Universal has increased the size of its new credit facility to further develop banking relationships and increase flexibility. The company decided to upsize the loan amount to $295 million after the credit was oversubscribed, said Karen Whelan, v.p. and treasurer for Universal. Whelan explained the company had the opportunity to expand its relationship bank group and have additional flexibility by accepting all of the commitments offered on the deal. Wachovia Bank led the deal, but Whelan would not disclose the names of the three new banks that joined on for the new credit.
The company approached Wachovia in anticipation of its former credit expiring in April. The new bank deal, comprising a $147.5 million, 364-day revolver and a $147.5 million, two-year revolver replaces the old $225 million facility. The old deal includes a $150 million, 364-day revolver and a $75 million, two-year revolver. Pricing on the new deal is LIBOR plus 11/ 2% if the company draws down less than 33% of the deal and LIBOR plus 13/ 4% if usage exceeds the 33% mark. There is an unused fee of 32.5 basis points on the 364-day tranche and a 37.5 basis points fee on the two-year tranche, said a source close to the deal. Whelan declined to disclose pricing on the old credit. She said there was no flex down on the pricing following the extra demand, but noted that the credit was structured with a 364-day revolver to make it more attractive to banks.
The credit will be used as a back up for commercial paper and other short-term borrowings and also for general corporate purposes. Universal Corporation is the world's largest buyer and processor of leaf tobacco, but also receives revenue from its lumber, rubber, tea, dried fruit, and sunflower seed businesses.