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Reynolds American to get $2.2 billion credit facility, $1.8 billion notes for Conwood buy
By Sara Rosenberg
New York, April 25 - Reynolds American Inc. plans on getting a new $2.2 billion credit facility and issuing $1.8 billion in senior secured notes to help fund its acquisition of Conwood, according to an 8-K filed with the Securities and Exchange Commission Tuesday.
Lehman Brothers and JPMorgan are joint lead arrangers and joint bookrunners on the credit facility, with Lehman on the left. Lehman will also act as syndication agent and JPMorgan will act as administrative agent.
The proposed bond offering will be led by Lehman and JPMorgan as well.
The credit facility consists of an up to $1.7 billion six-year term loan B talked at Libor plus 225 basis points and a $500 million five-year revolver talked at Libor plus 225 basis points, the filing said.
It is expected that a bank meeting date will be scheduled "shortly" for the launch of the credit facility, a market source told Prospect News on Tuesday.
As a back up for the bonds, the company has also received a commitment for an up to $1.8 billion 364-day secured term loan.
Under the acquisition agreement, Reynolds has agreed to pay $3.5 billion for the holding company that owns Memphis, Tenn.-based Conwood, the nation's second-largest manufacturer of smokeless tobacco products.
Proceeds from the term loan, notes and $300 million of available cash will cover the acquisition costs.
Revolver borrowings will be available for working capital needs.
The transaction, which is expected to close by the end of the second quarter, will require regulatory approval by the Federal Trade Commission.
Reynolds American is a Winston-Salem, N.C.-based manufacturer and marketer of cigarettes and other tobacco products.
The headquarters of the newly combined companies will be located in Memphis, Tenn., and full integration is expected to be completed by the end of 2007.
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