Rexnord Corp's bank debt broke into the secondary market last week, trading between 100 1/4 100 1/2. One trader estimated that a total of $20 million was flipped in the days immediately following the break. By week's end the name grew quiet. Dealers said the paper was being bought by investors who were cut back on allocation as the seven-year, $360 million "B" piece was more than 50% oversubscribed.
Deutsche Bank and Credit Suisse First Boston closed out Rexnord's $435 million credit line last week. Pricing stayed at debut syndication levels, with a LIBOR plus 4% spread on the "B" tranche, and LIBOR plus 31/ 2% on the six-year, $75 million revolver. 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. Calls to officials at Rexnord were not returned.