The Houston Texans will be looking for a lead bank for a possible $300 million refinancing in the form of either a bank deal, a private placement or a combination of the two by next year. J.P. Morgan leads the current $225 million bank facility, but the Texans need an extra $75 million to pay the National Football League next January, and according to Scott Schwinger, cfo of the Texans, the debut season would be a good time to extend the maturity on the existing debt. "J.P. Morgan has a strong seat at the table, but we will talk to other folks as well," stated Schwinger.
The club is looking for maturities of five, 10 or 15 years, Schwinger noted. The current facility expires in 2004. Next fall marks the debut season for the Texans, who are still paying the NFL for the franchise. The original purchase price was $700 million by owner Robert McNair, and four $150 million installments are required each year, along with $100 million in 2004. Half of the payment will be debt, half equity.
An extra $75 million has just been added to the bank loan, led by J.P. Morgan, he said. In the original $150 million loan signed last year, there was a provision to borrow more, he commented. There was a degree of trepidation regarding the lending environment, but the banks were enthusiastic, he said, and the same pricing as the original loan was attained. Pricing is 1% to 11/ 2% over LIBOR. "The credit of the NFL teams is very good," Schwinger stated. The security on the loan is the franchise and with strong attendance and commercial sponsorship, the banks are eager, he said. Reliant Energy has signed a 30-year contract naming rights deal worth $300 million and Ford Motor Company and Budweiser have signed on also, he said.