Del Monte credit facility set to hit the market next week

By Sara Rosenberg

New York, Nov. 13 - A launch date for the long-awaited Del Monte Foods Co. credit facility has finally been set, with a bank meeting for managing agents scheduled for Monday and a bank meeting for retail investors scheduled for Nov. 21.

The facility consists of a $350 million six-year revolver with an interest rate of Libor plus 350 basis points, a $250 million six-year term loan A with an interest rate of Libor plus 350 basis points and a $470 million eight-year term loan B being talked at Libor plus 375 basis points to Libor plus 400 basis points.

In addition there will be $300 million of senior secured floating-rate notes, which, according to the fund manager will act like a term loan. Interest on the floating-rate notes is being talked at Libor plus 400 basis points to Libor plus 425 basis points.

Also, there will be a $300 million term loan A-1 with an interest rate of Libor plus 350 basis points. This term loan, which is not being syndicated to institutions, will act like a bridge loan and is expected to be repaid once the bond deal is sold, the fund manager explained.

"If they can't get the bonds done then [the term loan A-1] stays in place and is pari passu to our debt," the fund manager said. "I'd like to see it subordinated to our debt. It's better for senior lenders if there's less senior secured debt."

Bank of America, JPMorgan Chase, UBS Warburg and Morgan Stanley are the lead banks on the deal that will be used to help fund the merger with certain H.J. Heinz Co. businesses.

Del Monte is a San Francisco processed food company.

In follow-up primary news, Tucson Electric Power Co.'s $200 million term loan B was flexed up to Libor plus 400 basis points from Libor plus 350 basis points, according to a market source. "And, there's talk that it might be flexed up again," he added.

Furthermore, the B loan now has a term of five years instead of ten years.

The term loan B is part of a $400 million credit facility (Ba2/BB+) that is being led by Credit Suisse First Boston and TD Securities. The Tucson, Ariz. electric company's facility contains a $60 million revolver and a $140 million letter of credit facility in addition to the institutional tranche.

National Waterworks Inc.'s bank loan is said to contain an interesting feature - yield protection. This protection states that the existing debt has to be within 25 basis points of any new debt, market sources told Prospect News on Wednesday.

The reason behind this yield protection is the $50 million incremental facility that is built into the term sheet, according to a syndicate source. This way investors are protected from the syndicate pricing the add-on at interest rates that would make the existing paper trade lower in the secondary market, as was recently seen in the Terex Corp. fiasco.

The facility was recently reworked, changing the pricing on the $250 million seven-year term loan B to Libor plus 400 basis points from Libor plus 375 basis points. In addition, upfront fees are now 50 basis points.

The $75 million six-year revolver was left unchanged with an interest rate of Libor plus 300 basis points.

Goldman Sachs, JPMorgan and UBS Warburg are the lead banks on the deal, which will be used to help fund the acquisition of U.S. Filter Distribution Group Inc. by a company jointly owned by JPMorgan Partners and Thomas H. Lee Partners.

National Waterworks is a Palm Desert, Calif. provider of water and wastewater systems.

Hollinger International Inc. launched its new $300 million credit facility on Friday via Wachovia Securities as lead arranger and bookrunner. The loan consists of a $40 million revolver with an interest rate of Libor plus 325 basis points, a $40 million term loan A with an interest rate of Libor plus 325 basis points and a $220 million term loan B with an interest rate of Libor plus 350 basis points, according to a syndicate source.

The company's amended syndicated credit facility is part of a comprehensive financing initiative, with proceeds going towards refinancing debt.

In July, the Chicago publishing company attempted to obtain a $350 million senior secured credit facility. TD Securities and Barclays Capital were co-lead arrangers and Wachovia was the syndication agent. The loan consisted of a $50 million six-year revolver with an interest rate of Libor plus 275 basis points, a $50 million six-year term loan A with an interest rate of Libor plus 275 basis points and a $250 million seven-year term loan B with an interest rate of Libor plus 300 basis points.

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