Crown Cork & Seal Co. Inc. may be on its way to fiscal recovery.
The company revealed a new financing package March 12 and announced a plan to raise $1.2 billion by selling some assets. Officials did not say whether they plan to sell any plastics-related holdings.
After trying to stay above water in the face of rising debt, asbestos lawsuits and plunging stock prices, Philadelphia-based Crown Cork announced that it received a $400 million loan, plus an extension of the company's $2.5 billion revolving credit facility.
The refinancing, arranged by JP Morgan Securities Inc., extends Crown Cork's revolving credit from February 2002 to Dec. 8, 2003. The deal also includes less-restrictive financial and operating covenants, according to a company news release.
In a March 12 conference call with analysts, Timothy Donahue, Crown Cork's senior vice president of finance, said that the refinancing will increase the company's net interest expenses by $127 million from 2000-01 to a total of $500 million.
To offset some of those expenses, Crown Cork announced planned asset sales that the company hopes will yield $1.2 billion in proceeds.
While officials gave no details about the assets up for sale, they added that the refinancing gives the company leverage to take its time and seek out deals that will yield funds to pay off its debt.
"We already have some proposals on some assets we have for sale," said Executive Vice President Alan Rutherford. "One of the reasons we wanted to refinance was to give ourselves the possibility to say no — that's the whole idea of refinancing and extending the tenure of our revolver.
"We seem to be making progress."
The company also announced significant restructuring of its food and beverage can business, including some plant closures in Canada and the upper Midwest, and the introduction of the new two-piece food-can design it hopes will replace the three-piece design.
Donahue said the company continues to develop new products across its entire product line, but he offered no specific plans for Crown Cork's PET beverage business.
Crown Cork reported 2000 sales at $7.3 billion, down from the previous year's $7.9 billion.
