Hormel, Inc. will tap its existing $425 million bridge facility to finance its proposed acquisition of Turkey Store for $334.4 million. Jody Feragen, treasurer, explained the company set up a $425 million facility for bridge financing purposes back in November 2000 as part of its acquisition plans. Feragen said the company plans to close the acquisition and tap the facility expiring in October by the beginning of March with plans to refinance the debt with a longer-term option. Feragen said the company has not yet decided whether or not to refinance with a bond deal or longer-term bank debt. She said deciding on a refinancing plan is something the company will tackle immediately, but she warned, "Nothing is cast in stone. We still need to get a public debt rating." Feragen would not comment on whether the company will seek bids for new bank debt.
Citigroup leads the current credit with participation from SunTrust Bank, U.S. Bank, and Bank One. "Citi assists us with relationship banking," said Feragen, explaining why the company chose Citigroup as its lead arranger. Pricing on the facility is LIBOR plus 92 1/2 % and it is based on a grid tied to debt. The company paid 10 basis points in commitment fees.