Deutsche Bank has been tapped to lead a $265 million credit line for Grant Prideco backing the $345 million acquisition of Reed-Hycalog from oil field service-company, Schlumberger. Deutsche Bank is fully underwriting the line, stated Louis Raspino, v.p. and cfo of Grant Prideco. He added that the company is planning a public or private bond offering of about $150 million to fund the deal. If a bond offering does not occur, there is a committed provision for a supplemental bridge loan, he explained. The credit will be an asset-based deal, a banker added.
In addition to financing the transaction, the new line will replace a $135 million revolver led by Transamerica Business Capital that was set to mature in April 2003. The remaining capacity on the new line will be used for working capital, Raspino added. He noted that plans for the bank meeting should be made over the next two weeks, but he could not yet verify the new structure or pricing. Raspino noted that the company chose Deutsche Bank because of its experience with large acquisitions. A spokesman for the bank declined to comment.
The $350 million transaction for The Woodlands, Texas-based manufacturer and supplier of oilfield drill pipe and other drill stem products will include $255 million in cash, $90 million of Grant Prideco stock, and the assumption of approximately $5 million in liabilities. Raspino expects the transaction to close before year-end. "We think the debt situation is very manageable," added Michael McShane, president and ceo of Grant Prideco, in a conference call regarding the acquisition and financing plans.