Tower Automotive $565 million credit facility to launch Thursday

By Sara Rosenberg

New York, May 4 - Tower Automotive Inc. is scheduled to hold a bank meeting for its proposed $565 million credit facility on Thursday, according to a market source. Morgan Stanley and JPMorgan are the lead banks on the deal, with Morgan Stanley listed on the left.

The facility consists of a $50 million five-year revolver with an interest rate of Libor plus 425 basis points, a $375 million five-year term loan B with an interest rate of Libor plus 425 basis points and a $140 million 51/2-year second lien synthetic letter-of-credit facility with an interest rate of Libor plus 750 basis points, the source said.

Despite the fact that the deal hasn't officially launched yet, "the second lien is significantly oversubscribed and the first lien is more than once covered," the source said.

"There's significant support in the market for the transaction. Previously the bank group was commercial lenders. Now they're reaching out to institutional lenders," the source added.

Leverage through the first lien is 1.8x, and leverage through the first and second lien is 2.3x.

As was previously reported, proceeds, combined with proceeds from a proposed $110 million principal amount of convertible senior debentures offering, will be used to refinance the existing credit facility eliminating near-term amortization pressure and refinance the 5% convertible subordinated notes due Aug. 1.

Tower Automotive is a Novi, Mich., designer and producer of structural components and assemblies used by automotive original equipment manufacturers.

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