JPMorgan Leads $120 Million Second Lien for CIC Partners’ Portfolio Company, CTI Foods
JPMorgan and Union Bank of California are also providing a $45 million asset-based revolver; pricing is LIBOR plus 2¼%. The second lien is priced at LIBOR plus 6% with call protection of 102,101.
“We are pursuing capital to finish the construction of a facility in Saginaw, Texas, and for another facility in the pipeline,” Johnson said. “While we are refinancing, we decided to take a dividend as well.” The company just completed a plant in Arlington, Texas. CTI is also in serious discussion for another plant in the Midwest. With the current and planned construction, Johnson said CTI, “just wants to continue to grow the business. We don’t have a particular time horizon; we’re long-term investors. We think we have a good management team.”
Union Bank led the company’s current financing, which includes a revolver and term loans “A” and “B” with JPMorgan in the syndicate. Johnson said both banks were chosen based on their longstanding relationships with CIC.
Based in Wilder, Idaho, CTI Foods was established in July 2003 through the acquisition and merger of SSI Food Services and S&S Foods from J.R. Simplot. It produces food products for restaurant chains including Taco Bell and Wendy’s. In addition to CIC, CEO Kirk Smith and food-service businessman, Billy Rosenthal have a stake. EBITDA for the twelve months ending May 26 was $28.4 million. It generates revenues of about $300 million.
Moody’s Investors Service has assigned a B2 rating to the loan. The company is a small niche manufacturer with its sales and earnings highly concentrated within a few small products and customers largely in the Western and Southwestern U.S. CTI’s leverage is high and its coverage modest and given expansion plans, Moody’s does not expect a major improvement in the ratings.
Reprinted with the permission of Loan Market Week (www.loanmarketweek.com)