Berry, Rite Aid dip with numbers; New deals pile on to next week's calendar; Goodrich flexes

By Sara Rosenberg

New York, Jan. 3 - Berry Plastics Holding Corp.'s term loan was softer on Thursday, pressured by the recent release of financials and being put on review for downgrade, Rite Aid Corp.'s term loan was bid lower after the company released disappointing December sales numbers, Tousa Inc.'s second-lien continued to move higher, and LCDX was down.

Meanwhile, the primary market is picking up as a few deals - Solutia Inc., Dana Corp. and Augusta Sportswear Group - stacked on to next week's calendar, joining the CDW Corp. term loan that was the first to be announced this year.

In other news, Goodrich Petroleum Corp. reduced pricing on its second-lien term loan and removed the delayed-draw option.

Berry Plastics' term loan headed lower on Thursday as investors appeared to be reacting to recently released quarterly financials and the placement of the company's ratings on CreditWatch with negative implications by Standard & Poor's, according to traders.

The term loan ended the day at 92½ bid, 93 offered, down from 93 bid, 93½ offered, traders said.

"There was no reaction yesterday but for some reason it reacted today," one trader remarked.

On Wednesday, the company revealed in an 8-K filed with the Securities and Exchange Commission that for the period of July 1, 2007 to Sept. 29, adjusted EBITDA was $112.8 million and net loss was $25.8 million.

For the same period in 2006, "Old Berry" reported adjusted EBITDA of $65.2 million and a net loss of $86.3 million, "Old Covalence" reported adjusted EBITDA of $33.6 million and a net loss of $5.7 million, and the combined company reported adjusted EBITDA of $98.8 million and a net loss of $92 million.

Then on Thursday, S&P placed its first- and second-lien senior secured debt ratings on Berry on CreditWatch with negative implications. The reason given for the CreditWatch is Berry's late December announcement that it will acquire Captive Holdings Inc. for about $500 million in cash and that it has obtained financing commitments for the transaction.

"The CreditWatch placement indicates that we could lower or affirm the ratings on the first- and second-lien debt, depending on financing for the acquisition and the implications for recovery prospects for these instruments in the post-acquisition capital structure," S&P credit analyst Cynthia Werneth said in the rating release. "Recovery prospects could deteriorate if Berry finances the acquisition with additional secured debt."

Berry is an Evansville, Ind.-based manufacturer of plastic packaging including plastic containers, tubes, drink cups, bottles, closures, dispensing caps, industrial buckets, consumer products, prescription vials and overcaps.

Rite Aid bid slides

Also in the secondary, Rite Aid's term loan was lower on the bid side during the trading session in reaction to soft December sales results, according to a trader.

The term loan was quoted at 93¼ bid, 94 offered, compared with Wednesday's levels of 93½ bid, 94 offered, the trader said.

For the four weeks ended Dec. 29, Rite Aid reported a decrease in same-store sales of 0.5% over the prior-year period.

Same-store sales for the 43-week period ended Dec. 29 increased 1.2%.

Rite Aid is a Camp Hill, Pa.-based drugstore chain.

Tousa second-lien edges higher

Tousa's second-lien term loan was once again trading higher, with some saying that the recently missed bond payments were actually a positive for the bank debt.

The second-lien term loan ended the day at 92½ bid, 93½ offered, up from 92 bid, 93 offered, traders said.

"If they're not making payments on the notes, there's less cash going out the door. Leaves more for the second-lien and ongoing it will be less money going out. They can stay current on the second-lien because it's only a PIK and they can continue to make the PIK payment," one trader explained.

On Wednesday, Tousa said that it failed to make its semiannual interest payments due Jan. 1 under its $300 million 9% senior notes due 2010 and $185 million 10 3/8% senior subordinated notes due 2012.

The failure to pay interest on the notes within 30 days of the due date could result in the debt becoming immediately due and payable and cause other debt of the company to be accelerated.

As was previously reported, the company is considering restructuring alternatives.

Tousa is a Hollywood, Fla.-based homebuilder.

LCDX inches lower

LCDX 9 was a bit weaker on Thursday, with no specific reason seen as causing the move, according to traders.

The index went out around 96.70 bid, 96.80 offered, down from around 96.90 bid, 97.00 offered on Wednesday.

Stocks were mixed on the day, with Nasdaq down 6.95 points, or 0.27%, Dow Jones Industrial Average up 12.76 points, or 0.10%, S&P 500 unchanged, and NYSE up 8.50 points, or 0.09%.

Launch momentum picks up

Now that people had a day to settle back in after the holidays, new deal announcements multiplied, as Solutia and Dana both revealed bank meeting dates for their exit facilities, and Augusta Sportswear came out with details on its buyout deal.

Solutia is set to launch its proposed $1.6 billion exit financing credit facility, comprised of a $400 million five-year asset-based revolver (Ba1) and a $1.2 billion seven-year term loan B (B1/B+), on Monday, according to a market source.

Citigroup, Goldman Sachs and Deutsche Bank are the joint lead arrangers and joint bookrunners on the deal, which will be used to pay creditors under the company's plan of reorganization and to fund ongoing operations after its emergence from Chapter 11.

As part of its exit financing package, Solutia has also received a commitment for a $400 million senior unsecured bridge facility, which will not be utilized if $400 million of senior notes due 2016 are issued prior to emergence, and the company has arranged for a fully backstopped rights offering that will raise $250 million in new equity capital.

Solutia is a St. Louis-based manufacturer and provider of performance films, specialty chemicals and an integrated family of nylon products.

Also scheduled for next week is Dana's proposed $2 billion exit financing credit facility, comprised of a $650 million five-year asset-based revolver and a $1.35 billion seven-year term loan B, which is set to launch on Tuesday, a market source said.

Citigroup, Lehman Brothers and Barclays are the lead banks on the deal, which will be used to repay the company's debtor-in-possession credit facility, to make other payments required upon its exit from bankruptcy and to provide liquidity to fund working capital and other general corporate purposes.

Dana is a Toledo, Ohio-based supplier of components, modules and systems to vehicle manufacturers and related aftermarkets.

And yet another deal to emerge onto next week's scene is Augusta Sportswear, as it is set to launch a proposed $302.5 million credit facility on Monday to help fund its buyout by Quad-C Management from Linsalata Capital Partners, according to a market source.

GE Capital is the lead bank on the deal, which consists of a $50 million revolver, a $172 million first-lien term loan and an $80.5 million second-lien term loan.

Augusta is an Augusta, Ga., designer, manufacturer and distributor of athletic-oriented apparel, team uniforms, sportswear and related accessories.

These three deals joined CDW's $2.2 billion institutional term loan (B2/BB-), which was already announced during the previous session to be launching with a bank meeting on Wednesday of next week.

Price talk on the CDW term loan is not yet available, but the deal will be sold to investors at some sort of original issue discount.

Lehman Brothers, JPMorgan, Deutsche Bank and Morgan Stanley are the lead banks on the term loan, with Lehman the left lead.

Proceeds from the deal, which already funded back in October, were used to help back the buyout of CDW by Madison Dearborn Partners LLC and Providence Equity Partners Inc. for $87.75 in cash per share. The transaction was valued at $7.3 billion.

In connection with the buyout, the company also got an $800 million ABL revolving credit facility that was syndicated late last year at pricing of Libor plus 150 basis points.

CDW is a Vernon Hills, Ill., provider of technology products and services to business, government and education customers.

Goodrich Petroleum trims spread

In more primary happenings, Goodrich Petroleum lowered pricing on its $100 million senior second-lien term loan due Dec. 31, 2010 and eliminated the delayed-draw option that was available on $50 million of the tranche, according to a market source.

The second-lien term loan is now priced at Libor plus 550 bps, down from original talk at launch of Libor plus 600 bps, and the paper is still being sold to investors at par, the source said.

Call protection on the loan is unchanged at non-callable for one year, then at 101 in year two and at par after that.

BNP Paribas is the lead bank on the deal, which will be used to pay down revolver borrowings.

Although the total size of the second-lien term loan is currently $100 million, it is possible that the company will take down less than the full amount given the success of its recent equity offering.

In December, the company closed on a common stock offering that generated net proceeds of $145.4 million. The company is using $123.9 million of the proceeds to pay off outstanding borrowings under its senior credit facility and $21.5 million of the proceeds to purchase capped call options on its common stock.

Recommits from lenders were due on Thursday and allocations are expected to go out late next week.

Goodrich is a Houston-based crude oil and natural gas company.

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