FMC Corporation has secured a $500 million credit facility that includes the company's first-ever "B" term loan. According to Eric Norris, director of investor relations, the Philadelphia chemical company decided to tap the institutional market for additional lending flexibility. "[An institutional loan] is a very viable source of capital for us," Norris said, explaining that the term loan provided the company with the additional capacity it needed. He further noted that an institutional lender is a "harder sell" than a relationship bank. "The term loan folks are much more nuts-and-bolts, dollars-and-cents oriented," he added. However, he affirmed that FMC was pleased with the final outcome of the deal, particularly considering the currently difficult credit market.
The credit consists of a three-year, $250 million revolver and a five-year, $250 million "B" term loan. Salomon Smith Barney, Banc of America Securities and Wachovia Bank lead the facility, having syndicated the "B" tranche to several undisclosed institutional lenders and providing the majority of the revolver in conjunction with a few other banks, Norris said. He would not confirm the final terms until FMC announced them publicly, but pricing was last quoted at LIBOR plus 43/ 4% on the "B" loan with an original issue discount of about 2% and LIBOR plus 25/ 8% on the revolver. Pricing on the "B" piece had been flexed up more than once from an initial spread of 31/ 4% over LIBOR.
The term loan was reduced from its initial $300 million amount to its current $250 million size, and the $50 million was added to the company's $355 million offering of 101/ 4% senior secured notes (LMW, 10/14). FMC decided to increase the amount of the bonds because there was such strong interest, Norris said, adding that proceeds from the offering and borrowings under the credit facility should address maturities coming due over the next five years.