Bank of Nova Scotia last week closed a $900 million credit facility for Warnaco Group Inc., an apparel maker that is on the prowl for acquisitions.
The loan, which was oversubscribed by about $210 million, consists of a $600 million, five-year revolving credit and a $300 million, 364-day letter of credit, according to sources at Citibank.
The Citicorp unit served as documentation and co-syndication agent, while the Bank of Nova Scotia was administrative agent. Warnaco has had a relationship with both banks since 1988, according to William Finkelstein, chief financial officer at Warnaco.
The credit facility provides the New York company with a borrowing rate of 37.5 basis points above the London interbank offered rate, according to Warnaco. The company's previous $750 million credit facility, also led by Bank of Nova Scotia, had a borrowing rate of 42.5 basis points above Libor.
Warnaco said the tightened pricing and brisk lender interest reflect its financial strength. Analysts agree that Warnaco is doing well.
"They have the leading market share in every business in which they participate," said Susan Sansbury, an industry analyst at Bear, Stearns & Co.
The company manufactures men's and women's intimate apparel, menswear, and accessories. Warnaco also has the worldwide trademark rights to Chaps by Ralph Lauren and Calvin Klein men's and women's underwear and men's accessories.
Warnaco will use the loan for general corporate purposes, including future acquisitions, according to Mr. Finkelstein.
He said the company, which completed three acquisitions last year, plans to seek out additional targets within the intimate apparel industry, perhaps even abroad.
Margaret Whitfield, an industry analyst with Hancock Institutional Equity Services in New York, said the financial troubles of Maidenform could make it an attractive buy for Warnaco.
