Dole breaks for trading in secondary, moving up to par ½ from issue price of par

By Sara Rosenberg

New York, March 27 - Dole Foods Co. Inc.'s credit facility allocated and broke for trading on Thursday, according to market sources. The term loan B moved up to par 1/2, after being issued at par, according to a trader.

The facility contains a $575 million 51/2-year term loan B with an interest rate of Libor plus 375 basis points, a $250 million five-year term loan A with an interest rate of Libor plus 325 basis points and a $300 million five-year revolver in dollars and euros with an interest rate of Libor plus 325 basis points. The term B was downsized by $25 million following pricing of an upsized bond deal.

The facility is expected to officially close on Friday.

Proceeds are being used to help fund the buyout of Dole by DHM Acquisition Co., which is wholly owned by David H. Murdock.

Deutsche Bank, Scotia Capital and Bank of America are the lead banks on the loan.

Dole is a Westlake Village, Calif. producer and marketer of fresh fruit, vegetables and flowers.

Charter Communications Inc.'s term loan B was flat on Thursday, after spending the previous two days heading higher by about a quarter of a point each day, according to a trader. The St. Louis, Mo. cable company's term loan B is quoted around 87 bid, 88 offer.

Meanwhile, Allied Waste Industries Inc. publicly announced its financing and divestiture plan under which the existing credit facility will be replaced, maturities will be extended, liquidity will be enhanced and the capital structure will be improved.

Under the plan, the company will obtain a new $3 billion credit facility, consisting of a $1.5 billion five-year revolver and a $1.5 billion seven-year term loan B. Previously, price talk on the revolver was said to be Libor plus 300 basis points and price talk on the term loan was said to be Libor plus 350 basis points. JPMorgan, Citibank, Credit Suisse First Boston, Deutsche Bank and UBS Warburg are the lead banks on the deal.

Terms of the proposed credit facility increase the existing revolver capacity from $1.3 billion to $1.5 billion. Proposed covenants based on company projections should give the company about $200 million of EBITDA cushion on its most restrictive covenant over the life of the credit agreement, and would provide the company with increased flexibility to pay cash dividends on its series A preferred stock after July 30, 2004 if its leverage ratio is in excess of 4.0 times, according to a news release.

In addition to the facility, the company will issue $100 million of common stock, $300 million of three-year mandatory convertible preferred stock, $300 million of 10-year senior notes and $150 million of an on-balance sheet accounts receivable securitization.

Furthermore, the company anticipates divestitures generating approximately $300 million of after-tax proceeds during 2003.

The financing transactions are expected to be launched in the capital markets in the immediate future as conditions dictate and the financing is expected to be completed within the next 45 days.

The company has already received commitments for the entire $1.5 billion revolver and has completed the accounts receivable securitization.

"We are pleased to announce these exciting plans to improve the capital structure of our company," said Tom Ryan, executive vice president and chief financial officer, in the release. "We believe investors will benefit from the multiple steps taken to significantly extend maturities, increase covenant flexibility and enhance liquidity. Cash generated from the financing and divestiture activities combined with the 2003 free cash flow should enable us to retire $1 billion of debt this year, bringing our year end debt balance below $7.9 billion."

In follow-up news, AmeriPath Inc. closed on its new $290 million credit facility (B1/B+), consisting of a $225 million seven-year term loan B with an interest rate of Libor plus 450 basis points and a $65 million six-year revolver with an interest rate of Libor plus 350 basis points.

Credit Suisse First Boston and Deutsche Bank were the lead banks on the deal.

Proceeds from the loan, combined with proceeds from a bond offering, were used to help fund the acquisition of AmeriPath by Amy Acquisition Corp., an entity formed by Welsh, Carson, Anderson & Stowe. This acquisition was approved by stockholders and consummated on Thursday.

"We are pleased with the closing of the merger and look forward to working with our new partners at Welsh, Carson, Anderson & Stowe. As we've said before, Welsh Carson's experience and resources will be valuable as the company continues to pursue its strategic objectives," said James C. New, chairman and chief executive officer, in a news release.

"We are enthusiastic about the completion of the merger and the successful bank and bond financings," said Paul Queally, general partner, Welsh, Carson, Anderson & Stowe, in the release. "We believe AmeriPath's leadership in the anatomic pathology services market and its strong management team, in combination with sponsorship by Welsh Carson, will enhance AmeriPath's continued delivery of valuable services to physicians, hospitals and other customers."

AmeriPath is a Riviera Beach, Fla. provider of cancer diagnostics, genomic, and related information services.

K2 Inc. closed on a new $225 million three-year credit facility consisting of a $205 million revolver with an interest rate of Libor plus 250 basis points and a $20 million term loan with an interest rate of Libor plus 400 basis points. Bank One was the lead bank on the deal.

Securing the facility is substantially all of the company's domestic, Canadian and United Kingdom assets.

Proceeds will be used to replace the company's $63.9 million of outstanding borrowings under a revolver and senior notes, and to secure existing letters of credit. In conjunction with the refinancing, the company will expense $6.9 million in first quarter 2003 due to the early extinguishment of the senior notes and capitalized debt costs related to its facilities being refinanced.

"We are pleased to have this important new financing arrangement in place. Our improved borrowing capacity and lower cost of capital gives K2 a greater degree of flexibility to execute our growth objectives," said Richard J. Heckmann, chairman and chief executive officer, in a news release.

K2 is a Los Angeles designer, manufacturer and marketer of brand name sporting goods and recreational products.

Overall though, the tone of the market place remained relatively quiet once again as the war in Iraq continued to be the main focus, according to market sources.

One fund manager told Prospect News that currently there are no deals on the forward calendar that the company is looking at and it has been so slow that the phone has barely been ringing.

A second market professional expanded on this, saying: "There's a war going on. If you don't need the money right away, you might as well let the war play itself out. It's a lot easier to hold off a little bit then it is to start syndicating a loan only to have it fall apart because something happens. It's wait and see."

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