Deutsche Bank is set to lead a bankruptcy exit facility for Harnischfeger Industries, Inc. in the coming weeks, as it emerges from bankruptcy. The $350 million four-and-a-half-year secured revolver is expected to close in the first half of June, said Kenneth Hiltz, senior v.p. and cfo of the Milwaukee, Wisconsin-based manufacturer of surface mining equipment. Pricing and the date of the bank meeting have not been finalized, he noted. The spread will be based on the total amount of leverage, ranging from LIBOR plus 2-3%, he said.
Deutsche Bank was chosen as lead following a fairly extensive search, Hiltz noted. The ability to provide international flexibility was a deciding factor, he explained. The loan will be available in multiple currencies to facilitate business transactions in a variety of countries, including Australia, Canada and the U.K. "Harnischfeger talked to everyone on a variety of different packages," Hiltz said, declining to name other banks considered.
The loan will be used to pay down debt, retire some overseas facilities and provide a cushion of working capital, Hiltz remarked. The credit will be secured against all the assets of the company, including receivables and intellectual property. Hiltz is optimistic about the prospects for the industry, as coal mining is a strong sector and the customer base will benefit. Under the reorganization plan, Harnischfeger stock will be cancelled and new common stock will be issued and distributed to the company's creditors. A banker familiar with the deal said it has a heavy asset-based structure.