Magazine article American Banker

Demand for Junk-Bond Offering Cuts Bank Package for WestPoint Stevens

Magazine article American Banker

Demand for Junk-Bond Offering Cuts Bank Package for WestPoint Stevens

Article excerpt

Strong investor demand for a junk-bond offering by the textile concern WestPoint Stevens Inc. will result in a sharp cutback in the size of a recently underwritten bank deal for the company.

The $750 million package of bank loans, led by the banking units of Bankers Trust New York Corp. and NationsBank Corp., will be reduced by $400 million, said a spokesman for the Georgia-based company, which is to succeed West Point-Pepperell.

The junk-bond market has siphoned business from the loan market all year, with issuers taking advantage of investors' insatiable appetite for high-yielding securities.

$950 Million of Senior Notes

On Wednesday, WestPoint sold $950 million of senior notes and debentures, far more than the $600 million initially contemplated.

An investment banker involved in the offering said it was the largest deal ever done in the junk-bond market by a new issuer.

The two-part offering consisted of $400 million of 8 3/4% senior notes, and $550 million of 9 3/8% senior subordinated debentures, both priced at par.

Donaldson, Lufkin & Jenrette Securities Corp. was lead manager of the offering.

Proceeds to Refinance Debt

Among the co-managers were the securities underwriting subsidiaries of Bankers Trust and J.P. Morgan & Co.

Proceeds from the new bank loans and securities offering will be used mainly to refinance more than $1 billion of existing bank debt, much of it stemming from the failed 1989 buyout of West Point-Pepperell by the Chicago industrialist William Farley. …

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