Kinetic Concepts bank meeting expected to be well attended as deal grabs market attention

By Sara Rosenberg

New York, July 14 - Kinetic Concepts Inc.'s $580 million senior secured credit facility has received a lot of interest ahead of Tuesday's launch and the expectation is that the bank meeting will be well attended, a source close to the deal told Prospect News on Monday.

The facility consists of a $100 million six-year revolver with an interest rate of Libor plus 250 basis points and a 50 basis points commitment fee, and a $480 million seven-year term loan B with an interest rate of Libor plus 275 basis points.

Morgan Stanley Senior Funding Inc. and Credit Suisse First Boston are the lead banks on the deal, which is anticipated to close in mid-August.

Proceeds from this new credit facility are anticipated to be used as part of a recapitalization of the company, which is expected to include repayment of the outstanding balance on the existing credit facility and the redemption of its 9.625% senior subordinated notes.

As of March 31, the San Antonio medical device company's senior credit facility consisted of a revolver due December 2003 with approximately $39 million available for borrowing, a term loan A due 2003 with approximately $17.6 million outstanding, a term loan B due 2004 with approximately $57 million outstanding, a term loan C due 2004 with approximately $57 million outstanding, a term loan D due 2006 with approximately $62.7 million outstanding and a term loan E due 2005 with approximately $20 million outstanding, according to a filing with the Securities and Exchange Commission.

The existing term loan A and the revolver carry an interest rate of Libor plus 175 basis points, the term loan B has an interest rate of Libor plus 250 basis points, the term loan C and term loan E have an interest rate of Libor plus 275 basis points and the term loan D has an interest rate of Libor plus 262.5 basis points.

Meanwhile, American Seafoods Group LLC's $300 million credit facility is essentially done as pro rata banks have committed to the revolver and insurance companies have committed to the term loan B. But, before the deal is officially closed there will be some internal discussion at the lead bank to decide whether the institutional bank loan market will be approached and given the opportunity to commit to the new facility as well, according to a source close to the deal.

The facility consists of an $80 million five-year revolver with an interest rate of Libor plus 300 basis points and a commitment fee of 50 basis points, and a $220 million seven-year term loan B that is divided between a fixed-rate and a floating rate tranche, with the floating rate bearing interest at Libor plus 300 basis points, the source said.

Insurance companies were initially approached about the credit facility since the expectation was that they would find the fixed-rate component attractive.

Leverage is in the mid-ones on a senior basis and the low-fives on a total basis.

Security will be a pledge of American Seafoods' intercompany debt, 100% of the capital stock of ASG and its wholly-owned domestic subsidiaries and a security interest in certain assets of ASG and its subsidiaries.

The Seattle producer of seafood products is seeking this new credit facility since it must terminate its previous line of credit as part of its plan to issue income deposit securities. Besides having to obtain a new credit facility, the company must also close on a consent solicitation of its 10 1/8% senior subordinated notes due 2010.

Proceeds from the credit facility combined with proceeds from the IDS offering will be used to pay for the repurchase of the 10 1/8% notes pursuant to the redemption and tender offer and the fees, expenses and premiums associated with the consent solicitation, redemption and tender offer.

CIBC World Markets Corp. is the lead arranger and sole bookrunner on the deal.

Merisant Co. closed on its $310 million credit facility (Ba3/BB-), consisting of a $35 million 51/2-year revolver with an interest rate of Libor plus 275 basis points and a 50 basis points commitment fee, a €50 million 51/2-year term loan A with an interest rate of Libor plus 275 basis points and a $225 million 61/2-year term loan B with an interest rate of Libor plus 275 basis points, according to a company spokesman.

The credit facility was originally anticipated to be sized at $320 million, consisting of a $40 million 51/2-year revolver with an interest rate of Libor plus 300 basis points, a €40 million 51/2-year term loan A with an interest rate of Libor plus 300 basis points and a $240 million 61/2-year term loan B with an interest rate of Libor plus 325 basis points. The structure, however, was modified during the syndication process.

At the same time, the Chicago tabletop sweetener company also closed on $225 million high yield bond offering, which was increased from an originally anticipated size of $200 million.

Credit Suisse First Boston acted as lead arranger and administrative agent on the credit facility, Wachovia acted as the syndication agent, and Bank One and Fortis acted as co-documentation agents.

The loan was obtained as part of a recapitalization plan and was used to refinance the existing credit facility and pay a dividend to shareholders, the spokesman said.

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