Rockwood, Foundation Coal, Refco, Allied Security break in Wednesday's new-issue focused secondary

By Sara Rosenberg

New York, July 28 - New issues dominated the secondary loan market Wednesday as Rockwood Specialties Group Inc., Foundation Coal Corp., Refco Group Ltd. LLC and Allied Security Inc. all broke for trading, with term loan bids on the various deals ranging anywhere from par 1/8 to 101.

Rockwood Specialty's term loan B was quoted at par ¾ bid, 101¼ offered on the break, moved up all the way to 101 1/8 bid during market hours and then settled back down to par 5/8 bid, 101 1/8 offered by day's end, according to a trader.

The $985 million seven-year term loan B is priced with an interest rate of Libor plus 250 basis points with a stepdown to Libor plus 225 basis point if leverage falls below 2.25x. Originally, the tranche was launched with a size of $1.05 billion and pricing of Libor plus 275 basis points, but the size was reduced Monday because the company opted not to refinance some of the debt at the businesses it is acquiring and the pricing was reduced last week on strong oversubscription.

The $1.757 billion credit facility (B1/B+) also contains a $272 million eight-year euro term loan C with an interest rate of Libor plus 300 basis points, a $250 million six-year revolver with an interest rate of Libor plus 250 basis points and a commitment fee of 50 basis points, and a $250 million six-year term loan A with an interest rate of Libor plus 250 basis points. The term loan C was originally sized at $300 million but was downsized Monday as well, for the same reason as the term loan B downsizing.

Credit Suisse First Boston, UBS and Goldman Sachs are the joint lead arrangers and joint bookrunners on the financing.

Proceeds from the facility, combined with proceeds from a bond offering and equity, will be used to help fund the acquisition of four chemical businesses of Germany-based Dynamit Nobel.

The equity for the transaction will be provided by Rockwood's internal resources, its existing majority shareholder Kohlberg Kravis Roberts & Co. LP and by CSFB Private Equity. The sponsors bid €2.25 billion for the four business units.

Closing of the transaction is planned for the third quarter and is subject to approval by the supervisory board and annual general meeting of MG Technologies, parent company of Dynamit Nobel, as well as by the relevant antitrust authorities.

Rockwood is a Princeton, N.J., specialty chemicals and advanced materials company.

Foundation Coal 101 bid

Foundation Coal's term loan B was quoted at 101 bid 101½ offered by late day, according to a trader.

The $470 million seven-year term loan is priced with an interest rate of Libor plus 200 basis points with a stepdown to Libor plus 175 basis points. Originally, the tranche was priced at Libor plus 250 basis points but was reverse flexed during syndication, at which time the stepdown was added as well. Furthermore, the tranche had initially been sized at $435 million but was upsized by $35 million as the company opted to decrease the size of its proposed offering by the same amount to $300 million.

The $820 million credit facility (Ba3/BB-) also contains a $350 million five-year revolver with an interest rate of Libor plus 250 basis points and a 50 basis points commitment fee.

Citigroup and Credit Suisse First Boston are the joint lead arrangers and joint bookrunners on the deal, with Citi left lead and administrative agent, CSFB syndication agent and UBS documentation agent.

Proceeds from the credit facility and the bonds will be used to help fund the acquisition of American Coal by a private equity consortium consisting of First Reserve Corp., The Blackstone Group and American Metals & Coal International from RAG Coal International.

Foundation Coal is a Linthicum Heights, Md., coal mine company.

Refco par 1/8 bid

Refco's term loan B was quoted at par 1/8 bid, par 5/8 offered on its first day of trading, according to a trader.

The $800 million seven-year term loan B is priced with an interest rate of Libor plus 275 basis points.

Refco's $875 million credit facility (B1/BB-) also contains a $75 million six-year revolver with an interest rate of Libor plus 275 basis points.

Bank of America, Credit Suisse First Boston and Deutsche Bank are joint lead arrangers on the deal, and Deutsche is also documentation agent.

Proceeds from the credit facility and a high-yield offering will be used to help fund Thomas H. Lee Partners' acquisition of a major ownership stake in the company.

Financial terms of the Thomas H. Lee acquisition were not disclosed; but, the transaction, which is subject to regulatory and other approvals, values the company at about $2.25 billion. As part of the agreement, Refco's management team will retain a significant ownership stake in the company.

Refco is a New York diversified financial services organization.

Allied Security par ½ bid

Allied Security's term loan was quoted at par ½ bid, 101½ offered with levels remaining pretty much in that context throughout the afternoon, according to a trader.

The $210 million six-year term loan B is priced with an interest rate of Libor plus 425 basis points with a stepdown to Libor plus 400 basis points if total leverage falls below 31/2x. Originally the tranche was talked at Libor plus 450 basis points but was reverse flexed Friday on strong demand.

Allied Security's $260 million credit facility (B2/B+) also contains a $50 million five-year revolver with an interest rate of Libor plus 450 basis points, unchanged since launch.

Closing on the credit facility is expected to take place on Aug. 3.

Bear Stearns is the lead bank on the deal that will be used by the King of Prussia, Pa., private security company to help fund the acquisition of Barton Protective Services and repay debt.

Levi active, higher

Levi Strauss & Co.'s bank debt traded "around a lot" on Wednesday at stronger levels with the paper quoted at 108 bid, 109 offered, according to a trader.

"It's up half a point from yesterday, a point to a point and a half from last week," the trader added, saying that there was no specific reason for the momentum.

Levi is a San Francisco clothing company.

Interstate Bakeries holds steady

Interstate Bakeries Corp.'s bank debt was quoted wide at 97 bid, 99 offered on Wednesday, pretty much unchanged on the day, despite news that the Securities and Exchange Commission is conducting an informal inquiry regarding the company's manner for setting workers' compensation reserves and other reserves, according to a trader.

The SEC investigation resulted from the company's announcement that the audit committee of its board of directors had retained the law firm of Skadden, Arps, Slate, Meagher & Flom LLP to investigate these matters, according to a company news release.

"The company intends to cooperate fully in the inquiry," the release added.

Interstate Bakeries is a Kansas City, Mo., baker and distributor of fresh baked bread and sweet goods.

Cable/energy unchanged

With all the allocations that took place on Wednesday, market participants had little time to focus on the energy and cable names that suffered in Tuesday's weaker market, leaving many of those names pretty much unchanged on the day.

For example, Calpine Corp.'s second lien (not the CalGen second lien as was incorrectly reported in Tuesday's issue) remained around 86 bid, 87 offered, or if quoted wide, 85½ bid, 87¼ offered, according to a trader. And, Reliant Energy Inc.'s bank debt remained quoted at 99½ bid, par ¼ offered, according to another trader.

"It hasn't really traded out there," the first trader said. "The new issue allocations took guys attention away [from energy and cable] so pretty much unchanged but that's on little volume."

On Tuesday, Calpine's second-lien debt had fallen by about three points before ending at the 86 bid, 87 offered context, Reliant Energy's bank paper fell by about a half a point to a point at 99½ bid, par offered, and Charter Communications Inc.'s paper fell by about a point with the term loan A quoted at 97¼ bid, 98 offered and the term loan B quoted at 98 3/8 bid, 99¼ offered.

Calpine is a San Jose, Calif., power company, Reliant is a Houston electricity and energy services company and Charter is a St. Louis cable company.

Entravision oversubscribed

Entravision Communications Corp.'s $250 million 71/2-year term loan B with price talk of Libor plus 200 to 225 basis points was already oversubscribed within a few hours of Wednesday's bank meeting, according to a market source.

"Several orders [came in] pre meeting and many post," the source said. "Broadcasting - people know it and love it."

The $400 million senior secured credit facility (B1/B+) also contains a $150 million 61/2-year revolver with price talk of Libor plus 200 to 225 basis points.

Goldman Sachs and Union Bank of California are the lead banks on the deal, with Goldman listed on the left.

Proceeds will be used to refinance outstanding bank borrowings under the company's existing $400 million credit facility, for general corporate purposes and to fund the potential repurchase of the remaining shares of its series A preferred stock, according to a company news release.

Entravision is a Santa Monica, Calif., diversified Spanish-language media company.

Alliant Resources well attended

Alliant Resources Group Inc.'s Wednesday bank meeting was well attended and said to have gone "great" although no early commitments made their way into the books since the syndicate opted not to go out to any early accounts, a market source said.

The commitment deadline is mid-August.

The $205 million credit facility consists of a $30 million five-year revolver with price talk of Libor plus 325 basis points and a $175 million seven-year term loan B with price talk of Libor plus 350 basis points. The term loan is being offered at par, and revolver commitments get an upfront fee of 50 basis points.

GE Capital and Calyon are the lead banks on the deal, with GE listed on the left.

Proceeds will be used to repay existing debt, redeem preferred stock and pay a dividend.

Initially, senior and total leverage will be 3.16x.

The deal is expected to receive a B2 rating from Moody's Investors Service and a B rating from Standard & Poor's, the source added.

Alliant Resources Group, which is majority owned by GTCR Golder Rauner LLC, is a Stamford, Conn., distributor of insurance and financial services products.

Venetian to close books early

Venetian Casino Resorts is closing the books on its $975 million senior secured credit facility (B1/B+) earlier than expected with the deadline moved up to Friday from sometime next week, according to a market source.

The deal has been oversubscribed since last week, pretty much immediately after launching, a fact that was not too surprising being that a nice amount of orders had already come in right after the bank book was posted a few days before the launch.

Some factors working in favor of the deal are the ratings, the collateral package and it being a known credit that people like.

The facility consists of a $125 million revolver due in 2009, a $90 million 18-month delay draw term loan A due in 2009, a $105 million six-month delay draw term loan B due in 2011 and a $655 million term loan B due in 2011.

The delay draw term loan A has a 150 basis points unused fee and the delay draw term loan B has a 75 basis points unused fee.

Price talk on the term loan B (including the delay draw portion) is Libor plus 250 to 275 basis points. Prior to launch, market speculation had the term loan B talked in the Libor plus 275 basis points area.

Goldman Sachs is the sole lead arranger and bookrunner on the deal, as well as syndication agent. Bank of Nova Scotia is the administrative agent on the loan.

Proceeds will be used by the Las Vegas hotel and casino to refinance existing debt and to finance construction of the new Palazzo casino resort project.

Closing on the credit facility is expected to take place in August.

Goodyear pricing surfaces

Pricing of Libor plus 450 basis points emerged on The Goodyear Tire & Rubber Co.'s $500 million senior secured funded synthetic letter-of-credit facility due 2007 (B1/B+) now that a bank meeting took place Wednesday afternoon to launch the deal to investors, according to a market source.

JPMorgan is the lead bank on the deal.

Proceeds will be used to refinance the Akron, Ohio, tire company's $680 million senior secured U.S. revolver, which matures on April 30, 2005.

Closing is anticipated sometime in August.

US Oncology ups revolver size

US Oncology Inc. increased the size of its five-year revolver to $150 million from $100 million but left pricing unchanged at Libor plus 250 basis points, according to a syndicate document.

The now $550 million senior secured credit facility (Ba3/B+) also contains a $400 million seven-year term loan B with an interest rate of Libor plus 250 basis points.

Interestingly, before the deal launched in May, it was anticipated that the credit facility would in fact contain a $150 million and a $400 million term loan but the structure changed as the bank meeting neared.

JPMorgan Chase Bank, Wachovia Bank and Citicorp North America Inc. are the lead banks on the deal.

Proceeds from the credit facility, combined with proceeds from a bond offering, will be used to help fund the acquisition of US Oncology by Oiler Acquisition Corp., an affiliate of Welsh, Carson, Anderson & Stowe IX LP.

The roadshow for the $575 million bond deal, comprised of $200 million senior notes due 2012 and $375 million senior subordinated notes due 2014, kicked off Monday and pricing is expected to take place next week.

Under the merger agreement, the holders of US Oncology common stock, other than Welsh Carson who already owns about 14.5% of the common stock, will receive $15.05 per share in cash for their shares, which represents an 18.5% premium above the March 19 closing price of $12.70. The transaction is valued at about $1.7 billion, including consideration for outstanding stock options and the assumption of debt.

Closing of the deal is subject to various conditions including majority approval from US Oncology's shareholders excluding Welsh Carson and members of senior management participating in the transaction, closing of the financing transactions, closing of a tender offer for US Oncology's public debt securities, the expiration of the applicable waiting period under the Hart-Scott-Rodino Act and other customary conditions.

On June 14, US Oncology announced that it had received tenders of notes and related consents from holders of more than a majority of the $175 million outstanding principal amount of its 9 5/8% senior subordinated notes due 2012. Most recently, the tender offer was extended to Aug. 13.

Furthermore, the company received early termination of the waiting period under Hart-Scott-Rodino.

A special stockholders' meeting will be held on Aug. 20 regarding the merger.

US Oncology is a Houston cancer-care services company.

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