Fleet Capital has been selected to provide a $336 million credit facility for Republic Engineered Products, a new company sponsored by KPS Special Situations Fund and Hunt Investment Group. "KPS and Hunt bought six plants of Republic Technologies International, which was in Chapter 11 proceedings, and the new company was created," explained Mike Psaros, a managing principal at KPS.
Fleet was the agent for Republic Technologies' $420 million debtor-in-possession facility, Psaros noted, adding that the new credit is a rollover of the DIP under new terms. The new agreement frees Republic Engineered Products of more than $1.3 billion of debt and $100 million of fixed charges per year, he said. Psaros did not disclose structure and pricing of the new facility.
Republic Technologies, which makes steel bars, ran into trouble following a leveraged buyout in 1998 that created $1.7 billion of debt. "The company had a horrible cost structure, inefficient asset configuration and a tremendous operating redundancy," Psaros said. He declined to comment on the actions of the sponsor responsible for the LBO, The Blackstone Group.
KPS approached the debtor and proposed an investment of $50 million into the new company, Psaros said. In addition, the sponsors are assuming the bank debt and have issued $80 million of new notes to replace $425 million of old notes.