Hillenbrand Industries has tapped Banc of America Securities and Salomon Smith Barney as joint lead arrangers for its debut $500 million credit facility in preparation for acquisitions in the health care space. The Batesville, Ind., company, which operates in both the funeral and health care sectors, has indicated to the market it is hungry for acquisitions and has put in place the facilities so it can move quickly on potential targets, explained Mark Lanning, v.p. and treasurer. Hillenbrand is looking for acquisitions to increase revenue growth a further $100 million to $150 million, said Lanning. The targets will be in health care, where there are opportunities, rather than the funeral business, he added.
As the company had no prior credit line or lending group, Hillenbrand approached banks with which it had previous investment banking and treasury management relationships, Lanning noted. "We went and picked a group of banks we had an interest in expanding relationships with," he added. "We reviewed pricing, capability as banks and the bankers also," he said, commenting on the selection procedure. "Obviously every bank in the facility would expect to expand the relationship," Lanning commented, in response to a question over whether future investment banking business would be linked to the provision of credit. A couple of banks did not want to participate in the line due to lending policies, he said. He declined to name these banks, but said, "Banks are being more choosy than a few years ago."
Citibank is the syndication agent, while BANK ONE, LaSalle Bank and UBS Warburg are co-documentation agents on the credit facility, which consist of a $250 million 364-day and a $250 million three-year revolver. Prior to the credit lines, Hillenbrand used cash flow to fund working capital. Lanning reiterated that the lines are not needed for working capital and will be termed out through the capital markets at a later date if an acquisition is completed. He declined to provide pricing on the lines.