Five new deals including Laidlaw's $825 million join calendar, Fleming trades break quiet

By Paul A. Harris

St. Louis, March 24 - As the capital markets took measure of news coming from the Middle East, on Monday, leveraged loan market source remarked upon a generally quiet session.

News, nevertheless, materialized on five new bank deals during the week's first session.

Laidlaw Inc. announced that its Chapter 11 exit financing will involve a new $825 million loan that could get underway as early as Wednesday. Meanwhile French and American media giant Vivendi Universal signaled it will refinance a $1.6 billion bridge loan with a $700 million five-year securitization of accounts receivable and a new $500 million five-year term loan. Koppers Industries Inc. will launch a new $175 million credit facility on Thursday. Oreck Corp., intending to hoover up $165 million, will launch its new facility Tuesday. And Sea Containers Ltd. announced it is steaming toward $160 million of new bank credit.

Equally quiet, sources said, was the secondary market during Monday's session. All the news, said traders, involved Texas-based food distributor Fleming Foods Inc.

A bank meeting is set to take place sometime during the coming fortnight on Laidlaw Inc.'s new $825 million credit facility (BB) via Citigroup and Credit Suisse First Boston, sources told Prospect News on Monday. One source said a bank meeting could take place as early as Wednesday.

The Chapter 11 exit financing loan will be comprised of a $300 million senior secured revolving credit facility at Libor plus 300 basis points and a $525 million senior secured seven-year term loan B at Libor plus 350 basis points. The term loan B will come with an amortization provision of greater than 1% per year.

The financing also includes $300 million of senior secured notes.

Also in a Monday press release, Vivendi Universal Entertainment announced that it will refinance a $1.6 billion bridge loan with a $700 million five-year securitization of accounts receivable, scheduled to close by the end of March and a $500 million five-year term loan, for which it has commitments for $300 million. If necessary, the release added, the company will seek to extend the remainder of the bridge loan to Dec. 31, 2003, for an amount underwritten up to $420 million

Parent company Vivendi Universal will begin the roadshow Wednesday for a two tranche offering of €1 billion in dollars and euros of high-yield notes due 2010 (expected ratings B1/B+). Goldman Sachs, JP Morgan, Banc of America Securities, RBS and Salomon Smith Barney are five-way bookrunners. In addition Vivendi Universal announced it will bring a €2.5 billion credit facility.

Proceeds will be used to refinance the troubled French and American media giant's debt.

A bank meeting is set for Thursday for Koppers Industries Inc.'s new $175 million credit facility, led by PNC and NatCity Investments

The Pittsburgh firm, which makes carbon-compound products, will take out a $100 million revolver at Libor plus 200 basis points and a $75 million four-year term loan at Libor plus 250 basis points.

Meanwhile Oreck Corp. has scheduled a Tuesday bank meeting for its $165 million facility. The all-bank financing to take the company private will come via Royal Bank of Scotland. American Securities Capital Partners is the equity sponsor.

And Sea Containers Ltd. announced in an earnings release that it is negotiating a $160 million one-year bridge facility secured by the assets.

One market source noted that the Sea Containers deal, which had been spotted earlier in the year, is now returning to the market.

One source characterized the secondary market as "pretty dead." The only paper seen moving was that of food distributor Fleming Cos., Inc.

Two sources reported seeing the paper trade in the "83 range." One of those sources reported seeing "more than one trade."

"There was a Fleming auction earlier this morning, but I never saw if it really went off," one trader told Prospect News. "I heard there was a $6 million auction. This was a $5 million piece that traded at 83."

That level is well down from the 90 bid/93 offered where the debt was quoted last week.

Although there have been no recent announcements, the company's debt has been sliding as it struggles with its debt load, an investigation by the Securities and Exchange Commission, and a weak earnings report.

There has also been persistent talk in the markets that Fleming's troubles will end up with it filing for Chapter 11.

Other than Fleming, said sources, the secondary market seemed to be sidelined by headlines, not all of them favorable, relating to the U.S. military's effort to displace Iraqi dictator Saddam Hussein.

"What we're seeing is pretty scarce, as I look at the pipeline," one source said. "Things don't happen on a dime. You have to propose, do some due diligence.

"As I look forward there is not a lot going on.

"Unless somebody has an absolute looming maturity in front of them, I think corporate treasurers as well as the banks are just willing to sit still for the time being."

With Fleming and HealthSouth making recent high-profile additions to the distressed market, Prospect News asked if this was is a harbinger of things to come.

"I really don't think so," said the source. "You may see some airline-related names. But defaults are down and credit quality is improving across the board. And these interest rates don't hurt people either.

"There will be a few new distressed names showing up, but I don't think you'll have nearly the growth that you had over the last six months."

Prospect News followed by asking if, in the face of a sideways-moving economy, defaults might be expected to stay low.

"There are some fairly interesting stats that kind of show where the bubble was," the source replied. "The things that are defaulting today are deals that were done in 1997-98. There was much higher leverage for these companies, much lower equity in the capital structures, much lower fixed charge coverages. Defaults that are occurring today are basically fairly aggressive deals done four or five years ago.

"We've learned a little bit. Structures have gotten tighter. Collateral has gotten better. So even if you have a 'going-sideways' economy we don't think we're going to see any growth in defaults. We think the structures of the deals done will have a little more merit to them, and will withstand a little more stress in the economy."

Finally among deal closings, Fresh Del Monte Produce Inc. announced it has signed a new $400 million revolving credit facility, arranged and syndicated by Rabobank. The new loan replaces the company's existing, soon to mature revolving credit facility and term loan, the release stated.

The Coral Gables, Fla.-based company, which produces, markets and distributes fresh and fresh-cut produce, will use the credit facility primarily for general corporate purposes and investing activities, the release stated.

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