American Commercial Lines (ACL) recently restructured its credit facility in conjunction with a larger recapitalization sparked by its acquisition by financial services firm Danielson Holding. For the new credit, ACL split its $100 million revolver into a $50 million revolver and a $50 million "A" term loan, according to Jim Wolff, cfo. This was done at the request of its banks, which wanted borrowings under the revolver to better reflect what the company could pay down in one year, he explained.
Following the split, Danielson paid the bank group a $25 million amortization payment across all its term loan tranches, Wolff noted. The result took ACL down to a credit comprised of a $50 million revolver and a $47 million "A" term loan, both priced at LIBOR plus 33/ 4%; a $134 million "B" term loan set at LIBOR plus 4%; and a $158 million "C" term loan with LIBOR plus 41/ 2% pricing. The pricing was unchanged by the amendment and restatement process.
Even though the credit does not completely mature until 2007, it will need to be refinanced in 2005, Wolff noted. "There's a bullet coming due in 2005, and we anticipate that it will be hard to handle," he said, referring to ACL's heavy debt load. The credit is led by the company's relationship bank, J.P. Morgan, and originally was completed in May 1998.
Danielson bought the Jeffersonville, Ind., marine transport and services company because it saw an opportunity to buy the debt at a discount in the marketplace and buy out the current equity holders at a reasonable price, Wolff said. "They were able to purchase a market leader...at a discount to market multiples," he added. In the future, the new owner plans to de-leverage the company.