The Shrewsbury, N.J.-based maker of packaging resins and Fortrel brand polyester fibers on Friday said it has completed the sale of $126 million of perpetual convertible preferred stock and warrants to Warburg Pincus, a private equity firm. Moreover, Wellman said it has entered into a new three-year, $275 million revolving credit facility.
As a result of the deal, Warburg will own approximately 26 percent of Wellman on a converted basis. Additionally, Warburg partner David Barr has joined Wellman’s board, increasing the number of directors to 10.
Warburg first announced plans for the investment in February, as reported, at which time Warburg vice president Oliver Goldstein was named to Wellman’s board, increasing its size to nine. The revolver is $100 million more than originally anticipated, Wellman said, due to positive reaction to Wellman’s new financing in the banking community. J.P. Morgan was syndication agent and Fleet Bank’s administrative agent for the facility.
Wellman said proceeds from the transaction will be used primarily to pay down existing debt. As of March 31, Wellman’s long-term debt stood at $166.5 million.
“The strong show of support for this transaction by Wellman's shareholders reaffirms our view that this investment substantially improves our financial flexibility and allows us to build upon our strong competitive positions in the [packaging] resins and polyester fiber businesses,” said Wellman chief executive officer Tom Duff in a statement.
Wellman's shareholders approved the sale of the preferred stock in a special meeting of shareholders held Thursday, the company said.
Wellman’s shares closed up 7 cents, or 0.6 percent, at $10.98 in New York Stock Exchange trading Friday.
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