David Ostro, assistant treasurer at Parker Hannifin Corporation, was working the phone in his Cleveland, Ohio, office on the morning of Sept. 11 trying to wrap up his company's first syndicated bank credit. Because of the time-sensitivity of certain documents, the company needed the deal completed that day and was closing in on that goal when the first hijacked plane struck the World Trade Center. "Half the banks were already signed on when the attack happened, before the whole world changed," Ostro said.
Ostro had been on the phone with his banker at Salomon Smith Barney, syndication agent, at around 8:30 a.m. They wrapped up the call and Ostro got on the phone with another market player in the Wall Street area, who suddenly remarked that something must have happened "because it looks like a ticker tape parade around here." Ostro called back his syndication agent at Salomon, but couldn't get through. He then e-mailed her on a Blackberry handheld, and she called him back, saying she was walking to Midtown because "something terrible has just gone on."
The deal the company was looking to complete was to replace $822 million in bilateral agreements with an $825 million syndicated deal. Parker Hannifin wanted to switch to syndicated financing because bilateral agreements are an "administrative nightmare," Ostro said. "There are 10 different documents [with the bilateral agreements]. With this deal [the term loans] start and stop on the same day."
Ostro's focus on the bank deal shifted to concern for the bankers he was working with in New York. But the bank group that day still managed to finish what it started with Parker Hannifin. Salomon Smith Barney and KeyBank, are the joint lead arrangers in the 12-bank syndicate, and the banks have all worked with the company in the past and they were chosen based on relationships. The deal breaks down into a $500 million, five-year credit and a $364 day credit agreement totaling $325 million. The deal was oversubscribed to $1.45 billion, but the company chose to scale back.
For administrative reasons the deal makes a lot of sense for Parker Hannifin and it gives the company a geographically balanced and loyal bank group. But it will always carry a mark, Ostro said. "The date [on deal documents] is Sept. 11, unfortunately."