Columbus McKinnon refinanced its existing $150 million senior secured credit facility in creative fashion by obtaining a new $100 million senior secured line and a $70 million second lien secured term loan in a separate transaction. The Fleet Capital-led senior debt provided the amount the company was able to borrow from the bank according to its assets, while the second lien loan made up for the additional desired capacity, said Robert Montgomery, executive v.p. and cfo. "We needed another portion to sit below the [$100 million piece of] debt," he said.
Fleet arranged the new five-year, $100 million line, with six other banks signing onto the syndicate and Merrill Lynch being the only new lender, Montgomery noted. Fleet Securities placed the five-year second lien loan with Regiment Capital II and Ableco Finance. The senior facility includes a $67 million revolver priced at LIBOR plus 23Ž 4% and a $33 million term loan at LIBOR plus 31Ž 4%, Montgomery said, adding that there was a variety of fees involved in the transaction. The second lien piece is priced at 111Ž 2% plus 11Ž 2% payment-in-kind notes, he added. "We were delighted with the pricing," he noted.
Columbus' previous revolver was priced in a similar range to the $100 million line and had $125 million drawn from the credit, Montgomery stated. This Fleet-led facility was set to expire in March of next year. Columbus has been facing some liquidity pressures due to the downturn in the industrial product market. Moody's Investors Service stated that the refinancing has eased some of the pressure, however the company's financial flexibility remains constrained. The ratings service downgraded the company's senior debt from B3 to Caa1. Amherst, N.Y.- based Columbus has been a Fleet customer since 1986. "We have a wonderful, long-standing relationship with Fleet," Montgomery said.