Metris expands term loan deal in lieu of bond offering, changes pricing to floating rate

By Sara Rosenberg

New York, April 29 - Metris Cos. Inc. pulled its proposed $250 million senior secured notes offering, upsized its term loan and switched the bank tranche to a floating-rate piece of paper from fixed rate. Meanwhile, as the market for second lien pieces of paper continues to be somewhat difficult, Bluelinx has increased price talk on its second lien tranche and The Holmes Group is considering increasing price talk on its second lien tranche.

Metris increased the size of its proposed term loan to $300 million from $175 million and revised pricing to Libor plus 1000 basis points from a fixed rate of 11%, according to an informed source. The tranche is still being offered at an original issue discount of 99.

"I heard it had over $700 million in the book already," a buyside source said. "I think that was even before the price change. But, it's better to do it as a floating-rate tranche for lenders with interest rates inching up."

Goldman Sachs is the lead bank on the deal.

Proceeds from the term loan will be used to refinance the company's $125 million one-year term loan that was obtained last June and is priced with an annual interest rate of 12% plus performance payments based on the excess spread in the Metris Master Trust. Proceeds will also be used to refinance existing bond debt, including the 10% senior notes due in 2004 and a portion of the 10 1/8% senior notes due in 2006.

Metris is a Minnetonka, Minn., provider of financial products and services.

Bluelinx flexes up

Price talk on Bluelinx's $100 million 51/2-year second lien term loan has increased to Libor plus 750 to 800 basis points from Libor plus 600 to 650 basis points, according to a market source. The 2% Libor floor and 1% upfront fee remained intact throughout the price talk change.

"I don't think they were getting much interest at the 600 to 650 level," the source said.

The $800 million credit facility also contains a $700 million asset-based revolver with an interest rate of Libor plus 225 basis points, which is said to pretty much spoken for already, the source added.

Goldman Sachs and Congress Financial are the lead banks on the deal that will be used to fund the acquisition of Georgia-Pacific Corp.'s building products distribution business by Bluelinx, a new company formed by Cerberus Capital Management LP.

Holmes Group considers flex

The syndicate on The Holmes Group Inc.'s in-market deal is considering increasing pricing on the $105 million seven-year second lien term loan (B3/CCC+) to Libor plus 750 basis points from Libor plus 700 basis points, according to a fund manager. Furthermore, there is also talk that an upfront fee of 50 basis points will be added as opposed to the tranche being issued at par.

"I heard the second lien is going pretty slow. They're going to have to do something and that's where the syndicate is talking it right now," the fund manager said.

Holmes Group's facility also contains a $75 million five-year revolver (B1/B) with an interest rate of Libor plus 325 basis points and a 50 basis points commitment fee, and a $240 million first lien term loan (B1/B) with an interest rate of Libor plus 325 basis points.

"The first lien had over $400 million in the book," the fund manager added.

General Electric Capital Corp. and Credit Suisse First Boston are joint lead arrangers and bookrunners on the deal, with GECC acting as administrative agent and CSFB acting as syndication agent.

Proceeds will be used to refinance the company's bank debt and fund a tender offer for its $100.1 million principal amount of 9 7/8% senior subordinated notes due 2007.

The Milford, Mass., consumer products company previously said it is refinancing its debt to take advantage of "current market opportunities" ahead of the expiration of its existing credit facility starting in January 2005.

Sterigenics price talk

Price talk on Sterigenics International's proposed $240.5 million senior secured credit facility surfaced on Thursday, with the $170.5 million term loan talked at Libor plus 300 basis points, the $35 million revolver talked at Libor plus 275 basis points and the $35 million second lien term loan talked at Libor plus 625 basis points, according to a market source.

Furthermore, it has now firmed up that the bank meeting will take place on Wednesday as opposed to that being the tentatively scheduled date.

UBS is the lead bank on the deal.

Proceeds will be used to help fund the acquisition of Sterigenics by PPM Ventures Ltd. and PPM America Capital Partners LLC, the private equity units of U.K.-based Prudential plc, from Ion Beam Applications.

Sterigenics is an Oak Brook, Ill., provider of contract sterilization and ionization services for medical devices, food safety and advanced materials applications.

UGS PLM price talk

Price talk on UGS PLM Solutions' proposed $625 million credit facility was revealed on Thursday now that the deal had its bank meeting launching it into the primary market, with both the $500 million term loan B and the $125 million revolver talked at Libor plus 275 basis points, according to a market source.

JPMorgan, Citigroup and Morgan Stanley are the lead banks on the credit facility, with JPMorgan listed on the left.

Proceeds, combined with proceeds of a proposed bond offering, will be used to help fund the previously announced acquisition of UGS PLM by Bain Capital, Silver Lake Partners and Warburg Pincus from Electronic Data Systems Corp. for $2.05 billion in cash.

UGS PLM is a Plano, Texas, provider of product lifecycle management software and related services.

Mark IV U.S. launch set

A solid date for Mark IV Industries Inc.'s U.S. bank meeting has been set, with the deal slated to launch on Monday, according to a market source. Previously it was known that the deal would launch early next week but exact timing had not yet been determined.

A bank meeting has already taken place in Europe this past Tuesday for the deal.

The credit facility is sized at $865 million, consisting of a $150 million six-year revolver with a sublimit available for euro drawings, a $100 million six-year U.S. dollar equivalent euro term loan A and a $615 million seven-year term loan B with price talk of Libor plus 300 basis points.

JPMorgan and Bear Stearns are the lead banks on the deal, with JPMorgan listed on the left. JPMorgan is also acting as administrative agent and Bear Stearns is also acting as syndication agent.

Proceeds from the new credit facility will be used to refinance existing bank debt and an asset sale bridge, the source added.

Mark IV is an Amherst, N.Y., supplier to the industrial/distribution and automotive OEM markets.

Leiner sets launch date

Leiner Health Products is now all set to launch its proposed $290 million senior credit facility via a bank meeting on Tuesday, according to a market source. Like Mark IV, it was previously expected that the deal would launch next week but no specific date had been established.

The credit facility consists of a $50 million five-year revolver talked at Libor plus 275 basis points and a $240 million seven-year term loan talked at Libor plus 300 basis points.

UBS and Morgan Stanley are the joint lead arrangers and bookrunners, and Credit Suisse First Boston is a co-documentation agent on the deal.

Proceeds, along with proceeds from a proposed $150 million bond offering, will be used to back North Castle Partners and Golden Gate Capital's $650 million recapitalization of Leiner that involves a sale of North Castle's existing majority stake in the company.

Under the recapitalization Golden Gate, and a new fund investment vehicle managed by North Castle, will invest about $265 million and will be the co-sponsors of Leiner. Leiner's management team will retain a significant ownership in the company, according to a company news release.

Leiner is a Carson, Calif., manufacturer of vitamins, minerals, supplements and diet aids, and producer of store brand over the counter drugs.

Consolidated Container sees interest

Consolidated Container Co. LLC's bank meeting for its proposed $245 million credit facility went "very well" as there seemed "to be a lot of interest in the deal" from investors, a market source said.

"It's a refi so there seems to be a lot of people who want to maintain or increase their positions," the source added.

The facility consists of a $200 million term loan B with an interest rate of Libor plus 350 basis points and a $45 million revolver with an interest rate of Libor plus 375 basis points.

Proceeds will be used to refinance existing debt.

Consolidated Container is an Atlanta manufacturer of rigid plastic containers.

Also launched Thursday, besides UGS PLM and Consolidated Container, was Advance America, Cash Advances Centers Inc. and Guilford Mills Inc.

Advance America's proposed credit facility came via Wachovia and Bank of America. No further details on the financing are available at this time.

Advance America is a Spartanburg, S.C, lender.

Guilford Mills' $215 million deal hit the market via Goldman Sachs and consists of a $40 million revolver, a $100 million term loan B and $75 million second lien term loan.

Leverage through the first lien is 2x and leverage through the second lien is 3.5x, the source added.

Proceeds will be used to help fund Cerberus Capital Management's leveraged buyout of the company. However, the actual acquisition was completed earlier this month when GMI Merger Corp., an affiliate of Cerberus, completed a cash tender offer for the outstanding shares of Guilford Mills at $19 per share.

Guilford Mills is a Greensboro, N.C., designer and manufacturer of engineered fabrics for automotive, technical and apparel applications.

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