Deutsche Bank and Credit Suisse First Boston closed out Rexnord Corp.'s $435 million credit line Monday with more than 50% oversubscription on the seven-year, $360 million "B" piece, according to a banker familiar with the deal. The "B" loan was trading over par the following day, he added. Pricing stayed at debut levels, with a LIBOR plus 4% spread on the "B" tranche, and LIBOR plus 3 1/2% on the six-year, $75 million revolver. In addition to what one buysider described as favorable pricing, the term loan also included amortization as a credit enhancement. A Deutsche Bank official declined to comment, while a CSFB banker did not return calls.
The bank deal backs The Carlyle Group's acquisition of Rexnord from Invensys for $913 million. Rexnord, a manufacturer of industrial power transmission components, was put up for sale in February as part of London-based Invensys' move to reduce the punishing debt load that last year threatened to push the industrial giant into bankruptcy. Reportedly, Rexnord's operating profit fell to $104 million last year on revenues of $704 million. The Carlyle Group, however, believes the industrial sector will rebound.
Moody's Investors Service's B1 rating of the credit cited that the Milwaukee, Wis.-based mechanical power components manufacturer's exposure to the cyclical industrial market and its significant debt leverage were a source of concern. Rexnord's funded debt is $585 million. Calls to officials at Rexnord were not returned.