G&K Services has selected Wachovia Bank and BANK ONE from a group of four of its 22 existing lenders to lead its new $325 million credit facility. "[Wachovia and BANK ONE] presented good market intelligence and creative ideas to meet the credit needs," said Glenn Stolt, treasurer. "They also have maintained good ongoing working relationships with the company," he added, explaining why the two banks were chosen. Wachovia and BANK ONE serve as syndication agent and administration agent, respectively.
The Minnetonka, Minn., company, which provides uniforms and business apparel to industrial, service and technology companies, needed to score the new credit because its existing facility was set to mature. That credit included a $100 million U.S. revolver, a $25 million Canadian revolver and a $300 million "A" term loan. Wells Fargo led the five-year facility, which was priced at LIBOR plus 1/2%.
The new credit comprises a five-year, $250 million revolver and a five-year, $75 million "A" term loan. Pricing on both tranches of the new credit is tied to a leverage-based scale and currently rests at LIBOR plus 11/ 4%. Stolt pointed out that the increase in price is due to the current market. "Back in 1997 [when the former credit was syndicated], it was the best time to access the bank market," he said. G&K Services, however, is very satisfied with the new pricing. He noted that, for a five-year credit, the pricing is among the lowest, if not the lowest, the company was given throughout the structuring process.
The company will use the new credit to pursue its strategic growth plans, which include sales and marketing initiatives and product development, as well as future acquisitions and the expansion of existing markets. "Our goal is to continue to add markets to have a larger geographic footprint," Stolt said.