In yet another example of the proliferation of structured product in the market of late, Tyco International Ltd. recently circled a $16.1 million credit tenant lease transaction agented by McDonald & Co. Securities.
The company, usually a public issuer, found a warm reception in the private market.
"Regardless of the issuer, it's tough to do this type of transaction in the public market," said one source familiar with the offer, referring to the size and structure of the notes.
Upsizing slightly, the deal consisted of notes with a 21-year final maturity and 16-year average life. It priced between 200 basis points and 210 basis points over Treasurys. According to sources it priced through Tyco short-term public paper.
Hot on the heels of its latest offering for L.L. Bean, Tyco is one of the latest deals to hit the market from McDonald & Co. in the past weeks.
Tyco has business in the telecommunication and electronics industries as well as healthcare and specialty products. It reported sales of $22 billion and net income of $985 million in 1999.
Due to the current lull in the market, private market players have been looking towards creatively providing new business opportunities.
"It's pretty slow and we've become much more opportunistic looking towards recapitilizations, more mezzanine and bank loan stuff," said one agent.
McDonald and Co. was also involved as agent in another transaction. Fully-integrated beef processor, Future Beef Operations LLC last week sold a $160 million project finance deal, underwritten by Scotia Bank.
The deal consisted of a $30 million revolver and a $130 million six-year term loan priced at Libor plus 350.
It includes a 10-year off-take contract with Safeway Inc. Future Beef Operations is purchasing a small facility and expanding it to meet Safeway's requirements.
At press time the transaction was set to move into bank syndication. - Akil Salim Roper