Lehman Brothers launched syndication late last week of a new $455 million loan package to finance the acquisition of Savannah Foods and Industries Inc. by Imperial Holly Corp.
Acting as arranger and syndication agent for the loans, Lehman is also expected to underwrite $250 million in high-yield bonds for Imperial, said a source familiar with the deal.
Imperial, based in Sugar Land, Tex., refines and markets sugar. The deal to acquire rival sugar producer, Savannah, Ga.-based Savannah Foods, uses a combination of about 70% cash and 30% stock. The acquisition was announced in September.
"Our complementary geographic presence will enable us to provide even better service to our customers," said James C. Kempner, Imperial's president and chief executive officer.
Upon completion, the merger will create the largest producer of refined sugar in the United States with pro forma annual revenues of more than $2 billion. Savannah operates refineries in Georgia, Louisiana, Florida, and Michigan. Imperial operates factories in Montana, Wyoming, Texas, and California.
The new loan package features a $200 million five-year revolving credit, a $150 million six-year term loan A, and a $105 million eight-year term loan B.
Pricing for the revolver and term loan A begins at 175 basis points over the London interbank offered rate, and at 200 basis points over Libor for the term loan B. For all tranches, pricing is tied to Imperial's performance.
A commitment fee of 37 basis points will be paid on the revolver, with fees of 30 basis points paid for committing to the $25 million agent tier and 20 basis points paid for committing to the $15 million agent tier. A fee of 10 basis points will be paid for pro rata commitments to the A and B term loans. Commitments are due Dec. 9.
Lehman also brought two other new loans to market last week.
A $135 million loan facility for Chantilly, Va.-based Gemini Air Cargo includes a $115 million five-year term loan B and a $20 million five-year revolving credit.
Both tranches are priced at 300 basis points over Libor, with a 50 basis point commitment fee for the revolving credit.
Lehman also began syndication of a $261.2 million six-year term loan for Southern Energy Finance. Lehman is arranger and syndication agent for the loan, with Credit Suisse First Boston acting as arranger and administrative agent.
Priced at 90 basis points over Libor, the loan will finance leasing activities and certain limited partnership interests of Southern Energy, a subsidiary of Atlanta-based power producer and marketer Southern Co.