Jean Coutu heads lower on acquisition news; Movie Gallery, Georgia Pacific stronger; Fresenius softens

By Sara Rosenberg

New York, Aug. 24 - The Jean Coutu Group Inc.'s term loan B came in toward the par context as news surfaced that the debt would be paid down with proceeds from the sale of Jean Coutu Group USA Inc.

In other trading news, Movie Gallery Inc.'s term loan B saw positive momentum during Thursday's market hours and so did Georgia-Pacific Corp.'s term loan B, while Fresenius Medical Care AG weakened a touch.

Jean Coutu's term loan B fell by about half a point in trading as investors are now waiting to be taken out by the transaction, according to a trader.

During a conference call on Thursday, company officials said that it would be repaying in full its term loan A, term loan B and revolver bank debt with proceeds from the sale of Jean Coutu Group USA to Rite Aid Corp.

In reaction to the news, Jean Coutu's term loan B moved to par bid, par ½ offered from previous levels of around par ½ bid, par ¾ offered, the trader said.

Rite Aid is buying Jean Coutu Group USA for $1.45 billion in cash, subject to customary working capital adjustments, and 250 million shares of Rite Aid common stock, giving it a 32% common equity interest and 30.2% of the voting power in the expanded Rite Aid.

The Jean Coutu Group USA includes 1,858 drugstores of which 337 are Brooks stores and 1,521 are Eckerd stores, and six distribution centers.

Rite Aid will be using new term loan debt, six-year notes, borrowings under its existing revolving credit facility and cash on hand to fund the acquisition.

Closing of the transaction, which could be as early as Rite Aid's fiscal 2007 fourth quarter that begins Dec. 3, 2006 and ends March 3, 2007, and The Jean Coutu Group's fiscal 2007 third quarter that begins on Nov. 26, 2006 and ends Feb. 24, 2007, is subject to review under the Hart-Scott-Rodino Act, Rite Aid stockholder approval and other customary closing conditions.

Jean Coutu is a Longueuil, Quebec-based drugstore chain.

Movie Gallery trades up

Movie Gallery's term loan B bounced around a bit during market hours, with trades going off as much as three quarter of point stronger, before settling back in to close the day only slightly higher, according to a trader.

The term loan traded as high as 941/2, but by late day, levels settled in at 93¾ bid, 94½ offered, the trader said. Overall, Thursday's closing levels ended up better by about a quarter of a point when compared to Wednesday's closing levels.

No specific news was seen as sparking the momentum, the trader added.

Movie Gallery is a Dothan, Ala.-based video rental company.

Georgia-Pacific better

Some Georgia-Pacific term loan B debt traded during Thursday's session at slightly stronger levels on no specific news, according to a trader.

The term loan B closed the day better by about an eighth of a point at par 1/8 bid, par 3/8 offered, the trader said.

Georgia-Pacific is an Atlanta-based manufacturer and marketer of tissue, packaging, paper, building products and related chemicals.

Fresenius weakens

Fresenius' term loan B came in by maybe an eighth of a point with levels closing out the day at 99 bid, 99½ offered, according to a trader.

"It's one of the lower coupon names, so it's tough to get that one to move up," the trader explained.

Fresenius is a Bad Homburg, Germany-based dialysis products and services provider.

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