Hercules has completed a $325 million refinancing deal that alleviates some of the chemical company's debt load of $1.3 billion. Hercules tapped $125 million of its new $200 million "B" term loan in order to pay off its 61/ 8% senior notes that were scheduled to come due this June, said Stuart Shears, v.p. and treasurer. There were reported rumblings at launch that the credit might hit some bumps because of asbestos-related issues, but the deal was oversubscribed with about 30 institutions signing on at close.
"We didn't want to be backed in the corner by waiting," said Shears, v.p. and treasurer, explaining that the company wanted to refinance well in advance of the previous line's maturity. The new credit refinances a $200 million senior secured revolver that was led by Bank of America and was set to expire in October of this year. Shears noted that the previous line had similar pricing to the new revolver. Credit Suisse First Boston and Wachovia Securities lead the new facility. He explained that, "CSFB has raised a lot of our financing in the past," including Hercules' last bond deal. "And we've been talking to Wachovia a lot," he added, addressing why the company switched leads.
The new deal for Wilmington, Del.-based Hercules includes a four-year, $125 million revolver priced at LIBOR plus 23/ 4%, while the four-and-a-half-year "B" loan has a LIBOR plus 31/ 4% spread, Shears said. The remainder of the facility will be tapped for general corporate purposes and ongoing liquidity. "We like the flexibility of the "B" market better than the bond market," Shears noted, explaining the decision to seek the institutional loan.