Citibank's and Merrill Lynch's planned recapitalization for Paragon Trade Brands has been scuppered after Tyco International agreed to buy the diaper manufacturer for about $565 million in cash plus the assumption of $85 million in debt. A $425 million recapitalization for Wellspring Capital Management was coming to market, said a banker familiar with the proposed loan. But Tyco has stepped in and is unlikely to need any kind of financing, as it is such an immensely capitalized company.
Wellspring purchased a majority interest in Paragon in January 2000, but in June this year Paragon released a statement confirming several bidders had expressed interest in acquiring the company. The recapitalization was planned after talks with Fremont Partners to buy the company faltered. The acquisition is expected to take effect in the first quarter of 2002. Mary Anne Kane, spokeswoman for Tyco, said the debt is being acquired as part of the all-cash buy, but she would not comment on the proposed recapitalization.