Centerplate scraps plans for new buyout financing, opts instead to keep existing deal in place

By Sara Rosenberg

New York, Dec. 24 - Centerplate Inc. is no longer looking to get new bank debt to help fund its acquisition by Kohlberg & Co. since financing was hard to come by because of market conditions, so the solution was to amend and restate the company's existing credit facility.

Back in November, Centerplate disclosed that National City Bank, the lead on its originally proposed $175 million senior credit facility, was not going to fund the debt because the bank claimed that events occurred in the financial, banking and capital markets that could reasonably be expected to have an adverse impact on the successful syndication of the deal.

This facility was expected to consist of a $90 million term loan, a $60 million revolver and a $25 million letter-of-credit facility.

At the same time, however, the company also said that National City was willing to discuss alternative financing arrangements.

Following those discussions, National City informed Kohlberg that it would not provide alternative financing, which is why Kohlberg determined to pursue an amendment and restatement of Centerplate's existing deal, according to an 8-K filed with the Securities and Exchange Commission on Wednesday.

Centerplate extends maturity, ups pricing

The amendment and restatement of Centerplate's existing credit facility resulted in the maturity date being extended to Dec. 31, 2012 from 2010, and pricing on both the revolver and the term loan being increased to Libor plus 600 basis points.

Also, the senior leverage, total leverage and interest coverage ratios were changed and a new fixed-charge coverage ratio requirement was added.

Furthermore, the rate of excess cash flow that is subject to mandatory prepayment was increased and the term loan amortization schedule was modified.

The amendment and restatement is subject to closing of the buyout, the approval of the indenture supplement, the prepayment of $25 million of term loan debt and the paydown of at least $22.5 million of revolver borrowings.

General Electric Capital Corp. acted as the lead bank on the amendment and restatement that was completed on Dec. 23.

In return for their consents, lenders will be paid a 250 bps fee.

Failure to consummate the tender offer and the buyout by Feb. 28 will constitute an immediate event of default under the credit agreement.

Centerplate purchase price reduced

In addition to the change to the financing plans, there was also a revision to the buyout agreement as Kohlberg is now purchasing the company for a lower price.

The buyout of Centerplate is being done through a debt tender for up to 70% of its notes and a merger in which 100% of its common stock will be acquired.

Each unitholder who tenders the notes underlying their units will now receive $2.49 for each note tendered, as opposed to $3.99, subject to proration if more than 70% of the notes are tendered.

At the closing of the acquisition, each unitholder will also receive $0.01 per share for the common stock underlying the units for a total payment to income deposit securities holders of $2.50 per unit, as opposed to $4.00 per unit.

As before, other financing for the transaction will come from $125 million in equity from Kohlberg.

The acquisition is expected to be completed in the first quarter of 2009, subject to the approval of holders of a majority of the common stock, receipt of valid tenders of 50.1% of the notes, receipt of consent from holders of at least 50.1% of the notes to certain amendments to the indenture governing the notes, and other customary conditions.

Centerplate is a Stamford, Conn., provider of food and related services including concessions, catering and merchandise services.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.