Graham Packaging term B gets upsized, pricing changes on both tranches

By Sara Rosenberg

New York, Feb. 3 - Graham Packaging Co.'s credit facility underwent some structural changes now that the company is no longer planning an initial public offering in the immediate future. The reworked facility includes a larger term loan B and upward flexes in pricing on both the term loan B and the revolver.

More specifically, the term loan B was upsized to $695 million from $660 million and pricing was flexed up to Libor plus 375 basis points from Libor plus 325 basis points, according to a market professional, who added that the tranche is already fully syndicated. The tenor remained at seven years.

The credit facility also contains a $150 million five-year revolver with an interest rate that was increased to Libor plus 350 basis points from Libor plus 325 basis points, according to a syndicate source.

Deutsche Bank is the lead arranger and bookrunner, and Salomon Smith Barney is the syndication agent.

The York, Pa. plastic container company will use proceeds from the loan to repay existing debt (however, the holding company notes will stay in place, according to the professional) and for general corporate purposes.

This is the second time that the company has opted to pull its initial public offering, the first time occurring this past summer. However, unlike the previous attempt, the company decided not to table its recently launched credit facility.

Meanwhile, Wyndham International Inc. is scheduled to hold a lender meeting on Wednesday to request an amendment to its credit agreement that would extend the maturities of the installment repayment loan and revolver to June 15, 2006 from June 15, 2004, according to a fund manager.

There is no event prompting this amendment, meaning the Dallas hotel operator is currently in full compliance with its covenants, and there is no economic incentive in terms of additional spread or amendment fees, the fund manager explained.

The main focus regarding this proposed amendment is use of proceeds from asset sales. Currently, when the company sells properties it is first required to pay down mortgage debt that is associated with the properties and then the company keeps 25% of the remaining balance and distributes 75% to pay down its term loan B, IRL and revolver. With this amendment, the company is likely to adjust pro rata distribution so that a larger portion would go to the IRL.

"Let's say the IRL pro rate portion is around 22%," the fund manager said. "The company will change that to something like 40% of proceeds going to IRLs so the term loan B will be getting less than its pro rata share.

"Term loan B holders are benefiting from extending because than the company won't have to refinance the IRLs or the revolver so there's no [potential] liquidity crisis," the fund manager continued.

In the secondary market, the IRL tends to trade higher than the term loan B due to the fact that it matures two years before the term B. For example, on Monday, the term B was quoted with a 77 bid and a 79 offer and the IRL was quoted with an 81 bid and an 83 offer.

But the 2006 maturity date that is being requested is the same day that the company's existing term loan B is scheduled to mature. Asked whether this would affect secondary trading levels of the IRL, the fund manager responded: "It should trade slightly ahead - probably a point or so, but not two or three points. It depends on the asset same schedule. If there are no asset sales than it should trade even."

When asked whether the amendment appears to have enough support to pass, the fund manager once again responded that it "depends on how the asset sale schedule looks. Who knows? The company may have some surprises for us." The fund manager added that since the meeting isn't till Wednesday a clear picture of the amendment's chances has not developed as of yet.

In follow-up news, now that UAL Corp.'s $1.2 billion debtor-in-possession financing facility has been restructured with higher interest rates, a better Libor floor and more favorable upfront fees, investors may take to the deal, according to a fund manager.

"It seems like it will get more people interested," a fund manager said about the loan that was launched before Christmas. "I think now people are getting back into it and doing some work on it."

The DIP consists of a $400 million term loan and an $800 million revolver, of which $100 million is reserved for maintenance on collateral. The facility has an interest rate of Libor plus 650 basis points, up from Libor plus 450 basis points, a Libor floor of 3%, up from 2%, and an issuer price of 95, reduced from 97, according to the fund manager.

"This makes the yield a lot more appealing," he added.

The DIP is being led by J.P. Morgan Chase and Citibank, and includes CIT Group and Bank One.

UAL is an Elk Grove Township. Ill. airline operator that filed for Chapter 11 in December.

Another deal that has recently been changed is LIN TV Corp.'s $175 million term loan B (Ba2/BB). Pricing on the deal was flexed down by 25 basis points to Libor plus 200 basis points, according to market sources.

JPMorgan and Deutsche Bank are the lead banks on the Providence, R.I. television company's credit facility.

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