Green Mountain to get $125 million revolver for Keurig purchase

By Sara Rosenberg

New York, May 3 - Green Mountain Coffee Roasters Inc. plans to obtain a new $125 million five-year senior secured revolving credit facility as part of its acquisition of Keurig Inc., company officials said in a conference call Wednesday.

Bank of America is the lead bank on the deal.

The revolver is expected to carry an initial interest rate of Libor plus 175 basis points based on an expected leverage ratio of 3.9 times at close, officials said.

The loan will carry a pricing grid, and as the company delevers, interest rates will reduce, officials added.

At close, about $109 million will be drawn under the new revolver to finance the $99.5 million cash payment for Keurig and to refinance existing Green Mountain debt.

Total consideration for the Keurig acquisition is $104.3 million, subject to adjustment at closing, when including the assumption of currently outstanding unvested options with an aggregate value of $4.8 million to Keurig employees.

Green Mountain is only acquiring about 65% of Keurig's shares at this time since it already owns the other 35% on a fully diluted basis.

The acquisition is expected to be modestly dilutive to Green Mountain's earnings per share for fiscal 2006 and accretive thereafter. Taking into account the acquisition, the company narrowed its earnings per share guidance for fiscal 2006 to a range of $1.20 to $1.30 per share from a previous range of $1.20 to $1.40.

The transaction is subject to customary closing conditions, including expiration of the waiting period under the Hart-Scott Rodino Antitrust Improvements Act of 1976, and is expected to close on or about June 15.

Green Mountain is a Waterbury, Vt., roaster and seller of specialty coffee products. Keurig is a Wakefield, Mass., marketer of premium single-cup coffee brewing systems for the office and the home. After the merger, Keurig will remain at its headquarters in Wakefield.

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