Giant Eagle breaks; F&W rollercoasters; Novelis dips on restatement; Clarke, Recycled Paper talk emerges

By Sara Rosenberg

New York, Nov. 7 - In the bank loan secondary market, Giant Eagle Inc. allocated its credit facility first thing Monday morning, with the term loan B freeing up for trading in the mid-to-upper pars. Also, F&W Publications Inc.'s first- and second-lien bank debt had a tumultuous day as levels dropped significantly in the morning before rebounding somewhat in the afternoon. And, Novelis Inc. weakened as news came out that numbers from the past two quarters would have to be restated.

Meanwhile, in primary doings, Clarke American and Recycled Paper Greetings Inc. announced price talk on their credit facilities as both deals were launched with bank meetings on Monday.

Giant Eagle's credit facility broke for trading on Monday morning, with the $200 million seven-year term loan B opening up at par ¼ bid, par ¾ offered and then moving higher to the par ½ bid, 101 offered context where it closed the session, according to various market sources.

The term loan B is priced with an interest rate of Libor plus 150 basis points and was originally issued to investors at par.

Giant Eagle's $550 million credit facility also contains a $350 million six-year revolver with an interest rate of Libor plus 150 basis points.

Proceeds from the credit facility will be used to refinance existing debt.

Citigroup is the lead bank on the Pittsburgh-based grocery chain's deal.

F&W bounces around

F&W Publications' first- and-second-lien bank debt opened considerably weaker on Monday morning but managed to regain some ground prior to the close - although not enough to recoup all the losses amassed since Friday's close.

The first-lien bank debt opened around 89 bid, 90 offered in the morning and then rebounded to the 91 bid, 95 offered area by the end of the session, according to a trader. However, despite the slight rejuvenation, levels still ended lower when compared to Friday's close at 95½ bid, 96½ offered, the trader said.

As for the second-lien bank debt, the paper closed the day quoted at 77 bid, 80 offered, but levels had dropped to as low as 55 bid, 65 offered in the morning hours, the trader said. By comparison, at the close Friday, the second-lien bank debt was being quoted in the high 80s, the trader added.

"Not sure why it dropped and then came back and stabilized. There must be some more rumors," the trader remarked.

At the end of October, F&W Publications' bank debt was hit pretty hard by rumors that the company may have some problem with the way inventory has been accounted for and could potentially be facing covenant non-compliance.

Immediately following the outburst of rumors about two weeks ago, the first-lien term loan had dropped to 94 bid, 96½ offered from 98¼ bid, par offered and the second-lien term loan had dropped to around 85 bid, 87 offered from the high-90s.

F&W is a Cincinnati-based publisher of special interest magazines and books.

Novelis falls on numbers change

Novelis' bank debt dropped by about half a point on Monday as the company revealed that it will have to restate 2005 first- and second-quarter numbers, according to a trader.

Following the news, the bank debt fell to par ½ bid, 101 offered, where it closed the session, the trader said.

"Trading [in the stock] was halted this morning right before the open. Then they announced that they would be restating the past two quarters. But, it looks like minimal changes," the trader added.

Novelis is restating first- and second-quarter numbers relating to reserves and contingencies in South America.

On a preliminary basis, the first-quarter earnings are expected to be restated principally to reflect additional income taxes of about $4 million in Canada.

Second-quarter restated earnings are expected principally to reflect the reversal of an approximately $5 million pre-tax contingency related to Brazilian litigation matters.

In addition, because of the need to restate previous financials, the company has decided to delay the release of third-quarter 2005 results.

Novelis is an Atlanta-based aluminum rolled products and aluminum can recycling company.

Clarke sets opening spreads

Clarke American revealed opening price talk of Libor plus 300 basis points on its two-tranche $480 million credit facility as syndication on the deal officially kicked off Monday, according to a market source.

The facility is comprised of a $40 million revolver and a $440 million term loan B, which is being offered to investors at par.

Bear Stearns and JPMorgan are the lead banks on the deal, with Bear Stearns the left lead.

Proceeds from the facility, along with cash on hand, will be used to help fund M&F Worldwide Corp.'s acquisition of Novar USA Inc., the parent company of the businesses operated by Clarke American and related companies, from Honeywell International Inc. for $800 million in cash.

The acquisition, which is subject to certain customary conditions, is targeted to close prior to the end of the year.

Following the acquisition, Clarke will operate as a separate stand-alone business.

Clarke American is a San Antonio provider of check-related products and extensive servicing to financial institution customers.

Recycled Paper price talk

Recycled Paper Greetings came out with price talk on its $217 million credit facility as the deal launched via a well attended Chicago bank meeting that attracted more than 40 participants on the phone and about 15 in person, according to a market source.

The $20 million five-year revolver (B) and the $110 million six-year term loan B (B) were both launched with opening price talk of Libor plus 300 basis points, the source said. The revolver has a 50 basis point commitment fee.

And, the $87 million seven-year second-lien term loan (CCC+) was launched with opening price talk of Libor plus 700 basis points, the source continued.

The second-lien loan contains call protection of 102 in year one and 101 in year two.

Both the first-and the second-lien term loans are being offered to investors at par. Revolver commitments get an upfront fee of 100 basis points.

Credit Suisse First Boston is the lead arranger on the deal that will be used for LBO financing.

Recycled Paper Greetings is a Chicago-based greeting card company.

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