J.P. Morgan is looking for institutions to re-commit to a reverse flexed term loan "B" for Compass Minerals after being twice oversubscribed last week. A banker said the $275 million term loan "B" has been cut to $225 million with the spread trimmed 1/2% to LIBOR plus 31/ 2%. The bond deal has been upsized to $250 million. J.P. Morgan officials and a spokesman did not return calls. Deutsche Bank is the syndication agent and Credit Suisse First Boston is documentation agent.
The credit has been cited as a safe bet with low leverage, while concerns over possible legislation in Canada aimed at restricting the use of salt as a deicer agent, have not scared off investors (LMW, 11/12). Pricing is LIBOR plus 31/ 2% on the $135 million revolver.
One buysider demonstrated concern that uncertain weather could harm the cash flow. "When the weather is severe, the business the following year is good, but after a warm winter, the EBITDA could be way down. It is very hard to predict the weather though." There are very few credits in the market and people need to buy assets, she added. Secondary trading levels are moving up, even though company numbers are not that strong, she said, noting the supply and demand imbalance. The credit could be attractive in the secondary if it trades down, she added.