Levis Strauss signed a $1.05 billion credit facility two weeks ago and issued roughly $500 million in notes to replace the company's existing $1.6 billion facility. Eileen Van Ess, assistant treasurer, explained that the company planned to replace the $1.6 billion facility with a $1.5 billion loan, but then decided to further reduce the facility to $1.05 billion and issue roughly $500 million of notes in the bond market to diversify the company's debt.
"We wanted to extend the maturity profile of the debt. We had too much debt coming due in 2002," she said. "We announced last fall that we wanted to do a high-yield deal but as the market soured we postponed it," she said, explaining the company's decision to hold out for a much improved environment in January.
The new two-year facility comprises a $700 million revolver and a $100 million term loan "A" priced at LIBOR plus 31⁄2% attached to grids tied to the company's credit ratings. The remaining $250 million term loan "B" tranche has fixed pricing of LIBOR plus 31⁄4%. Lead arrangers on the facility include Bank of America, Citigroup, and Bank of Nova Scotia. Van Ess said the company was pleased with the performance of these banks in the past and therefore decided to use them again. The bonds that are due in 2008 carry a coupon of 115⁄8%. Van Ess said the company will use the loans for general corporate purposes and proceeds from the bond offering to pay down existing debt.