CSFB Offers Smooth Driving To Roadway

A financing package with few strings attached won Credit Suisse First Boston the lead on a $700 million debt package funding Roadway's $475 million acquisition of Arnold Industries. Dawson Cunningham, executive v.p. and cfo of Roadway, said the company had no previous relationship with CSFB, but the firm stood out because "they were very responsive to needs during negotiations." He explained that CSFB had very limited contingencies that would undo the financing. The firm, he said, provided a binding commitment that could only be unwound due to extremely adverse changes, basically in the economy. Material adverse change clauses are common in merger deals, and lenders will invoke them when a deal might get too sticky. He declined to name the other banks considered or that bid for the business. CSFB acted as adviser to Roadway and Morgan Stanley was the adviser to Arnold on the transaction.   The financing will include a $200 million revolver, but Roadway and CSFB have not finalized the remaining elements of the financing, Cunningham said. "It will be a mix of three different forms of financing, with the possibility of a bank term loan, corporate bond offering and then possibly an asset-securitization." The revolver will fund working capital needs and the $500 million will go toward acquisition financing. Roadway is waiting for ratings, he explained, though he could not provide a timeframe for a decision or comment on what the likely amounts would be. Officials at CSFB declined to comment. Cunningham predicts that Roadway will receive an investment-grade rating.   Roadway has no debt currently, said Cunningham, and has been debt-free since 1996. The acquisition is expected to close by the end of the year pending shareholder approval from Arnold. In the first part of the two-step acquisition, Roadway will pay $21.75 cash for each share of Lebanon, Pa-based Arnold. That part of the deal is valued at about $552 million. After Arnold Industries purchase is completed, Roadway will sell back Arnold's logistics unit back to the division's management team for $105 million.