Oshkosh Truck Corp. is set to close a $140 million term loan "B" add-on by July 23, with proceeds going toward the acquisition of a European company. Charlie Szews, cfo, says the company pursues acquisitions on an annual basis and decided that an add-on would be the cheapest and most con venient form of financing. "We're not seeking a lot of money, so it wouldn't be worth it to pursue a whole new deal," he said. "This is just the most effective approach. The high-yield market is choppy at best right now; we'd be paying a higher rate." The Oshkosh, Wisc.-based company makes heavy-duty vehicles for the defense, fire and emergency, and commercial industries.
Oshkosh Truck is using the add-on to acquire European trash hauler Geesink Norba Group. Oshkosh Truck has an annual 10% organic growth strategy. "We sweeten it with an acquisition each year," Szews said. "We were due for a big one." He explained that Geesink is the first major international acquisition for Oshkosh Truck. "We've courted them for a long time," he said. "They were not for sale until the parent company was bought out and the division was auctioned off." He added that as a major European company, Geesink will help strengthen Oshkosh's international presence. "We're the number one player in the U.S., and this gives us the number one player in Europe," he said.
Bank of America Securities, lead on the existing deal, is currently syndicating the add-on. Szews said B of A offered the best pricing and strategy. "Their credit strategy is very strong. We chose them in 1996, and things went well," he said. "They're very innovative, very price-competitive." Pricing and covenants are expected to change with the add-on, although Szews declined to specify how. Szews declined to give details on how syndication is going, but did say the market has been "very favorable" to the company. "It has a lot to do with our track record. We make projections to the banks and hit the numbers later on," he said.