Buysiders say the $385 million "B" tranche of the $685 million deal for Premdor has been pulled from the market and lead arranger Bank of Montreal and co-syndication agents SunTrust and Scotia Capital are stuck holding the bag on the fully funded acquisition credit. Robert Tubbesing, v.p. of finance and cfo at Premdor, was not available for comment. Arnold Rubin, manager of cash management, referred questions to Paul Bernards, v.p. and controller, who did not return calls. The credit backs the door maker's purchase of International Paper from Masonite.
Buysiders say the tranche seems to have disappeared after lead banks said that they would first work on syndicating the pro rata before completing the "B" tranche. "One day I got a call [from a banker] that he'd call me after they got the pro rata and I never heard from him again," she said. A syndication banker said the "B" tranche has been put on hold as the banks are still trying to sell the $200 million pro rata part of the deal to retail investors. He said roughly eight banks have signed on, but declined to comment on total commitments tallied. Two buysiders who looked at the credit said the struggling pro rata round on the deal has resulted in the disappearance of the "B" tranche and lead banks are expected to get stuck with it. "They'll probably come back to the market with it next year," said one fund manager.
"There is no syndication the bank is underwriting [that is] undergoing difficulty," said Ian Blair, a BMO spokesman, despite what market players said. Jane Shannon, a Scotia spokeswoman declined comment. SunTrust syndication officials did not return calls.
Buysiders who passed on the deal say the "B" tranche will be a tough sell right now if Bank of Montreal emerges in the near-term with the credit. "They're door makers and it's not the right time in the cycle for them," said one buysider as another noted that the LIBOR plus 31/ 2% pricing on the "B" tranche was not adequate as "The Masonite acquisition didn't get us too excited." He also noted the deal was on the high end leverage-wise with leverage over 3X. Another buysider said the company has a great market share in the industry, but paid a high multiple for the International Paper business. -