UBS Warburg and Morgan Stanley's credit for Rail America Transportation will be allocated by the end of this week, after the seven-year, $375 million term loan "B" was heavily oversubscribed. Pricing, currently at LIBOR plus 23/ 4%, has not yet been flexed, but one banker said it is still a possibility. The banks have not closed the deal because the issuer wants to create some subsidiary level debt in Canada and Australia, he added. The six-year, $100 million revolver is priced at LIBOR plus 21/ 4%. The deal was sure to be a lay-up, the banker noted, since the company is a repeat issuer, and the market is "smoking hot."
Moody's Investors Service slapped a Ba3 rating on the deal. Proceeds from the new facility will be largely used to refinance $325 million in existing senior secured debt, cover $15 million in interest-rate swaps termination costs, and fund the acquisition of certain railroad assets of a Class I branch line. The proceeds will also pay fees and expenses for general working capital purposes, according to the agency. A company spokeswoman said the loan is still being finalized, and noted that one of the strengths of the company has been the balance sheet.