Quality Distribution $200 million credit facility to launch Oct. 13 week

By Sara Rosenberg

New York, Sept. 18 - Quality Distribution Inc. is scheduled to hold a bank meeting for a proposed $200 million credit facility during the week of Oct. 13, according to a syndicate source. Credit Suisse First Boston, Deutsche Bank and Bear Stearns are the lead banks on the deal.

The facility, which is being obtained in conjunction with an initial public offering, consists of a $140 million delayed draw term loan B and a $60 million revolver, which may include letters of credit.

Previously, the loan was expected to be sized at $215 million with a $140 million B tranche and a $75 million revolver, according to data in a Securities and Exchange Commission filing.

Revolver borrowings will be used for working capital and general company purposes, including funding certain permitted acquisitions. Term loan borrowings will be used to repay existing debt.

Security for the loan is a first priority perfected lien on substantially all of the company's properties and assets.

The IPO is conditioned not only on the successful completion of the new credit facility but also on a private offering of unsecured notes by subsidiary Quality Distribution LLC and the exchange of all outstanding shares of 13.75% preferred stock for common stock, the SEC filing said.

Quality Distribution plans on using proceeds of $115 million from the IPO, proceeds of $125 million from the note sale and $149.953 million from the credit facility to repay the $279.278 million outstanding under the existing credit facility, redeem its $57.548 million 12.5% senior subordinated secured notes, redeem its $18.1 million 10% senior subordinated notes, redeem its $14.027 million 12% junior PIK notes and pay $21 million in transaction fees and expenses.

As of June 30, the outstanding credit facility debt consisted of about $80.3 million under the term loan A due June 9, 2005, $93.7 million under the term loan B due June 9, 2005, $80.3 million under the term loan C due Feb. 28, 2006, $5 million under the term loan D due March 2, 2006 and $19.9 million under the revolver due June 9, 2005. All of the outstanding bank debt carries an interest rate of Libor plus 425 basis points.

Quality Distribution is a Tampa, Fla. operator of a bulk tank truck network.

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