Goldman Sachs Canada Credit Partners Co. and SBC Warburg Inc. are co- leading a $180 million financing package for Western Star Truck Holdings Ltd., a Canadian company that has historically banked with Bank of Montreal.
The package includes a $110 million private placement, as well as a multi-currency revolving credit facility for the company, which is based in Kelowna, British Columbia. The loan, which is priced in Canadian dollars, is valued at approximately $72.36 million.
Officials at Western Star said the company tapped Goldman and SBC Warburg to do the deal because the firms could handle both the bond offering and the related loan..
Bankers say Canadian companies are increasingly drawn to the U.S. market because of its size and liquidity, and are using American banks to get there. The walls between investment and commercial banking are much lower here than in Canada.
Bank of Montreal and SBC Warburg led a bridge loan, worth approximately $58 million, to Western Star last August to finance the acquisition of ERF, a British trucking company. Warburg then led an equity offering, worth approximately $30 million, for Western the following month.
On Western's latest loan, which is set to close on Tuesday, Goldman Sachs and SBC Warburg have been named arrangers, joint syndications agents, and joint documentation agents.
The 144a private placement, meanwhile, was priced Wednesday at $99.503 with a 8.75% coupon to yield 8.875% or 212.5 basis points above Treasuries, according to First Call, Boston. Moody's Investors Service rates the notes Ba2, and Standard & Poor's gives them BB plus.
A number of commercial banks have brought 144A private placements to the market this week, after delaying and pulling many issues because of choppy conditions.
"The market tone has firmed considerably in the last week," said Kingman Penniman, president of KDP Investment Advisors, Montpelier, Vt. "There's still relatively thin inventories in the secondary market, which means it's a good time to bring in new issuance and there is demand. Underwriters are just responding to that need."
Also on Wednesday, J.P. Morgan led a $475 million offering for Vicap, a special financing unit of Vitro SA, Mexico's largest glassmaker.
"If the absolute level of rates stay what they are, we will see more cash come into the market, and this will be an attractive time for companies to come to market," said Mr. Penniman.
He added that 144A private placements are becoming increasingly popular because they do not require registration with Securities and Exchange Commission. They can be timed to hit the market when they can be priced advantageously for the issuer.
