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Commercial banks

CORT Business Services Secures $225 Million Credit Facility

Strategic Insights

— 1 min read

CORT Business Services Corp. has secured a $225 million credit facility through a joint effort by BankAmerica, BT Alex. Brown, and Credit Suisse First Boston. The facility will be used to fund CORT's leveraged buyout from Bruckmann, Rosser, Sherrill & Company Inc. The deal is structured as a six-year revolver with a starting total debt-to-Ebitda ratio of 3.7 times and a starting senior debt-to-Ebitda ratio of 1.2 times.

Key Takeaways:

  • The credit facility is a six-year revolver priced initially at Libor plus 200 basis points, with adjustment available after six months.
  • The facility has a commitment fee of 50 basis points on the available amount.
  • Proceeds from the deal will be used to fund CORT's leveraged buyout from Bruckmann, Rosser, Sherrill & Company Inc.
  • Bruckmann Rosser and Citicorp have committed to provide up to $105 million of equity financing.
  • The group is offering $24 per share in cash and $2.50 per share in liquidation value of a new series or preferred stock for a transaction, including assumed debt, of $453 million.
  • Corporate customers account for 80% of rental sales to CORT.
  • CORT is the number-one provider of rental furniture for office, residential, and trade show customers.
  • Faifax, Va.-based CORT is a leading company in the furniture rental market.

Statistics:

  • The credit facility is valued at $225 million.
  • The starting total debt-to-Ebitda ratio is 3.7 times.
  • The starting senior debt-to-Ebitda ratio is 1.2 times.
  • The group is offering $24 per share in cash and $2.50 per share in liquidation value.
  • The total transaction value, including assumed debt, is $453 million.
  • Corporate customers account for 80% of CORT's rental sales.

Sources:

  • BankAmerica
  • BT Alex. Brown
  • Credit Suisse First Boston
  • BLR (previously reported)

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