Brentwood, N.Y.-based Allou Health & Beauty Care, a distributor of health and beauty-aid products, switched lead banks from Fleet Capital to Citibank and Congress Financial after a competitive bid offered a better interest spread. Congress is a unit of First Union National Bank. David Shamilzadeh, president and cfo of Allou, said the old $180 million asset-based revolver carried a rate of 31/ 2% over LIBOR while the new loan carries a rate of 21/ 2% over LIBOR. "The pricing speaks for itself," he said.
Shamilzadeh declined to comment on whether there was a formal bidding process, but noted, "Allou has been talking to various banks for some time in a highly competitive situation." The company has performed well for 15 years, but the lenders have become aware of the improved credit now, he added. Fleet has led revolvers for 11 years for Allou, said Shamilzadeh.
Shamilzadeh stated that Allou is also looking to issue $150-$200 million in high-yield bonds in the near future to improve liquidity. He declined further comment on the purposes of the debt. Commenting on whether the lead banks would lead the note offering, he said, "We would look at anyone who would like to, starting from now." He declined to provide a more definitive timeframe for a possible issue. The new revolver matures in 2004, while the old credit was launched in May last year and was set to mature this year, explained Shamilzadeh on the timing of the financing.