Viad, a holding company for payment services and convention event areas, decided to go with a commercial bank rather than a pure investment bank on a new facility because the company feels a bank could best respond to its needs. David Iannini, treasurer, said the company took bids for the facility, but decided to stay with incumbent Citibank. "Investment banks are struggling because of the commercial banks. They don't have the same mentality or personnel to do the revolvers." Iannini continued, the investment banks need to adapt by providing all lines of credit on the same terms.
The company interviewed four or five of the top banks, but settled on Salomon Smith Barney, the existing lender, as Citibank has a mix of the two, commercial and investment, and could provide flexibility and cost. There are a number of investment banks on the new revolver though, he rejoined. "I said to them, if they want the investment banking business, they need to be on the revolver." Iannini said no investment banking business is currently scheduled. Other banks interviewed included J.P. Morgan and Bank of America, but Iannini declined further comment on banks on the syndicate or others considered.
The new $425 million revolver is replacing the current $300 million five-year facility maturing next year, Iannini stated. It is split between a 364-day and five-year tranche, as 364-days are cheaper at the moment than usual, can be renewed if necessary and rolled into the five-year. Pricing on the $200 million 364-day is LIBOR plus 5/8%, while the five-year revolver carries a spread of LIBOR plus 60 basis points. Both are backstops to support commercial paper and short-term borrowings.