UBS Warburg and Bank of America are holding one-on-one meetings with investors in New York and Chicago to shop the $175 million credit for Blackstone Capital Partners backing the acquisition of a majority interest in The Columbia House Company. A banker said one-on-one meetings are better when a credit has a story and needs explanation. Columbia House is moving away from selling compact discs into DVDs and though there is good cash flow, the story is complex and the company does not have solid asset coverage, said the banker. Pricing is a high LIBOR plus 41/ 2% on the $145 million "B" loan and on the $30 million revolver, though total leverage is only about 2.8 times.
Blackstone is buying the company from AOL Time Warner and Sony, though both will retain minority stakes. The purchase price is said to be $450 million. Reportedly, Blackstone is interested in combining the Columbia House operation with Bertelsmann's BMG Direct Music club.