Graphic Packaging, a Golden Colo.-based manufacturer of food cartons, switched its lead bank from Bank of America to Credit Suisse First Boston and Morgan Stanley for a refinancing of its credit line. Graphic gave B of A an opportunity to bid on the $425 million credit, but Morgan Stanley and CSFB provided better terms, explained Luis Leon, cfo of Graphic. The company is taking advantage of current strong investor appetite in the high-yield markets to refinance all of its debt by putting in place new notes and bank debt, he added, declining further comment on the politics of the switch in lenders. The credit refinances a $325 million, five-year term loan and a $400 million revolver.
The existing credit lines would have matured in two years, and the high-yield markets make it a very attractive time to refinance, Leon noted. Orders for the $300 million note offering, upsized from $250 million, reportedly topped $3 billion. The $450 million bank deal, split between a $300 million, five-year revolver and a $150 million, seven-year term loan, also refinances $50 million of subordinated notes. Pricing on the revolver is LIBOR plus 2% with a 1/2% commitment fee and LIBOR plus 3% on the institutional tranche (LMW, 2/11).
Debt levels for the company have been reduced significantly since a debt-financed acquisition in 1999, said Paddy Broughton, director of investor relations. At the end of 2000 debt to EBITDA was 4.6 times and at the end of last year 3.5 times, he said. Revenue meanwhile has increased organically in a flat market.