Greif Brothers chose Merrill Lynch to lead its $900 million credit backing its acquisition of Netherlands-based Huhtamaki Van Leer on the back of the firm's m&a advisory work. Ken Kutcher, cfo, said the company chose Merrill as its credit's lead arranger for the first time over Key Bank, its longstanding relationship bank. Kutcher noted that Merrill had familiarity with the transaction on the m&a side and more developed international expertise in general than its other lender. "The credit had international scope and we knew we would need international banks to be involved," he said. "We still have a strong relationship with Key Bank and I cannot say enough about their capabilities and support for the company," said Kutcher, explaining why Key Bank still participated in the credit as syndication agent. "They got second billing and we still wanted them to have a key leadership role," he said
Kutcher acknowledged that the company's credit did quite well in a tough loan market as it benefited from the market's interest in more traditional, industrial credits. "This transaction proves that you can get competitive pricing if you have a strong strategy even when the markets are choppy and liquidity isn't there," he noted. Bankers said the institutional tranche blew out almost immediately after its launch date as over 60 accounts signed on. But the oversubscription on the pro rata as well as the "B" is the real proof of the structure's strength, said market sources.
The credit comprises a five-year, revolver priced at LIBOR plus 23/4 %, a five-year, term loan "A" priced at LIBOR plus
2 3/4 %, and a seven-year, term loan "B" priced at LIBOR plus 31/4 %. Kutcher said future pricing reduction grids are tied to the company's overall leverage levels. "As total leverage comes down, pricing will come down," he said. Roughly 20 banks comprise the syndicate and they were offered 75 basis points for commitments of $25 million and 62.5 basis points for $15 million commitments on the pro rata. Fees on the term loan "B" were 12.5 basis points. Kutcher declined to comment on agent fees, but said, "Let's just say Merrill was competitive."
Greif Brothers, an industrial packager, is a global supplier of containers.