Burger King price talk emerges; Eddie Bauer adds pricing step up, soft call; Energy Transfer near par

By Sara Rosenberg

New York, June 20 - Burger King Corp. set price talk on its $1.15 billion credit facility (Ba2/B+) as the deal launched via a bank meeting on Monday. Meanwhile, Eddie Bauer Holdings Inc. added some step-up provisions to the pricing on its term loan because of specific collateral uncertainties, along with soft call protection.

In the secondary, Energy Transfer Co.'s reworked term loan was being quoted close to par on Monday, although it appears as if banks are being somewhat hush hush on the deal since they are in the process of trying to lessen their exposure.

Burger King went out to lenders with opening price talk of Libor plus 175 basis points on both its $150 million revolver and $250 million six-year term loan A and price talk of Libor plus 200 basis points on its $750 million seven-year term loan B as the deal launched into syndication, according to a market source.

The term loan B is being offered to investors at par.

JPMorgan and Citigroup are the lead banks on the deal, with JPMorgan the left lead.

Proceeds will be used by the Miami-based fast food restaurant chain to refinance existing debt.

Eddie Bauer adds step up

Eddie Bauer held private and public lender calls on Monday announcing that it modified the proposed $300 million six-year term loan (Ba3/B+) credit agreement to include a step up in pricing if certain collateral isn't pledged by a specific date and a step up based on leverage, according to a market source.

In addition, the syndicate added 101 soft call protection for one year to the deal as well.

Currently, the term loan is priced at an initial rate of Libor plus 275 basis points.

Under the new changes, the interest rate can increase by 25 basis points if the company is unable to pledge two specific subsidiaries as collateral by Sept. 30 and is unable to name these two subsidiaries as guarantors by Aug. 5, the source said. These subsidiaries were originally included in the collateral package but because of current Delaware bankruptcy law were unable to be pledged. However, this law is expected to be changed on Aug. 1, which is why the company has until Aug. 5 to name the subsidiaries as guarantors. The company was apparently given a little leeway in terms of the deadline for posting the collateral, the source explained.

Also, with the new modifications, pricing on the term loan can increase to Libor plus 300 basis points if leverage is greater than 2.75x. The credit agreement already contained a provision for a step down to Libor plus 250 basis points if leverage is less than or equal to 1.75x.

Based on the phrasing of the modified credit agreement, it appears that if pricing ends up increasing to Libor plus 300 basis points because of leverage, and the company then misses its Sept. 30 collateral deadline, pricing would step up to Libor plus 325 basis points, the source added.

The syndicate is planning on allocating the term loan on Tuesday.

JPMorgan and GE Capital are joint lead arrangers and joint bookrunners on the deal, with JPMorgan the left lead. GE is also acting as syndication agent and Credit Suisse First Boston is acting as documentation agent.

Proceeds from the term loan will be used to support Spiegel Inc.'s plan of reorganization upon exiting from Chapter 11 bankruptcy protection. Following emergence, Spiegel will establish Eddie Bauer Holdings as the new parent company.

Eddie Bauer has already gotten a $150 million working capital asset-based revolving credit facility as part of its exit financing package. This revolver is being provided by existing debtor-in-possession lenders and is already a done deal. Essentially the company's DIP is being converted into the new revolver.

Eddie Bauer is a Redmond, Wash., provider of casual wear clothing, accessories and home furnishings.

Energy Transfer near par

Energy Transfer Co.'s reworked term loan was being quoted by underwriters in the 99¾ to par context during Monday's session, according to a market source. The term loan first started trading on Friday but levels were hard to pinpoint and those that were heard in the market were incredibly wide, the source added.

The term loan was clubbed out among four underwriters - Citigroup, Goldman Sachs, Lehman and Wachovia - after some tweaks were made and is now being sold off by those lead banks in the secondary market.

When first launched in early May, the deal was intended to be fully syndicated in the primary market with Citigroup and Goldman Sachs acting as lead banks, with Citigroup the left lead.

With the decision to club out the deal, the term loan was changed to a size of $600 million, up from the most recent size of $500 million but down from the original launch size of $700 million.

Furthermore, pricing on the term loan was changed to Libor plus 300 basis points, with a step up to Libor plus 350 basis points in year two and Libor plus 400 basis points in year three, compared to original price talk on the deal of Libor plus 200 basis points.

Proceeds from the term loan are being used to pay a dividend to Energy Transfer Partners LP, a Tulsa, Okla.-based publicly traded partnership owning and operating a diversified portfolio of energy assets.

Energy Transfer Co. owns the 2% general partnership interest in Energy Transfer Partners.

Wire Rope closes

Wire Rope Corp. of America closed on its $220 million credit facility consisting of a $175 million term loan (B2/B-) and a $45 million revolver. J.P. Morgan Securities Inc. acted as the agent on the term loan, and HSBC acted as the agent on the revolver.

Wire Rope, a portfolio company of KPS Special Situations Fund II LP, used the new credit facility to fund the acquisitions of Aceros Camesa SA de CV and Camesa Inc. from Grupo Industrial Camesa SA de CV, to refinance debt and to pay a $25 million distribution to shareholders.

Wire Rope is a St. Joseph, Mo., manufacturer, engineer and distributor of wire rope.

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