Dean Foods rises; Willbros may do away with B loan; Infogroup sets pricing; Citgo floats talk

By Sara Rosenberg

New York, May 10 - Dean Foods Co.'s term loan B headed higher in trading as the company announced, along with earnings, that it is evaluating options for refinancing its debt, and the secondary market in general was better.

Over in the primary market, Willbros Group Inc. is looking at options to replace its in-market term loan B to fund the acquisition of InfrastruX Group Inc., and Infogroup Inc. firmed pricing on its term loan at the wide end of talk while increasing the original issue discount.

Additionally, Citgo Petroleum Corp. is circulating price talk on its proposed term loan in preparation for its upcoming launch, and Hillman Group Inc.'s credit facility has received strong interest from lenders, resulting in the books being more than filled out ahead of the nearing commitment deadline.

Dean Foods gains ground

Dean Foods' term loan B strengthened during Monday's trading session as the company revealed that it is looking at when to refinance its existing debt and at the various options available to complete such a transaction.

The term loan B was quoted by traders at 96¾ bid, 97¾ offered, up from around 96 bid, 97 offered, and the term loan A was quoted by one trader at 97¾ bid, 98¾ offered, also up about three quarters of a point on the day.

In connection with announcing first-quarter numbers, Dean Foods said that it is closely monitoring "the capital markets and may choose to address our refinancing needs sooner than we'd previously anticipated."

"Both the bank and high-yield financing markets have significantly improved over the past year, affording us multiple debt financing options to consider," said Jack Callahan, chief financial officer, in a news release.

Dean Foods debt tops $4 billion

Dean Foods' total debt at March 31, net of $48 million in cash on hand, was $4.163 billion, compared to $4.311 billion in the first quarter of 2009.

The company's funded debt to EBITDA ratio was 4.43 times as of the end of the first quarter, compared to a current covenant of 5.0 times and an end-of-year step-down in the covenant to 4.5 times.

"Given the continuing challenges in the business, we are not on pace against our goals of deleveraging the balance sheet to approximately 3.5 times funded debt to EBITDA by mid-2011," Callahan added in the release.

Dean Foods income declines

Dean Foods also said on Monday that for the first quarter, net income was $43 million, or $0.24 per diluted share, compared to net income of $76 million, or $0.48 per diluted share, in the previous year.

Consolidated net sales for the quarter totaled $2.97 billion, compared to $2.7 billion of consolidated net sales in the first quarter of 2009.

And, free cash flow provided by operations totaled $28 million for the three months ended March 31, compared to $146 million in the prior year.

Dean Foods provides limited guidance

Furthermore, Dean Foods said that it was providing guidance for the second quarter only, as visibility for the full-year outlook is not as clear.

For the upcoming quarter, the company expects adjusted diluted earnings per share to be in the $0.23 to $0.28 range.

"While we hope to see a more positive environment in the back half of the year, the uncertainty surrounding whether or when that will occur leads us to suspend our full year guidance for the present time," explained Gregg Engles, chairman and chief executive officer, in the company's news release.

Dean Foods is a Dallas-based food and beverage company

Willbros considering pulling B loan

Moving to new deal happenings, Willbros Group is thinking about passing on its proposed $300 million four-year term loan B and is looking at other financing alternatives, according to a market source.

The source said that he believes the company is looking at other public debt financing.

"Nothing has been decided. Realistically the term loan B has been slowed down to accommodate the new closing schedule [likely end of month] and for the company to make a decision on the optimal execution," the source added.

In a 10-Q filed with the Securities and Exchange Commission on Monday, the company said that it is "in the final stages of evaluating alternatives for financing the InfrastruX transaction in addition to, and possibly in lieu of, the bank term loan facility described in our earlier public filings. We are reviewing our options within the various debt markets and exploring all alternatives to optimize the economics of the transaction."

Willbros facility details

Willbros' term loan B is being talked at Libor plus 450 basis points to 500 bps with a 2% Libor floor and an original issue discount of 98 to 981/2. Pricing can step down by 50 bps after an interim period, so if it firms at Libor plus 450 bps, the step-down will be to Libor plus 400 bps, and if it firms at Libor plus 500 bps, the step-down will be to Libor plus 450 bps.

The company's $475 million senior credit facility (B2/BB-) also includes a $175 million three-year revolver talked at Libor plus 425 bps, with a step-down to Libor plus 375 bps after an interim period. Upfront fees on the revolver range from 112.5 bps to 137.5 bps, based on commitment size.

The obtainment of the revolver is not in question, the source added. It is already fully subscribed by seven lenders.

Crédit Agricole Corporate and Investment Bank (formerly Calyon) and UBS Securities are the joint bookrunners on Willbros' term loan B, and Crédit Agricole is the bookrunner on the revolver. Scotia Bank and Natixis joined on to the credit facility at the agent tier.

Wilbros buying InfrastruX

Proceeds from Willbros' credit facility or any alternative debt will be used to help fund the acquisition of InfrastruX Group for cash of $360 million and 7.9 million of new Willbros shares.

Pro forma for the transaction, Willbros' estimated total debt to EBITDA in 2010 is 2.6 times and estimated net debt to EBITDA is 1.7 times.

Willbros is a Houston-based independent contractor for the oil, gas, power, refining and petrochemical industries. InfrastruX is a Seattle, Wash.-based provider of electric power and natural gas transmission and distribution infrastructure services.

Infogroup firms pricing

Infogroup set pricing on its $315 million term loan at Libor plus 450 bps, the high end of the initial Libor plus 425 bps to 450 bps talk, according to a market source.

Also, the Libor floor firmed at 1.75%, compared to initial talk of 1.5% to 1.75%, the source said.

And, the original issue discount is now 98, whereas at launch it was talked at in the 98½ area, the source continued.

The term loan includes 101 soft call protection for one year.

As was previously reported, the commitment deadline on the term loan had been moved up to the end of the day on Friday from Tuesday.

The company's $365 million senior secured credit facility (B1/BB-) also includes a $50 million revolver.

Infogroup led by BofA

Bank of America is the lead bank on Infogroup's credit facility, which will be used to help fund the buyout of the company by CCMP Capital Advisors LLC for $8.00 in cash per share. The transaction has a total value of about $635 million, including the refinancing of its outstanding debt.

Equity for the transaction will be $343.7 million.

Closing is anticipated in early summer, subject to the approval of Infogroup shareholders, regulatory approvals and customary closing conditions.

Infogroup is an Omaha, Neb.-based provider of data-driven and interactive resources for targeted sales, marketing and research services.

Citgo talk surfaces

Citgo is whispering price talk of Libor plus 350 bps with a 1.75% Libor floor and an original issue discount of 98½ on its $300 million five-year term loan that is scheduled to launch with a bank meeting on Tuesday, according to market sources.

BNP Paribas, RBS and UBS are the lead banks on the deal, with BNP the left lead.

In addition, the company is getting a new $700 million revolver, which is already fully circled, sources said.

Proceeds from the credit facility, along with $1.5 billion of bonds, will be used to refinance existing debt. As a condition of the deal, the company must raise at least $1 billion between the term loan and the new bonds.

Citgo is a Houston-based refiner and marketer of transportation fuels, lubricants, petrochemicals and other industrial products.

Hillman going well

Hillman Group's $320 million senior secured credit facility (Ba3/B+) is already "very well oversubscribed" ahead of Tuesday's commitment deadline, according to a market source.

The facility consists of a $30 million five-year revolver and a $290 million six-year term loan B, with both tranches talked at Libor plus 375 bps with a 1.75% Libor floor.

The term loan is being offered at an original issue discount of 99 and the revolver is being offered at 98.

Also, the revolver has a 75 bps undrawn fee.

Barclays Capital, Morgan Stanley and GE Capital are the bookrunners on the deal.

Hillman being acquired

Proceeds from Hillman's credit facility, along with $150 million of senior unsecured notes and equity, will be used to fund the buyout of the company by Oak Hill Capital Partners from Code Hennessy & Simmons, Ontario Teachers' Pension Plan and certain members of company management for about $815 million.

The company will refinance its subordinated debt issuance and its existing amended senior credit facility in connection with the buyout.

Pro forma leverage is 3.2 times net senior secured, 5.0 times net opco and 6.2 times net total.

Completion of the buyout is expected in the second quarter, subject to regulatory approvals and customary conditions.

Hillman is a Cincinnati-based distributor of fasteners, key duplication systems, engraved tags and related hardware items.

ASG Consolidated closes

In other news, ASG Consolidated LLC (American Seafoods Group) completed its debt refinancing, according to a news release.

To help fund the refinancing, the company got a new $475 million credit facility (Ba3/BB-), consisting of an $85 million revolver at Libor plus 400 bps with a 1.5% Libor floor and a $390 million term loan at Libor plus 400 bps with a 1.5% Libor floor, that was sold at an original issue discount of 99.

During syndication, pricing on the term loan and the revolver was reduced from initial talk of Libor plus 450 bps, and the original issue discount on the term loan was lowered from 981/2.

Bank of America, Wells Fargo and DNB acted as the lead banks on the deal.

ASG Consolidated is a Seattle-based harvester, processor, preparer and supplier of seafood.

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