Exopack recently replaced $130 million of senior and subordinated debt with a new $120 million credit led by BNP Paribas in order to lower its borrowing costs, according toJohn Heaps, cfo. The company originally secured the debt in conjunction with its spinoff from International Paper. But with a year of solid performance under its belt, the Spartanburg, S.C., specialty packaging company was prepared to return to the market, Heaps said.
The new six-year facility includes a $50 million revolver, a $30 "A" term loan and a $10 million "B" tranche. Pricing is tied to a leveraged-based grid and currently rests at LIBOR plus 2%. The credit also includes a $30 million multiple-advance term loan, which is earmarked for capital expenditures. The multiple-advance loan is structured in such a way that Exopack can term out portions of the loan for two years, Heaps explained, adding that the company drew down $4 million to fund the acquisition of Specialty Films & Associates in September.
This new credit replaced $20 million of subordinated notes, which held a coupon of 13%. "It's the difference between 13% and 5%," Heaps said of Exopack's significant interest rate savings. In addition, the new line refinanced a credit facility that included a $60 million revolver, a $30 million "A" piece and a $20 million multiple-advance term loan. Heaps declined to comment on the exact pricing on the former credit, but he noted that it was roughly 50 basis points more than the new line.