Radnor, Pa.-based Airgas has completed a $625 million debt refinancing package comprising a $225 million senior subordinated note offering and a new $400 million five-year unsecured revolver via Bank of America. Joseph Sullivan, treasurer, noted that the loan and notes combination was necessary to get the deal completed in an increasingly difficult bank debt market, with fewer banks around and revolvers harder to obtain. The old $790 million revolver, also led by B of A, was set to mature at the end of the year. Reduced by $150 million through a receivables program, the $400 million that was drawn will be taken out by the new financing, explained Sullivan.
FleetBoston Financial was documentation agent and Bank of New York syndication agent on the new loan. Goldman Sachs was joint lead arranger for the 10-year, 144A note offering, which was upsized from $200 million after overwhelming investor appetite. FleetBoston, Bank of New York and CIBC World Markets co-managed the bond deal.
Adopting the note, loan combination diversifies the sources of funding, and provides flexibility, Sullivan commented. The revolver is also on an unsecured basis, though there is a spring lien if Airgas is downgraded. If downgraded twice, the loan will become secured by 100% of the stock of its domestic subsidiaries and 65% of the stock of direct foreign subsidiaries. Pricing on the new revolver is LIBOR plus 13/ 4%. The last loan, arranged in 1997 was priced at LIBOR plus 45 basis points, reflecting the changes in the bank market, he added. Airgas also now has a smaller bank group of nine compared to 17 banks on the old credit, Sullivan said. Mergers have taken some of the banks out, for example NationsBank, he said. The new credit contains a $33 million piece of Canadian-dollar loans. The old credit had $66 million in Canadian-dollars.