NEW YORK - Toledo's Owens-Illinois, Inc., is meeting resistance from some lenders as the biggest U.S. maker of glass containers tries to renew a $4.5 billion loan to help pay asbestos claims, according to bankers familiar with the matter.
The pact being arranged by Deutsche Bank AG requires all 82 lenders to agree to extend the credit line for three years, the bankers said. The current credit line expires in December.
Deutsche Bank, the arranger of the new financing, has persuaded 83 percent of O-I's lenders to extend the loan, the bankers said, adding that these commitments add up to $4.1 billion. Five Italian banks, which own $123 million of loans, are resisting.
The amount of its credit line renewal not yet locked up is roughly equivalent to the $490 million in cash O-I said last week it would receive from the sale of its Harbor Capital Advisors mutual fund family. The Fortune 500 company said it planned to use the proceeds from the deal, expected to close in June, to reduce its debt, which was $5.9 billion Dec. 31.
John Hoff, a spokesman for O-I, didn't return calls seeking comment.
Without the new agreement, the company may follow 26 other companies targeted by asbestos suits into bankruptcy, analysts said.
“If Owens can't renew its loans it will have to file” for bankruptcy protection, said Glenn Reynolds, a fixed-income analyst with CreditSights.com, an independent research firm. The company's shares, down 48 percent the past 12 months, gained 53 percent this year amid optimism over a credit-line extension. Its bonds due in 2018 trade at about 67 cents on the dollar.