Unisource/xpedx plans $1.4 billion asset-based financing for merger

By Sara Rosenberg

New York, Jan. 28 - The new company that will be formed through the merger of Unisource Worldwide Inc. and xpedx has received a commitment for $1.4 billion of asset-backed financing from three banks, according to a news release.

The financing will be used to fund a roughly $400 million cash payment to International Paper, parent company of xpedx, and refinance Unisource's existing debt.

Debt to EBITDA at the combined company is targeted in the range of 4 to 5 times.

Also, the new company will have projected annual revenue in the range of $9 billion to $10 billion.

The transaction will be accomplished through a Reverse Morris Trust structure. International Paper will contribute the assets of xpedx in exchange for stock in the company, the cash payment and potential for an additional cash payment pursuant to an earn-out in the sixth year after closing.

Following the spinoff of the new company to International Paper shareholders, Unisource will merge with xpedx.

Closing is expected mid-year, subject to certain conditions.

The new company will be based in Atlanta.

Norcross, Ga.-based Unisource and Loveland, Ohio-based xpedx are distribution services companies.

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