Millennium Chemicals expects to pay an increase in net interest expense of about $2 million per quarter on its new J.P. Morgan Chase and Bank of America-led refinancing. "The market has changed since the last $500 million credit facility was taken out five years ago," said Mickey Foster, v.p., investor relations for Millennium. Conditions are tougher and Moody's Investors Service has downgraded the company, he noted. The old $500 million five-year revolver was set to mature at the end of the month.
The refinancing package consists of a $175 million five-year secured revolver, a $125 million term loan and $275 million in seven-year senior notes. J.P Morgan Chase and B of A, the second lead, suggested the mix of notes and loans to refinance, said Foster. J.P. Morgan and B of A also led the note offering. "The banks were selected based on a beauty contest that included everyone," Foster noted. "They had the best ideas, flexibility and cost." He declined to name the other banks considered. The revolver is priced at LIBOR plus 2% and the institutional loan at 21/2 % over LIBOR. Foster declined to comment on the pricing on the old credit. The 144A senior unsecured notes offering was upsized from $250 million following oversubscription and is priced at 9.25%.
Moody's downgraded the company from an investment grade Baa3 to Ba1 due to the company's high levels of debt during a softening market for titanium dioxide products. Standard & Poor's, however, chose to maintain Millennium's investment grade status, Foster noted.