Citicorp and BankBoston Corp. plan to hold a bank meeting today for a loan package financing International Technology Corp.'s planned $370 million acquisition of OHM Corp.
The acquisition is being completed in two stages. International Technology, a Torrance, Calif.-based environmental consultant, will first execute a tender offer in February for a 63% stake in OHM, a Findlay, Ohio- based waste cleanup company, and then buy the rest of company in April.
At the meeting today in New York, Citicorp and BankBoston are seeking commitments for a $240 million debt package to finance the tender offer. It includes a $160 million 18-month revolver and a $80 million 18-month term loan, both with a spread of Libor plus 250 basis points.
Commitments are due Feb. 9, and International Technology plans to execute its tender offer Feb. 17.
Citicorp and BankBoston are asking prospective lenders that commit to the tender facilities to have their commitments roll over into a $200 million revolver included in a separate $425 million debt package that will finance the merger.
The $200 million six-year revolver has a spread of Libor plus 200 basis points. Also included in the merger package is a $225 million eight-year term loan with a spread of Libor plus 250.
Citicorp has underwritten 60% and BankBoston 40% of the both the tender facilities and the merger loans.
The deal marks the first major work Citicorp has done for International Technology, which has historically relied on Chase Manhattan Corp. and BankAmerica Corp. for its lending needs. Citicorp got into this transaction through its long-standing relationship with Carlyle Group, a Washington- based leveraged buyout firm that owns 38% of International Technology.
International Technology will use some of the proceeds of the tender loan to buy shares of OHM at up to $11.50 per share, or $161 million. The remaining proceeds will be used to refinance the company's existing debt and pay transaction costs.
Proceeds of the merger loans will be used to complete the acquisition and to repay the tender loans. International Technology will also use the merger loans to refinance OHM's debt, pay transaction costs, and for general working capital.
When the merger is complete, International Technology will be a major player in environmental remediation, a business with annual revenues of $11.5 billion in the United States. The post-merger company projects 1998 revenues of $1 billion.
On Jan. 15, International Technology and OHM announced their plans to merge.