Harsco Corp. is refinancing a $450 million acquisition loan from Chase Manhattan Bank with the proceeds from a public bond offering and a new $300 million bank credit, also led by Chase.

Harsco last month completed the purchase of Britain's Mulliserv International for about $384 million, drawing $250 million of the original Chase loan to help finance the deal.

As reported, Chase fully underwrote the interim financing in July. The credit essentially was a bridge loan and was not syndicated in the loan market.


Syndication of the new $300 million loan officially began Wednesday at a bank meeting in New York.

As of Thursday, Canadian Imperial Bank of Commerce, NationsBank, and Union Bank of Switzerland had already committed $40 million apiece to become coagents.

J.P. Morgan Securities Inc., meanwhile, is the lead underwriter of the $150 million senior note offering by Harsco. Chase Securities Inc. and Goldman, Sachs & Co. are comanagers.

It was expected that Harsco would refinance part of the $450 million interim bank loan in the public market after the Multiserv acquisition was completed.

Loan Structure

But instead of simply paying down $150 million of the original loan, an entirely new credit was put in place, composed of a $150 million, 364-day facility, and a $150 million, five-year multicurrency revolver.

The original $450 million credit was structured as a $150 million, 364-day facility and a $300 million term loan.

Pricing of the original credit and the new deal are said to be essentially the same.

The 364-day portion of the new credit carries a facility fee of 18.75 basis points and a borrowing rate of 43.75 basis points over the London interbank offered rate. The five-year portion has a facility fee of 25 basis points and a borrowing rate of Libor plus 50 basis points.

Subject to Adjustment

This pricing is based on Harsco's current credit ratings and is subject to adjustment.

Harsco has a senior debt rating of A from Standard & Poor's Corp. Moody's Investors Service downgraded Harsco's rating on Aug. 31 to Baal from A3.

As reported, the Multiserv acquisition doubled Harsco's ratio of debt to capital to about 44%, though that ratio is expected to fall back within a couple of years.

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