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Greenhill ups amount of stock buyback in recapitalization plan


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Greenhill ups amount of stock buyback in recapitalization plan

Greenhill & Co. Inc. has announced revised terms for a leveraged recapitalization increasing the size of a term loan and planned share repurchases.

The previously announced term loan B financing has been upsized to $350 million from $300 million and has been allocated to lenders. The 5-year financing that carries a borrowing rate of LIBOR + 375 basis points is expected to close and be funded in the week of Oct. 9. The facility will also include a $20 million revolving credit facility.

Net proceeds from the financing will be used to repay all of Greenhill's existing bank debt and help fund the repurchase of up to $285 million of shares. The size of the tender offer that will begin the implementation of the repurchase plan will be expanded to 12 million shares, up from the previous 9 million, at a purchase price of $17.25, also increased from the earlier price of $17.00.

The amended tender offer price represents a 20% premium to the closing market price immediately prior to announcement of the recapitalization and repurchase plan. The tender offer's expiration date of Oct. 25 remains unchanged.

The previously announced $10 million purchases of newly issued common stock by each of the firm's chairman and its CEO will be completed shortly after the closing of the tender offer, at the tender offer price.

Following completion of the tender offer and the 10 business day-period provided by the tender offer rules, the remainder of the $285 million share repurchase program is expected to be implemented through open market purchases or other means. Greenhill expects to refrain from share repurchases for a period of time after the share repurchase program is completed in order to focus cash flow on debt repayment.

Greenhill expects to substantially reduce or eliminate its quarterly dividend in order to improve tax efficiency and accelerate the future repayment of debt.