Graphic Packaging breaks; Georgia-Pacific widens; LCDX slides; Clear Channel still in question

By Sara Rosenberg

New York, March 28 - Graphic Packaging International, Inc.'s term loan hit the secondary market on Friday, with the debt trading slightly above its original issue discount price.

Also in trading, Georgia-Pacific LLC saw levels widen out following the release of financial results to investors and LCDX 9 was a touch softer in sympathy with equities.

In other news, a main focus in the loan market this week was Clear Channel Communications Inc.'s pending leveraged buyout, and that trend continued into Friday as more questions arose on whether the deal will get completed or not.

Graphic Packaging's $1.2 billion senior secured term loan due May 16, 2014 (Ba3) allocated and freed up for trading during the Friday session, with levels quoted in the 91 context, according to a trader.

More specifically, the term loan was seen at 91 bid, 91½ offered on the break and then it moved up to 91¼ bid, 91¾ offered, the trader said.

Pricing on the term loan is Libor plus 275 basis points and the paper was sold at an original issue discount of 91.

During syndication, the original issue discount was increased from initial guidance of 93.

Amortization is an annual amount of 1%, payable in equal semiannual installments, with a final installment due and payable at maturity equal to the remaining outstanding principal balance.

Bank of America, JPMorgan, Goldman Sachs and Deutsche Bank acted as the lead banks on the deal that was funded earlier this month.

Proceeds were used to refinance existing first- and second-lien bank debt in connection with the company's combination with Altivity Packaging LLC.

As part of the transaction, the company also got a $100 million add-on to its revolving credit facility due May 16, 2013, bringing the new total size to $400 million.

Graphic Packaging's existing $1.055 billion term loan due May 16, 2014 remained in place and continues to be priced at Libor plus 200 bps.

The combination of Graphic Packaging and Altivity created a company with pro-forma 2007 revenues of over $4.4 billion and pro-forma 2007 adjusted EBITDA of about $553 million.

Graphic Packaging is a Marietta, Ga., paperboard packaging company.

Georgia-Pacific bid slips

Georgia-Pacific saw the bid on its term loan fall a bit lower and the offer move a bit higher after the company discussed earnings with lenders, according to a trader.

The term loan was quoted at 92¾ bid, 93½ offered, compared to Thursday's levels of 92 7/8 bid, 93 3/8 offered, the trader said.

"Down a little bit [on the bid side], but numbers were pretty good," the trader remarked.

Georgia-Pacific made available to current or potential investors on Friday selected fourth quarter and full year 2007 financial information. A supplemental presentation will follow.

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

LCDX weakens

LCDX 9 came under a little pressure in trading on Friday as stocks sold off towards in the afternoon, according to a trader.

The index was quoted at 93.20 bid, 93.30 offered, versus 93.40 bid, 93.50 offered on Thursday, the trader said.

Nasdaq closed down 19.65 points, or 0.86%, Dow Jones Industrial Average closed down 86.06 points, or 0.70%, S&P 500 closed down 10.54 points, or 0.80%, and NYSE closed down 55.05 points, or 0.62%.

Clear Channel steals spotlight

Clear Channel's proposed leveraged buyout has been a dominant topic of conversation this past week as information on financing problems emerged, and even though it looked like the company gained court support for the transaction, new information surfaced that brought the completion of the deal back in question.

"Big thing in the news is whether Clear Channel will go through," a market source said.

On Friday, Clear Channel cautioned in an 8-K filed with the Securities and Exchange Commission that closing of its buyout transaction may not occur.

The company said that it met with the sponsors on Thursday for the closing, but the sponsors said that they could not consummate the purchase due to the failure of the banks to provide the required financing.

Clear Channel went on to say that representatives of the banks failed to attend the meeting.

The financing in question includes, among other things, a $19.525 billion credit facility, according to previous filings with the SEC.

Tranching on the deal has been outlined as a $1 billion receivables-backed revolver, a $2 billion senior secured revolver, a $1.25 billion senior secured term loan A, a $12.65 billion senior secured term loan B, a $625 million senior secured delayed-draw term loan and an up to $2 billion senior secured term loan C that would be reduced by proceeds from asset sales prior to closing.

Citigroup, Deutsche Bank, Morgan Stanley, Credit Suisse, RBS and Wachovia are the lead banks on the facility.

Firm information on the financing problems first came out this past Wednesday, when Clear Channel announced that it sued the banks, which had committed the buyout financing debt for tortious interference.

The lawsuit, filed in Bexar Country, Texas, alleged that the banks were refusing to execute necessary documents in an overt effort to cause time to run out so that the buyout agreement would fall through.

Then on Thursday, news came out that the judge issued a temporary restraining order in favor of Clear Channel, saying that the banks could not interfere with the completion of the buyout by refusing to fund the debt commitments, insisting on terms that are inconsistent with the commitment letter, or refusing to act in good faith in the drafting of definitive loan documents.

Under the transaction agreement, Clear Channel is supposed to be acquired by Thomas H. Lee Partners, LP and Bain Capital Partners, LLC for $39.20 per share.

Clear Channel is a San Antonio media and entertainment company specializing in "gone from home" entertainment and information services.

Chiquita closes

Chiquita Brands LLC closed on its $350 million six-year senior secured credit facility (Ba3/B+) on Friday, according to a market source.

The facility consists of a $150 million revolver priced at Libor plus 350 bps and a $200 million term loan A priced at Libor plus 425 bps.

During syndication, the revolver was downsized from $200 million, and pricing on the revolver and the term loan A was increased from original talk at launch of Libor plus 325 bps.

Both the revolver and the term loan A were sold with upfront fees that were under a point; however, the specific fees were not disclosed.

Rabobank acted as the lead bank on the deal that was fully syndicated to banks.

The agreement governing the new credit facilities contains two material financial maintenance covenants, an operating company leverage ratio and a fixed-charge coverage ratio.

Proceeds were used to help refinance the company's existing $200 million revolver and $326 million term loan C.

Also helping repay the term loan C were proceeds from a $200 million 4.25% convertible senior notes offering that was completed in February. The convertible deal was originally expected to be sized at $150 million but was increased prior to close. It's because of this upsizing to the convertible offering that the company ended up deciding to downsize the revolver.

Chiquita is a Cincinnati-based marketer and distributor of fresh and value-added food products.

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