Two Goldman Sachs-led credits backing Leonard Green & Partners-sponsored deals for veterinary companies are taking another walk around the block after weak syndications. Veterinary Centers of America is conducting informal meetings with institutions to help Goldman Sachs re-syndicate a deal that Goldman led for the company last year and ended up holding most of. Goldman and Wells Fargo are believed to be coming back to market also with a $350 million deal for Petco Animal Supplies, a credit that closed last October for another Leonard Green buyout.
Thomas Fuller, v.p., cfo and assistant secretary for Veterinary Centers of America, said the company was meeting with prospective lenders on a second spin of the $300 million credit. He noted, "Goldman were good to the company," when the deal was in the market last time, as the firm came through with the money for the company and ended up holding a large part of the credit. It could not be determined how much Goldman was holding. Fuller declined comment on the structure and pricing details of a new deal. Officials at Goldman said they could not comment at this time.
The market is much more receptive now than when the original deal was launched, noted Fuller. The credit backed the leveraged buyout of the Los Angeles-based operator of animal hospitals by private equity firm Leonard Green. Pricing stood at LIBOR over 3 1/4 % for a $50 million revolver and $50 million term loan "A," a $200 million term loan "B" was priced at LIBOR plus 3 3/4 %.
Goldman and Wells Fargo were left holding most of the Petco deal. The credit comprised an $80 million revolver, a $70 million term loan "A" and a $200 million "B" term loan, with pricing of LIBOR plus 3 1/4 % on the pro rata and LIBOR plus 4% on the term loans. Wells Fargo was also involved in the Veterinary deal, but not as lead arranger. Deatails on any new credit for Petco could not be determined by press time.
One banker commented that the structure of a deal is the key, rather than timing. The market is very keen for paper right now, but if a deal that struggled last time is brought back to market with the same structure, then it won't do much better, he said. Pointing to the now flying credit for The Hartz Mountain Corporation credit, he noted the deal had to change. Leverage was reduced, more equity infused, and the term loan structure was altered. In the case of the Veterinary deal, bankers noted that avoiding a formal bank meeting might stem any negative sentiment. "You don't want the same people in the room who hated the deal the first time," said a banker. This is especially true if the structure has not changed, he added.