Cleveland, Ohio-based chemical concern, OM Group, will tap existing leads Credit Suisse First Boston and National City Bank for as much as $500 million in bank debt to help finance its EURO1.2 billion ($1.085 billion) purchase of German chemical company Degussa AG. LMW reported on its Web site last Tuesday that the company was in talks with CSFB and National City, historical leads on the company's credits.
Kevin Durst, treasurer, declined to be specific about structure, but said the company is looking to close the transaction as soon as possible. "We have $60 million left on our existing facility but we'll try to re-work that into the new credit," he added. Durst said the company will also issue equity to finance the balance of the $600 million but he said the structure of bank debt versus equity has not been determined. "The company's fairly leveraged and we want to get our debt to equity ratio back down to 3:1," noted Durst, explaining why the company will finance a portion of the deal with equity.
Durst explained the company will sell assets to another Cleveland-based chemical company, Ferro, Inc., to raise cash to fund the balance of the EURO1.2 billion deal. Other bankers noted that Ferro is also in talks with National City Bank for as much as $500 million in loans to finance its $540 million purchase of OM Group's electronics materials, ceramics and pigments operations of former Degussa unit Degussa Metals Catalysts Cerdec. Officials at Ferro did not return repeated phone calls. OM Group has $675 million in bank debt with CSFB and National, including a $200 million seven-year, term "B" priced at LIBOR plus 3%.