Long awaited Prepackaged Ice deal to hit market after holiday weekend

By Sara Rosenberg

New York, July 3 - Coming up next week in the primary is the long awaited Packaged Ice Inc. deal that was previously expected to launch in June. The bank meeting for the proposed $170 million credit facility (B1/B+), which is scheduled for Tuesday, had been postponed since the Securities and Exchange Commission had to review the transaction. Previously council for the buyers had thought the deal did not need to be reviewed, although, according to one source that was a poor assumption since the SEC has reviewed seven or eight going private transactions recently.

As of mid-June, the syndicate already had a couple of tickets in hand and a lot of reverse inquiries.

The facility, which consists of a $35 million revolver and a $135 million term loan B, is being led by Credit Suisse First Boston, Bear Stearns and CIBC.

Price talk on the institutional and the pro rata tranche was Libor plus 400 basis points but, that proposed spread will be revisited by the syndicate due to strong market technicals, a source close to the deal previously told Prospect News.

Proceeds will be used to help fund the leveraged buyout of the Dallas packaged ice company by Trimaran Capital Partners and Bear Stearns Merchant Banking.

Also slated for next week is Oriental Trading Co. Inc.'s bank meeting on Wednesday for a $290 million credit facility, consisting of a $250 million six-year term loan B and a $40 million six-year revolver.

Credit Suisse First Boston and BNP Paribas are joint lead arrangers on the deal

The Omaha, Neb. direct marketer of novelties and toys is obtaining the facility as part of its recapitalization plan.

In the secondary, Aurora Foods Inc., which was the spotlight story on Wednesday, held in at previous levels with quotes in the area of 97 bid, 98 offered on Thursday in an extremely quiet pre-holiday market. The bank paper moved up a couple of points during the previous day's activity after the company released details on its restructuring plan.

On Tuesday the bank debt was quoted in the low 90s.

The company previously announced that it plans on filing a pre-negotiated bankruptcy reorganization case in order to facilitate a restructuring plan and that discussions with bank lenders and bondholders have begun regarding the terms of the comprehensive financial restructuring designed to reduce outstanding indebtedness, strengthen the balance sheet and improve liquidity.

"This is being viewed as positive news. People are expecting to get paid down at par and to get new notes," the trader explained.

Under the restructuring plan, existing bank lenders will be paid in full, receiving about $458 million in cash and approximately $197 million in new senior unsecured ten-year notes. Approximately $441 million of new bank financing is expected to be obtained in connection with the restructuring, including a $50 million revolver.

J.W. Childs Associates, L.P., a Boston-based private equity investment firm, will purchase a 65.6% equity stake in the restructured company for $200 million and the company's existing $400 million in subordinated debt will be converted into a combination of equity and cash. The investment will be used to reduce the Aurora's outstanding bank debt and subordinated debt as well as for working capital purposes.

Holders of the 12% senior unsecured notes due 2006 will receive new ten-year senior unsecured notes in the principal amount of approximately $29 million.

Holders of the outstanding 8.75% and 9.875% senior subordinated notes due 2008 and 2007, respectively, will receive a 50% recovery on their notes consisting of cash in the aggregate amount of approximately $110 million and approximately 29.5% of the post-restructuring common stock.

In connection with the restructuring, the company has opted to defer the $8.8 million interest payment due July 1, 2003 on its outstanding 8.75% senior subordinated notes. Under the indenture for the notes, there is a 30-day grace period for interest payments. The company's bank lenders have agreed not to exercise any remedies available to them during the grace period.

Aurora Foods is a St. Louis producer and marketer of leading food brands.

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