infoUSA stronger on S&P upgrade; Rayovac hangs steady on acquisition news

By Sara Rosenberg

New York, Aug. 22 - infoUSA Inc.'s term loan B was a touch higher on Friday following Standard & Poor's upgrade to its ratings on Thursday. But a trader said that on syndication the deal was "tucked away" so it hasn't traded a lot, making it virtually impossible for the debt to react strongly to the positive ratings news. Meanwhile, Rayovac Corp.'s bank debt was unchanged as the market was neither excited nor disappointed by the company's decision to acquire Remington Products Co. for approximately $322 million, including the assumption of debt.

infoUSA's B loan is currently being quoted at par 1/8 bid, par 5/8 offered, whereas before it was traveling right around par, the trader said.

On Thursday, S&P announced that it upgraded infoUSA including raising its 9.5% senior subordinated notes due 2008 to B+ from B and assigned a BB rating to its $45 million revolving credit facility due 2006 and a $100 million term loan due 2007.

S&P said the higher ratings reflect infoUSA's stronger financial profile, aided by lower debt levels over the past several years, and the expectation that it can be sustained.

Despite a very challenging operating climate, the company has generated meaningful levels of free operating cash flow starting in 2001, benefiting from cost reduction and containment programs and lower capital expenditures, S&P said. These funds have been used primarily for debt reduction.

In addition, infoUSA has repaid a substantial portion of its 9.5% subordinated notes due 2008, leaving $30 million outstanding, with its lower cost credit facilities.

Adjusted for operating leases, debt to EBITDA is in the low 2x area and EBITDA to interest is over 5x.

infoUSA is an Omaha, Neb. provider of business and consumer information products, database marketing services, data processing services, and sales and marketing solutions.

Rayovac's paper was quoted at par 1/8 bid, par 5/8 offered on Friday, according to a trader.

To help fund the acquisition, Rayovac plans to sell $300 million of senior subordinated notes and obtain an additional $50 million of term loan debt. Furthermore, the company has obtained bridge financing as a back up.

The all-cash transaction is expected to close within the next 60 days and is expected to be accretive in fiscal 2004.

Rayovac is a Madison, Wis. manufacturer of general alkaline batteries, and designer and distributor of battery-powered electric shavers and accessories, grooming products, hair care appliances and other small electrical consumer appliances. Remington is a Bridgeport, Conn. dry shaving and personal grooming products company.

Meanwhile, Charter Communications Inc. stabilized on Friday after spending most of the week inching higher. The term loan B was quoted at 93½ bid, 94 offered, unchanged from Thursday.

On Wednesday, the tranche moved up about ½ a point to 92½ bid, 93½ offered on news of a ratings upgrade by Standard & Poor's attributed to Charter's termination of its sub-par tender offers, which, if completed, would have been viewed by S&P as tantamount to a default on original debt issue terms.

And Goodyear Tire & Rubber Co.'s revolver took a breather after trading actively and higher on Thursday on news that a tentative agreement on a new three-year master contract was reached with the United Steelworkers of America.

The Akron, Ohio tire company's revolver was quoted at 93½ bid, 94½ offered, unchanged from Thursday and two points higher than Wednesday's levels of 91½ bid, 92½ offered, according to a trader.

The agreement still must be approved by the local union membership, a news release said. Details of the proposed agreement will not be available until the union has the opportunity to share the information with its members.

The parties have been negotiating since the second week of March.

Overall, it was an incredibly quiet day in the bank loan, with essentially no trading activity and many participants either taking the day off or leaving by late afternoon, according to sources.

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