Fleet Bank and Bank of Nova Scotia launched syndication of a $475 million credit facility for Flexi-Van on Aug. 28, during a quiet week for new issuance. The credit refinances existing debt and backs the Kenilworth, N.J., company's $180 million acquisition of the chassis leasing businesses of GE Capital's TIP unit, a banker said. The acquisition needs to be completed by Sept. 17, which is why the deal was launched at the end of August, he noted. A Scotia banker declined to comment. Calls to officials at Fleet and Flexi-Van were not returned.
The credit, which is likely to get a BB+ rating, is split between a $325 million revolver and a $100 million "B" term loan. Pricing is LIBOR plus 21/ 4% on the three-year revolver and LIBOR plus 3% on the five-year "B" loan. One buysider looking at the credit was satisfied with the "B" pricing, but he thought a little more juice was required on the revolver. "It's high margin, fairly stable and predictable, but the leverage is 4.2 times, all senior," he said. A banker, however, disagreed. "It sounds high but, for a leasing company, it is not out of the realm," he contended.
Flexi-Van supplies transport equipment, which comprise wheel trains for containers. "The units last for 20 years, and it's a pretty simple business," another banker said. "And there are low capital expenditure requirements, as maintenance of the fleet is up to the lessee."