Evenflo Co., which is owned by Kohlberg Kravis Roberts & Co., and makes baby and infant products, secured a $99 million credit line as the final piece to a recapitalization plan that allows the company to pare its overbearing debt load. Prior to the recap, the company had a $105 million credit and $110 million of subordinated debt that carried a coupon of 113/ 4%. "It was too heavy of a load to cover interest and capital expenditures with normal profits," said Daryle Lovett, senior v.p. of finance and cfo. To reorganize, Evenflo sought an equity injection of $18 million from its largest shareholder, an affiliate of KKR, and exchanged its notes for equity in the reorganized company and cash. Lovett declined to be specific about the distributions.
The new credit comprises a $45 million revolver, a $17 million "A" loan and a $37 million "B" piece, compared to Evenflo's former $105 million revolver. The credit was completed Dec. 19 and all the tranches mature in five years. Lovett could not comment specifically on the pricing, but he noted Evenflo's interest costs are reduced by about $14 million a year under the reorganized balance sheet.
Bank of America leads the credit. Currently, there are only three banks in the deal, but Lovett said that the banks could trade pieces of the deal in the secondary market, thereby opening up the bank group to new members. KKR acquired the company when it bought SHC, formerly Spalding Holdings Corp., in 1996. Evenflo was then spun-off in 1998.