A syndicate led by Morgan Stanley Dean Witter & Co. has decided not to bring a $1.7 billion loan for Sunbeam Corp. to market until next year.
"The new management needs to come together and take control," said R. Bram Smith, head of syndicated lending at Morgan Stanley.
The decision to postpone the Sunbeam loan came after an agreement between lenders and the company that gives Sunbeam more time to meet covenants in its loan package. The lenders agreed to give the cash-strapped Sunbeam six months to return the company to profitability.
The syndicate will also raise interest rates on the financing by 0.5 a percentage point on a $1.2 billion portion of the loan, costing the appliance maker about $6 million a year.
Morgan is co-leading the loan with First Union Corp. and BankAmerica Corp.
Sunbeam, Delray Beach, Fla., followed a profitable 1997 by reporting a first-quarter earnings decline. The company expects the same for the second quarter.
Those financial results along with questions about the company's true performance in 1997 resulted in the firing of its chief executive, Albert J. Dunlap, last month.
Mr. Dunlap had met tough questioning from bankers at a June 9 syndication meeting after negative press reports regarding Sunbeam's finances. At a board meeting later that day, Mr. Dunlap offered his resignation. It was not accepted, but he was fired four days later. Those events forced Sunbeam's banks to pull the loan from the primary market until Sunbeam outlined a course of action under its new management. BankAmerica and First Union have committed themselves to $510 million each. Morgan has the remaining $680 million.
Under new CEO Jerry W. Levin, Sunbeam has hired an independent auditor to review its books. Mr. Levin, along with major shareholder Ronald O. Perelman, is also expected to name several key executives.
New pricing for the loan is expected to be at the London interbank offered rate plus 2.75 points for a $550 million, seven-year term loan and a $400 million, seven-year revolving credit and at Libor plus three points for a $750 million, eight-and-a-half-year term loan.