Keystone sees good attendance, some investors eyeing upcoming bond deal before committing

By Sara Rosenberg

New York, Oct. 14 - Keystone Automotive Operations Inc.'s bank meeting went very well with about 40-plus attendees at the meeting and about 25 or more participating via phone, a market source told Prospect News. And, although there was no talk of commitments at this time, some are unconcerned, believing potential investors are taking a wait-and-see approach since the roadshow and pricing on the company's bond offering is fast approaching.

"I was a bit surprised that room was so full but I guess there was some spillover from the Nalco meeting since they were both at the Palace, but that's just my speculation," the source added. "There is some significant amortization in the term loan which I think is a nice plus compared to other deals in the market these days.

"No firm commitments yet," the source continued. "One thing is that [the] bonds hit the roadshow in earnest tomorrow and a lot of accounts will play relative value once [the bonds] price next week so they will wait until then."

Pricing on the deal was revised from initial price talk with both the $115 million term loan B and the $50 million revolver now set at Libor plus 325 basis points. Originally, the revolver was talked at Libor plus 300 basis points and the term loan B was talked at Libor plus 350 basis points.

Bank of America and UBS are joint lead arrangers and joint lead managers on the deal, which will be used to help finance Bain Capital's acquisition of Keystone from the company's current equity partners.

Keystone is an Exeter, Pa.-based marketer and distributor of automotive parts and accessories in specialty aftermarket.

Ondeo Nalco launched its $1.65 billion credit facility on Tuesday, which was reported to be going very well as a handful of commitments have already come in for the deal, according to a sell-side source. Citigroup, Bank of America, Goldman Sachs, JPMorgan and Deutsche Bank are the lead banks on the deal.

The facility consists of a $1.1 billion seven-year term loan B with an interest rate of Libor plus 275 basis points, a $300 million six-year term loan A with an interest rate of Libor plus 250 and a $250 million six-year revolver with an interest rate of Libor plus 250 basis points.

Proceeds will be used to back the acquisition of Ondeo Nalco by The Blackstone Group, Apollo Management, LP and Goldman Sachs Capital Partners from Suez SA in a transaction valued at $4.2 billion.

The company will also issue $1.8 billion equivalent of dollar and euro senior subordinated notes in four tranches to help fund the transaction. The remainder of the transaction will be funded in equity provided by Blackstone, Apollo and Goldman.

Closing on the acquisition is expected to take place in the fourth quarter of 2003, subject to customary regulatory approvals. Following the transaction, Nalco will operate as an independent company.

Ondeo Nalco is a Naperville, Ill. provider of water treatment and process chemicals and services.

Meanwhile, Pinnacle Foods Corp.'s credit facility will be maneuvered and revised to incorporate Aurora Foods Inc. into the transaction, a source close to the deal told Prospect News.

"The deal that was mandated and ready to go is no longer," the source added.

On Tuesday, Aurora announced that it has revised its previously announced financial restructuring and entered into a letter of intent with J.P. Morgan Partners LLC, J.W. Childs Equity Partners III LP, an informal committee of bondholders representing approximately 50% of the company's outstanding senior subordinated notes and C. Dean Metropoulos and Co., under which Aurora will be combined with Pinnacle Foods.

Previously Pinnacle Foods' facility was expected to be sized at $225 million, consisting of a $170 million term loan B and $55 million of pro rata bank debt.

JPMorgan and Deutsche are the lead banks on the deal that will be used to help fund the previously announced acquisition of Pinnacle Foods by JPMorgan Partners, in partnership with C. Dean Metropoulos, from Hicks, Muse, Tate & Furst Inc. in a transaction valued at $485 million.

Pinnacle Foods is a Cherry Hill, N.J. manufacturer and marketer of branded food products formed by Hicks, Muse, Tate & Furst and C. Dean Metropoulos in 2001 to acquire Swanson frozen foods, Vlasic pickles and condiments, and Open Pit barbeque sauce from Vlasic Foods International. Aurora Foods is a St. Louis producer and marketer of leading food brands.

In the secondary, market technicals continued to push paper higher, including Charter Communications Inc., Western Wireless Corp. and Qwest Communications International Inc., as potential sellers refuse to let go of their investment and bidders keep trying to hit the magic number that will convince people to sell.

Charter, a St. Louis cable company, traded at 97¼ on Tuesday and closed the day bid around that level, up from 97 bid, 98 offered previously, according to a trader.

"The cable sector led this week's rally, with Charter Opco TLB up almost 200 bps to 97-98, before settling back slightly," a Banc of America Securities report said, regarding Charter's performance last week. "While there was some positive fundamental news out of Adelphia, most of the surge in the cable sector was attributable to technical factors. Given the lack of below-par paper available, investors pulled aggressive offers for cable names. As a result, many of these names traded higher."

Western Wireless, a Bellevue, Wash. provider of wireless services, saw its term loan A trade at 96 7/8 and its term loan B trade at 99 1/8, up about a quarter to an eighth of a point from previous levels.

And, Qwest, a Denver broadband internet-based communications provider, saw its floating-rate tranche trade at 103 3/8 and its fixed-rate tranche trade at 99 1/8, also up about a quarter to an eighth of a point on the day, according to the trader.

In follow-up news, The Cypress Group LLC completed its acquisition of The Meow Mix Co. from J.W. Childs Associates LP in a transaction valued at approximately $425 million. To help support the acquisition Meow Mix obtained a $231 million senior secured credit facility, consisting of a $176 million first-lien term loan with an interest rate of Libor plus 350 basis points, a $30 million revolver and a $25 million second lien term loan with an interest rate of Libor plus 650 basis points.

UBS acted as bookrunner and lead arranger, and CIBC acted as syndication agent and co-arranger on the deal.

As part of the Cypress transaction, members of Meow Mix management and J.W. Childs have both retained significant equity stakes in the Secaucus, N.J. dry cat food company.

"We are very pleased to announce this acquisition, and we are excited about the growth potential of the Meow Mix and Alley Cat brands," said Christopher B. Harned, managing director of The Cypress Group, in a news release.

"Meow Mix is the leading brand in the premium dry cat food market today, a market that is currently growing at attractive rates with strong underlying fundamentals that will drive future growth. By actively developing new products and brand extensions, Meow Mix is positioned to capitalize on this growth, and we look forward to working with the Meow Mix team to extend the company's leadership through increased distribution, continued customer partnering, international expansion and a continued commitment to the highest quality products."

IESI Corp. closed on its $400 million senior secured credit facility consisting of a $200 million revolver due October 2008 with an interest rate of Libor plus 325 basis points and a $200 million term loan due October 2010 with an interest rate of Libor plus 350 basis points.

Fleet Securities Inc. was the arranger for the facility, Fleet National Bank is the administrative agent and LaSalle Bank NA is the syndication agent.

Proceeds from the term loan combined with $33.7 million of borrowings under the revolver were used to refinance the company's existing credit facility and help fund the acquisition of Seneca Meadows Inc., the owner and operator of the Seneca Meadows Landfill. The company also sold $47.5 million of new series E convertible preferred stock to help finance the acquisition.

"Seneca Meadows Landfill is one of New York State's premier landfills and we are extremely proud and excited to welcome them to our family of companies," said Mickey Flood, president and chief executive officer, in a news release. "The purchase of the landfill solidifies our Northeast Region and positions us for future expansion in the Northeast."

IESI is a Fort Worth, Tex. non-hazardous solid waste management company.

Washington Group International Inc. closed on a new $350 million credit facility consisting of a $150 million four-year revolver with an interest rate of Libor plus 325 basis points and a 100 basis points commitment fee, and a $200 million four-year revolver B with an interest rate of Libor plus 325 basis points and a 325 basis points commitment fee.

Credit Suisse First Boston was the lead arranger, book manager and administrative agent on the refinancing deal. LaSalle Bank acted as documentation agent and Ableco Finance LLC acted as syndication agent.

Washington Group is a Boise, Ida. provider of engineering, construction and construction management services.

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