CIT Group is preparing to shop a $100 million credit under a tight deadline as part of Sterling Chemicals' exit strategy from bankruptcy, scheduled for year-end. CIT is fully underwriting the line and expects to launch syndication of the five-year revolver by mid-December in order to close out the line in time for Sterling's emergence, said Paul Vanderhoven, Sterling's cfo. He noted, however, that the reorganization plans are not contingent on the line's timely closing. Sterling does expect CIT to close the deal by the end of this month, Vanderhoven affirmed, despite admitting that December is not the most optimal time to launch and close a new credit. Calls to CIT officials were not returned.
The facility will be secured by receivables and inventory, Vanderhoven said. He would not divulge the potential pricing. Sterling selected CIT because of its involvement with the company's previous credits, including its debtor-in-possession facility for $195 million, Vanderhoven noted. "CIT brought the most competitive pricing to the table," he added. Pricing on the DIP facility was LIBOR plus 31/ 2- 33/ 4%.
Houston-based Sterling entered bankruptcy protection in July of 2001 and worked on amending a reorganization plan until reaching the court-approved plan last month, Vanderhoven said. A major factor in emerging rested on Sterling's spinoff of its pulp chemicals business, which it has agreed to sell to Superior Propane for $375 million. In addition to the new credit line, Resurgence Asset Management is providing the company with $60 million in equity funding upon exit. Over $1 billion in secured and unsecured public note debt will be discharged by the plan. The chemical manufacturer expects its total debt to be under $100 million upon emergence, Vanderhoven added.