Investors appear confident environmental concerns over the use of salt on Canadian roads will not materialize into legislation that would put the brakes on Compass Minerals, IMC Global's salt business. J.P. Morgan, Deutsche Bank and Credit Suisse First Boston are leading the $410 million credit backing Apollo Management's acquisition of the salt business, launched two weeks ago. "This is a good business with a reasonable purchase price and the management team is solid," explained an investor. There is a degree of concern that highway de-icing is hazardous to the environment and legislation is being evaluated, he said.
However, the sponsor has known about it for some time and it appears there is no alternative to the ice problem. "If legislation were to be passed it would impact volumes and margins as Canada is cold and has lots of ice," he joked. Importantly, the leverage is moderate at 3.9 times and in the current environment it is pretty safe, he noted. Pricing is LIBOR plus 31/ 2% on the $135 million revolver and LIBOR plus 4% on the $275 million term loan "B." A banker said $400 million in commitments came in on the "B," though he suggested the pro rata is a tougher sell. Accompanying bonds are on roadshow now, he added.