Goldman, Sachs & Co. and Fleet Financial Corp. launched a $167 million leveraged loan package Tuesday backing the acquisition and refinancing of Amscan Holdings Inc. by Goldman's merchant banking unit.
The deal would give the Goldman unit-GS Capital Partners II, LP-an ownership stake of more than 80% in Amscan, according to a source familiar with the transaction. Amscan, based in Elmsford, N.Y., makes and sells party supplies. The transaction is expected to close Dec. 19.
In addition to the loan, the deal includes $75 million in equity and a $110 high-yield bond issue, expected to come to market after Thanksgiving, the source said.
Goldman Sachs is arranger and syndication agent on the loan; Fleet is administrative agent. Commitments are due Dec. 2.
Last December, Goldman Sachs underwrote Amscan's initial public offering. Its merchant bank's plan to buy the firm for about $315 million was announced in August.
Like several other investment and commercial banks vying for market share in the lucrative leveraged finance market, Goldman Sachs can turn to its merchant banking arm as a steady source of mandates to lead leveraged loans and bonds. Others with similar resources include Donaldson, Lufkin & Jenrette Inc., Chase Manhattan Corp., and BT Alex. Brown Inc.
In March, Goldman Sachs led an $815 million leveraged loan with Citicorp for the buyout of bowling equipment maker AMF Group by GS Capital Partners.
That loan was the first from Goldman Sachs to feature the hybrid loan- and-bond structure that is being used in the Amscan loan. It is now a common structure among leveraged loan tranches for institutional investors.
The credit facilities consist of a $50 million five-year revolving loan priced at 225 basis points over the London interbank offered rate, with a 50 basis point fee on the unused part of the revolver, and a $117 million seven-year facility priced at Libor plus 237.5 basis points.
The seven-year hybrid term loan uses bond-like covenants and prepayment penalties of 1.5% for the first year and 0.75% for the following six months.
Banks are invited to commit a minimum of $20 million with a 25 basis point up-front fee. Institutional investors are not being offered any up- front fees for minimum commitments of $10 million to the term loan.
