Chase Manhattan Bank is set to market a $175 million package of bank loans backing the buyout of Kayser-Roth Corp., maker of No Nonsense panty hose, by Mexico's Grupo Synkro SA.
The Mexican company signed a definitive agreement last month to buy Kayser-Roth for about $233 million.
In addition to underwriting the bank loans, Chase also advised Grupo Synkro on the deal, which is expected to close by the end of the year.
Testing the Waters
A meeting for prospective members of the bank syndicate probably will not be held until January, but Chase is likely to start testing market appetite for the credit before then.
Grupo Synkro is Mexico's largest maker of socks and panty hose, while Kayser-Roth is the second-largest panty hose maker in the United States, behind Sara Lee Corp.'s Hanes unit, which markets the L'eggs brand.
Based in Greensboro, N.C., Kayser-Roth is a subsidiary of Collins & Aikman Group of Santa Monica, Calif.
Collins & Aikman was formerly called Wickes Cos., which was acquired in a leveraged buyout in 1988 by Wasserstein, Perella & Co. and Blackstone Capital Partners.
Continental Bank and Bank of America led the bank financing for the Wickes buyout.
Two Tranches and a Revolver
The Chase-led bank financing for the Kayser-Roth acquisition by Grupo Synkro consists of two $60 million tranches of term debt and a $55 million revolver.
A five-year "A" tranche of term debt is priced at 275 basis points over the London interbank offered rate, as is the five-year revolver.
The "B" tranche of term debt, maturing in seven years is priced at 325 basis points over Libor.
The longer-dated tranche of term debt appears to be aimed at loan funds and other nonbank investors in the loan market.
Typically, these longer-maturing tranches do not start to amortize until most, if not all, of the shorter-term tranche is paid off.
Grupo Synkro will contribute $100 million of equity financing to the Kayer-Roth acquisition.
The acquisition agreement was disclosed late last month, shortly after congressional approval of the North American Free Trade Agreement.
Grupo Synkro, apparently sensitive to concerns that Nafta could mean the loss of U.S. jobs, said in announcing the deal that Kayser-Roth would operate independently, with no shift of jobs to Mexico.Deal at a GlanceBorrower Grupo Synkro SAAmount $175 millionAgent bank Chase ManhattanPurpose Acquisition financing