Riverwood International, faced with maturing credit lines, took advantage of favorable markets to ink a $635 million senior secured credit and issue $200 million of senior notes with J.P. Morgan and Deutsche Bank. Steve Myers, corporate controller of the Atlanta-based maker of coated unbleached paperboard, said the timing was right for Riverwood. "The market was good and Riverwood had some significant loans maturing, including an $80 million line due in 2002 and term loans in '03. We needed a package with good rates that would secure our liquidity position." Myers said the company sought proposals from several banks. "A decision was made based on pricing and maturity schedules," he added, though there was little significant difference in the actual pricing proposed by the banks. He could not provide further comment on the different pricing levels and declined to name the unsuccessful bidders. Chase Manhattan Bank, now J.P. Morgan, was the lead on the previous loan. That deal had a slightly larger revolver at $400 million compared to the $300 million now. The option to issue bonds and reduce the revolver was attractive because the fixed-rate on the notes makes it easier to manage interest-rate risk and it is better for forecasting purposes and swap agreements, explained Myers. The credit is split into the $300 million revolver and $335 million term loan, both maturing in 2006 and carrying all-in pricing of LIBOR plus 23/4%. The term loan begins to amortize in two years. Myers said $51 million was drawn on the revolver.
Paperboard Producer Packages New Credit