Georgia-Pacific ups revolver; Supervalu sets fees; Contech breaks; Movie Gallery firm on affirmation

By Sara Rosenberg

New York, Feb. 6 - Georgia-Pacific Corp. increased the size of its revolving credit facility tranche on Monday morning to provide the company with additional liquidity. Also, in the primary, Supervalu Inc. announced fees on the pro rata portion of its multi-billion credit facility as the deal was launched to agents.

In secondary happenings, Contech Construction Products Inc. allocated and freed for trading with the term loan closing the day quoted in the 101 region, Movie Gallery Inc.'s term loan B recouped Friday's losses and even gained some ground as the company reaffirmed guidance, and Huntsman Corp.'s term loan B saw a minimal improvement as the company announced a major change in plans.

Georgia-Pacific opted to upsize its revolving credit facility by $250 million on Monday to gain some additional flexibility, but left pricing on the tranche unchanged, according to a market source.

The revolver (Ba2/BB-/BB) is now sized at $1.75 billion, up from an original size of $1.5 billion, the source said. Pricing on the revolver is initially set at Libor plus 225 basis points, as was outlined when the deal was originally launched.

Georgia-Pacific's $11.25 billion senior secured credit facility also contains a $2 billion five-year term loan A (Ba2/BB-/BB) with an interest rate of Libor plus 225 basis points, a $5.25 billion seven-year term loan B (Ba2/BB-/BB) with an interest rate of Libor plus 200 basis points and a step down to Libor plus 175 basis points at 4.3x leverage, and a $2.25 billion eight-year second-lien term loan (Ba3/B+/B+) with an interest rate of Libor plus 300 basis points.

Late last month, the institutional portion of the credit facility was tweaked with the company deciding to move $250 million out of its second-lien term loan C and into its first-lien term loan B to take advantage of more attractive pricing, and then reducing pricing on both the term loan B and C being that they so well received by the market.

Prior to the changes, the term loan B was sized at $5 billion with price talk of Libor plus 225 basis points and no step down provision, and the term loan C was sized at $2.5 billion with price talk of Libor plus 350 basis points.

Citigroup is the administrative agent, joint bookrunner and joint lead arranger on the $11.25 billion senior secured credit facility, Bank of America is syndication agent, joint bookrunner and joint lead arranger on the revolver and term loan A, Deutsche Bank is syndication agent, joint bookrunner and joint lead arranger on the term loan B, and JPMorgan is syndication agent, joint bookrunner and joint lead arranger on the second-lien loan.

Proceeds from the term loan A, term loan B and second-lien loan will be used to repay a $6.356 billion bridge loan that was used to fund Koch Forest Products Inc.'s tender offer for all of Georgia-Pacific's shares, to refinance, repurchase or redeem certain outstanding debt securities of Georgia-Pacific and its subsidiaries and to refinance Georgia-Pacific's existing credit facility.

Revolver borrowings will be available for general corporate purposes.

Under the merger agreement, Koch paid $48 per Georgia-Pacific share for an equity value of $13.2 billion and a total enterprise value of $21 billion, including all Georgia-Pacific debt. And, now that the tender offer was completed in December, Georgia-Pacific is being operated as a privately held, wholly owned subsidiary of Koch Industries Inc.

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

Supervalu sets pro rata fees

Supervalu came out with upfront fees on its $2 billion revolver and $1.25 billion term loan A as the pro rata tranches were launched on Monday in an agent-only bank meeting that took place in the Four Seasons in New York City.

The upfront fee is 35 basis points across the revolver and term loan A for minimum tickets of $200 million, according to a market source.

Both the revolver and the term loan A were launched with opening price talk of Libor plus 150 basis points. The revolver carries a 40 basis point undrawn fee.

As for the agent meeting, it was "very well attended [with] standing room only," the source added.

Supervalu's $4 billion credit facility also contains a $750 million term loan B with pricing still to be determined.

The general syndication bank meeting is expected to take place later this spring.

Expected ratings on the credit facility are Ba3/BB-.

Royal Bank of Scotland is the lead arranger on the deal that will be used by the Eden Prairie, Minn., supermarket operator to purchase some assets from Albertson's Inc., including the operations of Acme Markets, Bristol Farms, Jewel-Osco, Shaw's Supermarkets, Star Markets and Albertsons banner stores in the Intermountain, Northwest and Southern California regions.

Supervalu's total consideration is about $12.4 billion in stock, cash and the assumption of about $6.1 billion of Albertson's debt.

The transaction is subject to approval by both Supervalu and Albertson's stockholders as well as customary regulatory approvals.

Contech frees to trade

Contech Construction Products' new credit facility broke for trading on Monday, with the $450 million term loan quoted at par ¾ bid, 101¼ offered on the open and then moving up to 101 bid, 101½ offered where it closed the day, according to a trader.

The term loan is priced with an interest rate of Libor plus 200 basis points. During syndication, the term loan was upsized from $425 million and pricing was reverse flexed from the original Libor plus 225 to 275 basis points range that was going to be based on ratings.

Contech's facility also contains a $100 million revolver.

Wachovia and Goldman Sachs acted as the lead banks on the $550 million (B1/B+) deal, with Wachovia the left lead.

Proceeds were used to help fund the now completed buyout of the company by Apax Partners LP.

Contech is a Middletown, Ohio, civil engineering site solutions products and services company.

Movie Gallery rebounds

Movie Gallery's term loan B recovered and then some on Monday from Friday's downfall as the company assured investors that fourth-quarter numbers will come in line with previous expectations, according to traders.

The term loan B ended Monday's session with levels of 93¾ bid, 94½ offered, according to a trader, up from the 92 bid, 93 offered type of range that the paper closed out Friday's session with after dropping off from the 93 bid, 94 offered type of range during market hours, the trader said.

Some other traders did not see Movie Gallery's term loan B quoted quite that high at the end of the day Monday, with one source placing level at 93¼ bid, 93¾ offered, and another source placing levels a bit wider at 93 bid, 94 offered.

However, all agreed that the paper definitely rebounded from the late-last-week fall off.

"They reaffirmed guidance today. It fell off the shelf on no real news [Friday]. It just felt heavy. I think people were just looking for some guidance and they got something solid today," one trader explained.

"It was more quoted than traded," the trader added.

On Monday morning, Movie Gallery reaffirmed its guidance for the fourth quarter of 2005 of revenues between $675 million and $705 million and same-store revenues in the range of 5% to 9%, as compared to the fourth quarter of 2004.

The company's normal year-end audit is in progress, and it expects to report its fourth-quarter and full-year results in March.

Movie Gallery also said that it expects to be in full compliance with all credit facility debt covenants for the fourth quarter but plans on resuming discussions with lenders regarding further amendments to its senior credit facility soon because of softness in the rental industry.

Surprisingly, the news of further amendments potentially being needed seemed to have no negative affect on the bank debt.

"People see it as an opportunity for increased pricing or fees," one of the traders said in explanation of why the amendment announcement seemed to go unnoticed.

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

Huntsman takes itself off the block

Huntsman Corp.'s term loan B was up a touch as the company announced that it has terminated discussions regarding its potential sale, although the news did not have as big an affect as some would have thought as little trading was seen in the name during what was described as a very quiet secondary session, according to traders.

Huntsman's term loan B closed the day quoted at par ½ bid, 101 offered, up from par ¼ bid, par ½ offered, according to a one trader, while a second trader had Monday's closing levels slightly tighter at par 5/8 bid, par 7/8 offered.

The company's revolver was unchanged on the day at 97 bid, 98 offered, both traders said.

At the end of January, Huntsman's term loan B had started coming in closer to par as rumors of possible buyout talks circulated around based on a Wall Street Journal article that claimed serious acquisition discussions were taking place and Apollo Management LP was a leading candidate for the purchase. The news report valued the potential Huntsman purchase at more than $4.3 billion. These rumors were confirmed later that day as Huntsman announced that it had received an indication of interest regarding an acquisition of all of the outstanding stock of the company.

However, on Sunday, Huntsman terminated the potential sale plans, which took a little pressure off of loan paydown fears.

"After careful review of the proposals received, the company's prospects and other strategic initiatives available, as well as thorough discussions with the parties, the board of directors of the company and its special committee have concluded that none of the proposals were in the best interests of the shareholders," the company news release said.

"We are enthusiastic about the global opportunities and prospects we see for 2006 and beyond, including expanding our differentiated businesses and possible divestitures to accelerate our debt reduction," added Peter Huntsman, president and chief executive officer, in the release.

Huntsman is a Salt Lake City-based manufacturer and marketer of commodity and differentiated chemicals.

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