Salomon Smith Barney has snared the lead role on an upcoming $800 million bank and bond package for Greif Brothers, replacing Merrill Lynch. "We chose to go with the same bank to lead the bank loan and bonds as it plays well to the institutions, and we chose Salomon for the bonds as this is their specialty," said Rob Zimmerman, assistant treasurer for the Delaware, Ohio, industrial packaging company. "As a debut issuer in the bond markets, we wanted seamless execution and, based on league tables and interviews, we went with Salomon." Calls to a Salomon spokesman were not returned by press time.
Merrill became the agent bank on a $900 million acquisition credit for Greif just last year, using its M&A expertise to win the business (LMW, 4/8/01). Since then, however, Merrill's debt platform has experienced a number of high-profile departures, including that of Jack Yang and Matthew Collins, and a slide in the league tables. As a result, the firm recently brought on Jack Mann and Chris Birosak to help shore up the business (LMW, 6/17). Zimmerman noted that the current position of Merrill's debt platform played into the decision, but he added that Merrill was included in the selection process. Merrill officials declined to comment.
The new $500 million bank facility, consisting of a $250 million revolver and a $250 million "C" term loan, will be an amendment to the existing credit and will be co-led by Salomon and Deutsche Bank. Proceeds from the $300 million bond offering and the bank loan will be used to repay the existing "A" and "B" term loans, which currently stand at $254 million and $361 million, respectively. Pricing on the amended facility is not yet available. The loan amendment will be tackled once the bonds are sold at the end of the month.
The new capital structure meets a long-term objective of the company resulting from its acquisition of Huhtamaki Van Leer last year, Zimmerman noted. The refinancing reduces the ratio of senior debt to EBITDA to 1.5 times, assuming the bonds are sold. And although the refinancing increases total debt, it extends overall debt maturity and reduces annual amortization requirements.