Wellman $600 million credit facility to launch Wednesday

By Sara Rosenberg

New York, Jan. 20 - Wellman Inc. is scheduled to hold a bank meeting on Wednesday for a proposed $600 million credit facility, according to a market source. Deutsche Bank Securities Inc. and JP Morgan Securities Inc. are the lead banks on the deal.

The facility consists of a $175 million asset-based revolver with price talk of Libor plus 250 basis points, a $300 million second lien term loan and a $125 million first lien term loan.

There is no price talk on the term loans at this time since the syndicate is hoping to get a read on investor sentiment prior to pricing due to this first lien, second lien structure, the source explained.

Proceeds will not only be used to refinance the company's revolver, private placement notes and financial instruments, but the proposed credit facility would also be used to repay a $150 million sale and leaseback obligation entered into in 1999, a $28 million accounts receivable securitization program and an $87 million prepayment of a raw material contract.

"We are pursuing this new financing because it would simplify our capital structure and provide Wellman with significant financial flexibility, by extending substantially all of our maturities through at least 2009 and, we believe, provide the company with the liquidity to finance our business plan for the next five years, including the conversion of our idle Pearl River polymer assets to 300 million pounds of low cost PET resin production by early 2006," said Keith R. Phillips, chief financial officer, in a company news release.

Wellman is a Shrewsbury, N.J., manufacturer and marketer of polyethylene terephthalate (PET) packaging resins and high-quality polyester products.

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