Deutsche Bank last Tuesday launched syndication of a $240 million credit backing Grant Prideco's, $350 million acquisition of Reed-Hycalog from oil field service-company, Schlumberger. The line will consist of a four-year, $50 million "A" term loan priced at LIBOR plus 23/ 4% and a $190 million revolver with a LIBOR plus 21/ 2% spread, explained an official. There is a 1/2% fee for $25 million commitments and a 35 basis point fee for $15 million commitments. The company also intends to raise $175 million through a private placement of senior unsecured notes due 2009. If the bond offering does not pan out, there is a committed provision for a supplemental bridge loan, the banker said. The credit is fully underwritten and is an asset-based deal, he added. A Deutsche Bank spokesman declined to comment.
The acquisition of 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. The transaction is expected to close next month. 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. Louis Raspino, v.p. and cfo of Grant Prideco, was out of the office last week and could not return calls for comment.