Laidlaw breaks; Dole trades up on speculation of grid movement; Secondary sees better tone

By Sara Rosenberg

New York, July 31 - Laidlaw International Inc.'s term loan B freed for trading on Monday afternoon, with levels quoted atop par, and Dole Food Co. Inc.'s term loan B inched higher on speculation that lenders may be seeing a bump up in the spread based on the existing pricing grid and earnings expectations.

Meanwhile, the secondary loan market in general had a better feel to it with most names seen up marginally on the day, including big issuers like Affiliated Computer Services Inc., Georgia-Pacific Corp., Windstream Corp. and PanAmSat Holding Corp.

Laidlaw's $500 million term loan B (Ba2) broke for trading late in the day Monday, with levels quoted at par 3/8 bid, par ¾ offered, according to a trader.

The term loan is priced with an interest rate of Libor plus 175 basis points.

Proceeds from the term loan B will be used to repurchase $500 million of common stock, with about $400 million of stock expected to be purchased in a modified Dutch auction tender offer and about $100 million of stock expected to be purchased through open-market transactions.

With the new debt, leverage will be about 1.7x EBITDA.

Laidlaw is a Naperville, Ill., provider of transportation services.

Dole trades higher

Dole Food's term loan B bounced around a bit during Monday's trading session and actually closed the day slightly stronger as investors are theorizing that if upcoming earning results are as weak as the market is anticipating, pricing on the bank debt may move up a notch on the existing grid, according to a trader.

The term loan B closed the day quoted at 98 bid, 98½ offered, higher by about an eighth to a quarter of a point, the trader said.

"Earnings are expected to be weak and if they're weak enough, the pricing will go up to Libor plus 200 basis points based on the current grid. The grid is leverage based, so if EBITDA comes in lighter than expected, then leverage goes up," the trader explained.

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

Secondary stronger

Although some rumors helped to spark Dole's rise, the improvement could also have been a result of Monday's stronger secondary market in which names in general were up by about an eighth to a quarter of a point on the day, a second trader remarked.

Some of the bigger issuers that experienced this better trading momentum included Affiliated Computer, Georgia-Pacific, Windstream and PanAmSat.

Affiliated Computer's term loan B closed the day quoted at par ¼ bid, par ½ offered, up about an eighth of a point, the trader said. The company is a Dallas-based provider of business process and information technology outsourcing solutions to commercial and government clients.

Georgia-Pacific's term loan A closed the day quoted at par bid, par ¼ offered, also up about an eighth of a point, the trader continued. The company is an Atlanta-based manufacturer and marketer of tissue, packaging, paper, building products and related chemicals.

Windstream's term loan B closed the day quoted at par 3/8 bid, par 5/8 offered, up a quarter of a point from previous levels of par 1/8 bid, par 3/8, the trader said. The company is a Little Rock, Ark.-based provider of voice, broadband and entertainment services.

And, PanAmSat's term loan A and term loan B were both up an eighth of a point, with term loan A levels closing out the day at 99¾ bid, par ¼ offered and term loan B levels closing the say at par ½ bid, par ¾ offered, the trader added. PanAmSat is a Wilton, Conn.-based satellite company.

FTD firms pricing, step down

FTD Group Inc. firmed up pricing on its $150 million term loan B (Ba3/BB-) at Libor plus 200 basis points, the low end of original guidance of Libor plus 200 to 225 basis points, according to a market source.

In addition, a step down to Libor plus 175 basis points was added to the term loan effective when leverage is below 31/2x, the source added.

FTD's $225 million senior secured credit facility also contains a $75 million revolver (BB-) with grid-based pricing.

Allocations on the deal are expected to go out on Tuesday, but funding already took place this past Friday.

Wells Fargo acted as the lead bank on the deal.

Proceeds were used to fund the acquisition of Interflora Holdings Ltd., a U.K.-based provider of floral-related products and services, for a purchase price of £66 million and to refinance existing FTD bank debt.

FTD is a Downers Grove, Ill., provider of floral services and products.

Oglebay closes

Oglebay Norton Co. closed on its new $230 million credit facility (B1/B+) consisting of a $55 million five-year asset-based revolver at Libor plus 125 basis points, a $140 million six-year term loan at Libor plus 250 basis points and a $35 million delayed draw for nine months with a six-year final maturity term loan at Libor plus 250 basis points, according to a company news release.

The funded and delayed-draw term loans carry a step down to Libor plus 225 basis points if consolidated leverage is below 2.5x.

During syndication, pricing on the funded and delayed-draw term loans was reverse flexed from original talk at launch of Libor plus 275 basis points.

JPMorgan acted as the bookrunner and lead arranger on the deal.

Financial covenants include maximum leverage, minimum fixed charge coverage and maximum capital expenditures.

Proceeds were used to refinance the company's existing senior secured credit facilities, to provide for the conversion of convertible preferred stock and to provide for capital expansion.

The delayed-draw term loan will serve as a backstop for opportunistic calls on the convertible preferred stock or for certain growth capital expenditures.

Oglebay Norton is a Cleveland-based provider of essential minerals and aggregates to a broad range of markets, from building materials and environmental remediation to the energy and metallurgical industries.

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