Crescent, Vornado Eye $200M Financing for AmeriCold

The partners will, in turn, reimburse themselves for the cash layout to AmeriCold Logistics LLC prior to and after the repositioning, which has been steered by Alec Covington hired in mid-2001 as president and CEO. The Fort Worth-based Crescent owns 40% of the operation and Vornado, headquartered in Paramus, NJ, holds the balance. Total net proceeds will be distributed on the same split. The Atlanta-based AmeriCold's real estate assets also are owned in a 40-60 split, but held by Crescent Operating Inc. and Vornado Operating Co.

Keira Moody, Crescent's vice president of investor relations, tells GlobeSt.com that "this would afford us the opportunity to invest according to our primary business strategy of expanding our office portfolio through strategic joint ventures." Crescent intends to retain its ownership stake in the logistics operation, she stresses.

Crescent's John Goff, Jerry Crenshaw and Moody were on hand in New York City yesterday when Vornado made the announcement at an investors' conference call in which execs talked about other big-ticket financings and a drive to buy in its core markets. Vornado is poised to bring $200 million of unsecured bonds to market with a seven- to 10-year maturity plus retain an underwriter to line up another $500 million to repay some capital to the Newkirk Master Ltd. LP and satisfy a $200-million mortgage.

The Crescent-Vornado team hired an underwriter to explore financing with a likely five-year term, maybe a bit longer, with a blended rate of 6%, plus or minus, Michael Fascitelli, Vornado's president, said during the conference call. Lease restructurings, now under negotiations, won't affect the transaction, he said.

Covington said AmeriCold's finances are on the road to recovery and the task at hand now is to expand three of the four core areas: production-based facilities, distribution and transportation logistics. The immediate strategy has public cold storage riding on the coattails of the more profitable business arms of the nation's largest temperature-controlled logistics operation. AmeriCold has 100 facilities and 500 million sf under management or 26% of the non-private frozen food capacity in the US.

Covington says the facts today are production-based facilities, most oft located in rural communities, generate 29% of the EBITDAR and distribution contributes 38% of the EBITDAR. AmeriCold has been crafting deals to get away from ownership of rural properties..."to protect our company in the event of a plant closing," he said. AmeriCold also does not own any trucks or employ any drivers for the transportation services, another focus of the expansion plan.

Public storage, Covington said, brings in less than 25% of the generated revenue. "We will continue to decrease our dependency on this segment for the cash flow we generate," he explained. "The key to improving results is to be the very best in the three areas."

Covington said AmeriCold "has stabilized and is showing encouraging signs of improvement...and we have a very clear sense of where we need to go...We have made progress, but we still have further work to do and we are more optimistic than ever."

For the first time, AmeriCold made a Top 10 list of logistics providers in the US, earning a sixth place ranking due in part to a 3,500-customer list, many Fortune 500 companies. And for the first time in awhile, the operation gained on the revenue line: $6.3 million or 6.7% higher than last year. Covington declared the gain "sustainable improvements" and not "one-time gains." AmeriCold historically had improved numbers in the third quarter and 2003 won't be any different, he vowed.