AAi.FosterGrant aims to allocate next week; Consents due on Titan repricing

By Sara Rosenberg

New York, Sept. 2 - The syndicate on AAi.FosterGrant Inc. is hoping to allocate a $115 million deal sometime next week once pricing and terms of the credit agreement are firmed up. Meanwhile, lender consents were due Thursday for Titan Corp.'s repricing amendment, with the expectation being that the proposal will pass because of the modifications made last week.

Investors are asking for changes to AAi.FosterGrant's $100 million six-year term loan B that include pricing to flex up to Libor plus 500 basis points from Libor plus 350 basis points, call protection of 102 in year one and 101 in year two to be added and the amortization schedule to be improved, a fund manager said.

And, while the syndicate is considering these changes knowing that the deal would be fully subscribed if the modifications are made, nothing official has happened as of yet, the market source explained.

This is the second time that talk of a change in pricing on the term loan B has surfaced since the syndication process first began in early August. Around, mid-August rumor had it that the tranche would be flexed up to somewhere in the Libor plus 400 basis points range in an attempt to capture investor attention. The deal was said to be falling through the cracks since it was August - a time well known for vacations - and people who were present were caught up in other deals.

Bear Stearns is the sole lead bank on the deal that is now targeted to close around mid-September.

Included in the credit facility is a $15 million five-year revolver.

Proceeds will be used to help fund the acquisition of Magnivision Inc. from American Greetings Corp. in an all cash transaction.

AAi.FosterGrant is a Smithfield, R.I., eyewear and jewelry company. Magnivision is a reading glasses company.

Titan repricing

Under Titan's repricing amendment, the approximately $345 million term loan B would carry an interest rate of Libor plus 275 basis points, with a step down to Libor plus 250 basis points if both Moody's Investors Service and Standard & Poor's take the company's rating off negative watch and a step up to Libor plus 300 basis points if the ratings are downgraded by one or both of the rating agencies, according to a fund manager.

The term loan would also carry soft call protection of 101 for one year against a refinancing.

Originally, the syndicate went out with pricing of Libor plus 250 basis points on the term loan B with a step down to Libor plus 225 basis points upon removal from negative rating watch but investors fought that proposal hard enough to get pricing increased by 25 basis points.

And, some investors are not even pleased with the tweaked amendment proposal but were somewhat forced to give in, according to a fund manager. "We had 51% against it and if we fought a little harder we probably could have gotten them to go up in pricing. But, then one bank caved and suddenly we didn't have the 51% anymore so everybody caved," the fund manager explained.

And, although the amendment needs 100% approval from the bank group, it is still expected to pass since the investor community -some rather grudgingly - seems to have agreed to vote in favor of the repricing.

Currently, Titan's term loan B - which has been consistently quoted at par 5/8 bid, par 7/8 offered in the secondary throughout this entire amendment process - is priced at Libor plus 325 basis points.

Wachovia is the lead bank on the credit facility.

Titan is a San Diego technology developer and systems integrator that provides a range of systems solutions and services primarily to government agencies.

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