Deals from IWCO Direct, Nusil, BP Metals stoke primary market; Yom Kippur sidelines secondary

By Paul A. Harris

St. Louis, Oct. 2 - Observance of Yom Kippur, the Jewish holiday of the Day of Atonement, significantly thinned the ranks in the leveraged loan market on Monday, sources said.

"Half the desk is in," one syndicate official confided at the open, adding that Monday would be a day for catching up on odd bits of business that the perennially busy bank loan market always managed to keep on the back burner.

Traders uniformly reported that there was no trading to speak of in the secondary market.

Meanwhile in the primary market, news on three deals from off-the-run names, each one less than $200 million, surfaced during the first session of October, and of 2006's fourth and final quarter.

IWCO to launch $175 million

IWCO Direct will hold a bank meeting on Thursday for its $175 million credit facility via Bear Stearns.

The Minnesota-based direct marketing company's facility will be comprised of a $150 million first-lien term loan and a $25 million second-lien term loan.

Proceeds will be used to repay existing debt and fund an $80 million dividend payment.

The company will have 3.9 times first-lien leverage and 4.6 times total leverage, according to numbers for the 12 months that ended in August, a source close to the deal said.

The existing senior secured debt ratings are B1 from Moody's Investors Service and B from Standard & Poor's.

BP Metals expected this week

BP Metals, LLC, is expected to launch a $145 million credit facility via CIBC World Markets this week, according to a market source.

The facility will be comprised of a $20 million revolver and a $100 million first-lien term loan. Both are rated Ba3 by Moody's.

The market source told Prospect News that pricing is expected to come in the Libor plus 175 to 200 basis points range.

The facility will also have a $25 million second-lien term loan (B3).

Proceeds will be used to refinance the Hertford, Hertfordshire, U.K., company's existing debt and fund a dividend payment to existing shareholders.

Wednesday meeting for Nusil

Finally Nusil Technology will launch a $135 million credit facility on Wednesday.

The Carpentaria, Calif., silicone compounds manufacturer plans to put in place a $125 million term loan B and a $10 million revolver.

RBS Greenwich Capital is the sole lead and bookrunner for the debt refinancing and dividend funding deal.

Quiet market awaits megadeals

With traders uniformly reporting the secondary market inactive during the Monday session, one said that right now the leverage loan market is "steady as she goes," with people "waiting for the big deals to get rolling."

Indeed a look at the Prospect News forward calendar affirms that a formidable parade of massive deals is slated to roll during October.

The more massive ones include Indiana Toll Road's $4.063 billion facility via BBVA,

BNP Paribas and RBS Securities and Michaels Stores Inc.'s $3.4 billion deal via Deutsche Bank, JPMorgan, Bank of America and Credit Suisse.

$2 billion-plus behemoths

Four more prospective October issuers clear the $2 billion threshold.

These include Insight Midwest, with $2.575 billion via Bank of America and JPMorgan, Lyondell Chemical Co., also with $2.575 billion, led by JPMorgan, Advanced Micro Devices Inc. with $2.5 billion via Morgan Stanley, and Reynolds & Reynolds with $2.485 billion out of Deutsche Bank, Credit Suisse and Bank of America.

Mastodons on the horizon

Farther out on the parade route, marching in place for the time being, there is a trio of deals sized to stagger the imagination.

The biggest is the HCA Inc. $16.8 billion facility via Bank of America, Citigroup, JPMorgan,

Merrill Lynch, Deutsche and Wachovia. The deal backs the LBO by Bain Capital, Kohlberg Kravis Roberts & Co., Merrill Lynch Global Private Equity and company founder Thomas F. Frist Jr.

Also topping $10 billion is the TXU Generation Development Co. LLC $11 billion credit facility, a project funding deal via Morgan Stanley, Citigroup and Merrill Lynch.

Finally there is the Kinder Morgan Inc. $8.6 billion deal via Goldman Sachs, Citigroup, Deutsche Bank, Wachovia and Merrill Lynch, to help fund public-to-private buyout of the company by management and equity investors.

Late Monday a bank loan investor commented that there is currently ample liquidity in the market to take down this massive amount of paper.

Open Text closes

In follow up news, Open Text Corp. said it completed its acquisition of Hummingbird Ltd., a transaction funded in part by a new $465 million credit facility (Ba3/BB-).

RBC Capital Markets was lead bank for the deal, which includes a $75 million revolver at Libor plus 250 bps and a $390 million term loan B at Libor plus 250 bps, with a step down to Libor plus 225 bps if leverage is below 2.75x or Moody's upgrades the company.

Open Text is a Waterloo, Ont., provider of enterprise content management software solutions.

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