MetoKote lined up a $60 million term loan to rework the amortization on its existing credit, according to Patrick Osler, cfo. The new piece paid down portions of the existing credit and allowed the company to put a back-ended amortization schedule in place. "It would provide substantial relief over the next six to eight quarters and then ramp up after that," he said, choosing not to explain the exact payment schedule. The company reworked the credit without extending its 2005 maturity date.
Before the change, the company's credit comprised a $40 million revolver, a $36 million "A" term loan and a $97.5 million "B" tranche. The new tranche would pay off about $31 million of the Lima, Ohio-based company's original $36 million "A" term loan-- leaving a $5 million balance. Osler said the company could not manage to cover the whole "A" loan, so MetoKote would just work on paying off the remaining balance with the original pricing terms in addition to the other tranches. The remaining $29 million on the new loan was used to pay down a portion of the $97.5 million "B" tranche, which incidentally holds the same structure and tenor as the new tranche, according to Osler.
A $27 million revolver was also added to replace the original $40 million revolving credit that was to expire next year. Osler stated that part of this revolver has already been tapped to pay off fees from the previous revolver, and to finance the 21/ 2% original issue discount needed to close syndication. The new tranche is priced at LIBOR plus 4%, while the revolver is tied to performance based pricing, and there was a commitment fee that Osler would not divulge. The entire approximate $160 million facility is secured by corporate assets.
Wachovia Securities fully underwrote the changes and additions to the facility, with strong participation and support from Huntington Bank, Osler noted. Wachovia did not lead the original deal, but MetoKote liked the bank's creative ideas in order to execute the arrangement, Osler stated. The facility was originally led by what was at the time Chase Manhattan Bank. Syndication of the new tranches was oversubscribed, with more than 20 institutions signing on. Osler said that the entire deal took 90 days from conception to completion, with three weeks to close in August after the deal hit the market with the discount. Osler said the pricing did come in a bit high for the company's liking, but it was acceptable considering the volatile market conditions.
MetoKote operates 29 facilities in the U.S., Mexico, Brazil, and the United Kingdom, offering extensive coating services to a wide range of industries. The company holds about $170 million in debt with leverage multiples just under four times, Osler said.