Kansas City, Mo., March 15 -- American Italian Pasta Company (NYSE: PLB) announced today that it has entered into a new $295 million, five-year senior credit facility. The new facility replaces a $290 million senior credit facility that would have expired on October 2, 2006. As a result of the financing, the Company is no longer in default of its prior credit agreement and is in compliance with all covenant requirements.
"The completion of our refinancing represents a significant milestone for the Company," said Jim Fogarty, Chief Executive Officer. "The new long-term financing strengthens our capital structure and provides us a stable platform from which to execute our strategies and business initiatives."
The new credit facility is comprised of a $265 million term loan and a $30 million revolving credit facility. The facility is secured by substantially all of the Company's assets and provides for interest at either LIBOR rate plus 600 basis points or at an alternate base rate calculated as prime rate plus 500 basis points. The facility has a five-year term expiring in March 2011 and does not require any scheduled principal payments. Principal pre-payments are required if certain events occur in the future, including the sale of certain assets, issuance of equity and the generation of "excess cash flow" (as defined in the credit agreement). The agreement also contains customary financial covenants and certain other restrictions.
Banc of America Securities LLC acted as sole arranger for the new credit facility and has syndicated a portion of the facility to a group of institutional lenders. Bank of America is a lender and also serves as the administrative agent under the facility.
In connection with the financing, the Company has reduced its outstanding debt from $281 million to $267 million (representing the term loan balance under the new credit facility of $265 million and the existing Italian subsidiary debt of $2 million). Subsequent to the financing, outstanding debt net of cash on hand is $262 million.
As of March 15, 2006, after giving effect to the new credit facility, the Company has liquidity resources of $33 million, comprised of $28 million availability under the new revolving credit facility (reflecting approximately $2 million of letters of credit issued under the $30 million revolving credit facility) and cash on hand of approximately $5 million.
Fogarty concluded, "Our new financing represents a vote of confidence from our new lending group who see in AIPC what we see: a company with a solid operating base. As we continue to further strengthen our operating environment, this refinancing sends an important message to our employees, customers, suppliers and shareholders. The completion of this transaction allows us to focus on our most important job -- providing quality products and excellent service to our customers."
Founded in 1988 and based in Kansas City, Missouri, American Italian Pasta Company is the largest producer and marketer of dry pasta in North America. The Company has four plants that are located in Excelsior Springs, Missouri; Columbia, South Carolina; Tolleson, Arizona and Verolanuova, Italy. The Company has approximately 600 employees located in the United States and Italy.