Books close on Levi as B loan sees three times oversubscription; paper may start trading Monday

By Sara Rosenberg

New York, Sept. 18 - The books have closed on Levi Strauss & Co.'s credit facility as approximately $1.5 billion in commitments flooded in for the $500 million senior secured term loan maturing in 2009, according to market sources. Now that syndication is essentially completed, the question floating around the market place is just how high the paper will trade once it hits the secondary since it contains a heftier coupon than most new issue paper.

"It has a lot more upside than a lot of names," a trader said. "It's not unreasonable to say that it might trade as high as 102 or even 103. It's Libor plus 700 basis points with a 2% Libor floor. If you lock Libor in for a year it's like you got Libor plus 800 basis points."

Levi's new bank debt is expected to break for trading on Monday, according to the trader.

The deal launched this past Tuesday to a mixed audience, as some investors were skeptical about the deal being fully committed by the Monday deadline. However, once price talk of Libor plus 700 basis points emerged behind the scenes, investors were drawn to the tranche.

According to one market source, there is talk that the term loan B will be flexed down to Libor plus 687.5 basis points, however this could not be confirmed by press time.

The $1.15 billion credit facility also contains a $650 million asset-based revolver maturing in 2007 with an interest rate of Libor plus 275 basis points.

Bank of America is the lead bank on the deal, which will replace the San Francisco brand name clothing company's existing senior secured credit facility consisting of a $375 million revolver and $365 million term loan, as well as $110 million of debt arranged under an accounts receivables securitization.

Wyndham International Inc.'s bank debt headed higher by about a point during market hours on Thursday with the IRLs quoted at 90 bid, 91 offered and the term loan B quoted at 88½ bid, 89½ offered, according to a trader who attributed the move to market technicals.

On Wednesday, Wyndham announced that it sold the 229-room Wyndham Valley Forge Suites in Wayne, Pa. to a group led by Valley Forge Investment Corp. and SCP Private Equity Partners LP for $28.3 million while retaining the hotel in its Wyndham-branded portfolio through a new 20-year franchise agreement with new ownership.

All net proceeds from the sale will be used by the Dallas hotel and resort company to pay down debt.

"Our asset disposition program continues to move forward with success as we continue to sell all non-proprietary assets, as well as strategic Wyndham-branded properties that remain in our portfolio pursuant to new management and franchise agreements," said Fred J. Kleisner, chairman and chief executive officer, in a news release. "Wyndham's disposition pipeline is strong as buyers move to valuations based on a percentage of replacement costs rather than trailing twelve month EBITDA."

Allegheny Energy Inc. was another name that saw about a one point increase on Thursday as quotes moved up to 96½ bid, 97½ offered, according to the trader, who once again gave market technicals as the reason behind the upturn.

On Thursday, the Hagerstown, Md. energy company announced that its subsidiary, Allegheny Energy Supply Co. LLC, and its Allegheny Trading Finance unit paid the initial $100-million installment under an agreement to terminate the 1,000-megawatt tolling agreement with Williams Power Co. Inc.

"The termination of this tolling agreement, along with the recently completed sale of ATF's energy supply contract with the California Department of Water Resources and the termination of a second tolling agreement, are part of Allegheny's strategy to exit the western energy markets and refocus on its core assets," a news release said.

Allegheny still has to pay Williams two $14 million installments, one in 6 months and the other in 12 months. Termination of the tolling agreement will occur when the final $14 million payment is made.

In follow-up news, AMI Semiconductor's $125 million five-year term loan B was flexed down by 25 basis points to Libor plus 250 basis points, according to a syndicate release. Credit Suisse First Boston is the administrative agent and joint lead arranger, Goldman Sachs is the syndication agent and joint lead arranger, and Lehman Brothers is the documentation agent.

The company's $200 million credit facility also contains a $75 million three-year revolver with an interest rate of Libor plus 300 basis points and a 50 basis points commitment fee.

By comparison, the existing credit facility, which matures December 2006, has an interest rate of Libor plus 350 basis points.

The Pocatello, Ida.-based designer and manufacturer of application-specific integrated circuits is seeking this new facility in connection with a planned initial public offering by its parent AMIS Holdings, Inc.

AMIS filed to raise up to $517.5 million in the IPO, including greenshoe. With the new $125 million term loan and $450 million from the IPO, AMIS will raise a total of $575 million. Of this, $39.9 million will be used to repay the existing term loan, $77.5 million to redeem notes, $412.9 million to redeem two series of preferred stock and $30.5 million for fees and expenses, leaving $14.2 million of excess cash.

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