Wrigley breaks; Allison rises; Airlines, autos head up; Fresenius nets orders; Landry's timing emerges

By Sara Rosenberg

New York, Aug. 12 - Wrigley Co.'s credit facility allocated and freed up for trading on Tuesday, and the well oversubscribed term loan B was quoted strong with levels inching their way north of par.

In more trading news, Allison Transmission's term loan B was higher following the release of earnings, the airline and auto sectors felt better in a general market environment that was choppy and quiet, and LCDX 10 was a bit weaker.

Over in the primary, Fresenius Kabi is close to wrapping up a managing agents syndication round for its proposed credit facility, and this process was quite successful as the company got more orders from banks than it had originally hoped.

Also on the new deal front, Landry's Restaurants Inc. came out with timing on the retail launch of its proposed bank financing and Turner Bros. has decided to push out the launch of its credit facility.

Wrigley's credit facility hit the secondary market during the session, with the $3.6 billion term loan B "on fire" in trading as levels were seen above the original issue discount price immediately on the break and then proceeded to creep above par, according to a market source.

The term loan B was quoted at 99¾ bid, 99 7/8 offered on the open and then moved up to par 3/8 bid, par½ offered, the source said.

The term loan B is priced at Libor plus 350 basis points with a 3% Libor floor, and it was sold at an original issue discount of 99. The tranche includes 101 soft call protection for one year.

During syndication, pricing on the term loan B was reverse flexed from initial talk of Libor plus 375 bps, the original issue discount was reduced from 97 and the soft call protection was added.

Wrigley's $4.85 billion credit facility also includes a $250 million revolver and a $1 billion term loan A, with both of these tranches priced in line with original talk at Libor plus 325 bps.

Goldman Sachs is the lead arranger on the deal, and Barclays, GE Capital, Rabobank and Sumitomo signed on as co-arrangers.

Proceeds will be used to help fund the merger of Wm. Wrigley Jr. Co. and Mars Inc., and to provide for ongoing working capital and general corporate purposes.

Mars will pay $80 cash for each share of Wrigley common stock and class B common stock in a transaction valued at about $23 billion.

As part of the merger, Mars received a separate debt commitment from JPMorgan, Bank of America, BNP Paribas, Citigroup, Deutsche Bank, Lloyds TSB Bank and RBS Securities that provides for a $12 billion senior unsecured credit facility consisting of a $1.5 billion revolver, an $8.5 billion term loan and a $2 billion bridge loan, according to filings with the Securities and Exchange Commission. This facility is expected to be investment grade.

Proceeds from the Mars facility will be used to finance the $11.6 billion equity contribution from Mars, the repayment or refinancing of certain Mars debt and for general corporate purposes.

Also, Berkshire Hathaway has agreed to provide $4.4 billion in subordinated debt financing to the surviving corporation in the merger and to invest $2.1 billion in equity securities.

A special meeting for Wrigley's stockholders to vote on the merger agreement is scheduled for Sept. 25.

Regulatory approvals for the transaction have already been received from the European Commission, and from U.S., Canadian and Australian regulators.

Mars and Wrigley are hoping to complete the merger as quickly as possible following receipt of stockholder approval.

Confections company Wrigley Co. will be operated as a separate, stand-alone subsidiary of Mars, keeping its headquarters in Chicago. Mars is a McLean Va.-based producer of confectionery, food and petcare products.

Allison up with numbers

Allison Transmission's term loan B was stronger on Tuesday after the company went out with positive second quarter financials to lenders, according to a trader.

The term loan B was quoted at 89¾ bid, 90¼ offered, up from 89¼ bid, 89¾ offered, the trader said.

Allison Transmission is a Speedway, Ind., designer and manufacturer of automatic transmissions.

Airlines better as oil falls

The airline sector in general, including names like UAL Corp. and US Airways Group Inc., continued to grind higher during the trading session as oil prices dropped by around $1.40, according to a trader.

UAL, a Chicago-based airline company, saw its term loan quoted at 73¾ bid, 74¾ offered, up from Monday's levels of 73¼ bid, 74¼ offered, the trader said.

And, US Airways, a Tempe, Ariz.-based airline company, saw its term loan quoted at 70½ bid, 71½ offered, up from 68¼ bid, 70¼ offered, the trader continued.

When asked why US Airways experienced such a big jump in levels, the trader explained that the company's term loan has lagged behind the other airlines, and with it being the last one in the 60s, it was viewed as the cheapest deal, inspiring buyers to get involved.

Autos inch up

Also experiencing positive momentum in trading was the auto sector, as names like Ford Motor Co. and General Motors Corp. posted some gains, according to a trader.

Ford, a Dearborn, Mich.-based automotive company, saw its term loan quoted at 78 bid, 78½ offered, up from previous levels of 77½ bid, 78 offered, the trader said.

And, General Motors, a Detroit-based automotive company, saw its term loan quoted at 75¼ bid, 76¼ offered, up from 75 bid, 76 offered, the trader continued.

The trader attributed the rise in autos to the high-yield market. He said that the companies' high yield debt has been moving up recently and the loans were just showing a delayed reaction to that high yield performance.

LCDX slides

LCDX 10 headed lower on Tuesday with activity in the index continuing to be light, according to a trader.

The index was quoted at 96.95 bid, 97.05 offered, down from 97.25 bid, 97.35 offered, the trader said.

Fresenius Kabi grabs attention

Moving to the primary market, Fresenius Kabi's proposed $2.4 billion senior secured credit facility is off to a great start being that during its first phase of syndication, the target sale amount was substantially oversubscribed, according to a 425 filed with the SEC Tuesday.

The oversubscription was reached as 20 of Fresenius' key relationship banks from Europe, the U.S. and Japan, acting as mandated lead arrangers and joint lead arrangers, provided strong orders towards the deal.

Deutsche Bank, Credit Suisse and JPMorgan are the senior mandated lead arrangers on the deal and provided the initial funding commitment to the company. Deutsche Bank is acting as the global coordinator.

Following review of customary documentation, the first phase of syndication is expected to close on Aug. 20.

It is currently anticipated that general syndication of the credit facility will be launched in Europe and the United States during the early September timeframe, the filing said.

The facility consists of a $500 million five-year revolver to be made available to a financing subsidiary of Fresenius, a $150 million five-year revolver to be made available to APP Pharmaceuticals Inc., a $900 million five-year term loan A and an $850 million six-year term loan B.

Previously, the company said that it estimates that the term loan A will be priced around Libor plus 287.5 basis points and that the term loan B will be priced around Libor plus 350 bps.

Financial covenants include a consolidated leverage ratio, a consolidated fixed-charge coverage ratio, an interest expense coverage ratio and limits amounts spent on capital expenditure.

Proceeds from the credit facility will be used to help fund the acquisition of APP Pharmaceuticals, refinance APP's existing senior credit facility, and for general corporate and working capital purposes.

The company has also received a commitment for a $1.65 billion bridge loan that could be replaced by high-yield financing opportunities.

Under the agreement, Fresenius Kabi will purchase APP for $23 per share and a registered and tradeable contingent value right that could deliver up to $6 per share, payable in 2011, if APP exceeds a cumulative adjusted EBITDA target for 2008 to 2010.

Based on the cash purchase price, the transaction values the fully diluted equity capital of APP at about $3.7 billion, and with the contingent value right, if fully realized, at a value of $4.6 billion.

Fresenius will also assume all of APP's outstanding debt, which totals about $940 million, net of cash; so, in total the consideration for the acquisition could be up to $5.6 billion.

Through the acquisition of APP, Fresenius Kabi will enter the U.S. pharmaceuticals market.

The transaction is expected to close at the end of 2008 or beginning of 2009, subject to certain conditions, including regulatory approvals, and approvals under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

Fresenius Kabi is a Bad Homburg, Germany, infusion therapy and clinical nutrition company. APP is a Schaumburg, Ill., hospital-based injectable pharmaceutical company.

Landry's sets launch

Timing on the retail launch for Landry's Restaurants' proposed $300 million senior secured credit facility surfaced on Tuesday as a market source revealed that a bank meeting for the deal has been scheduled for Sept. 4.

The facility consists of a $50 million five-year revolver and a $250 million five-year term loan A, with official price talk not yet available, the source said.

However, according to filings with the SEC, pricing on the revolver and the term loan is expected to be Libor plus 400 bps, with a 3.25% Libor floor, and the revolver is expected to have a 50 bps commitment fee.

Wells Fargo Foothill and Jefferies are the co-lead arrangers, co-bookrunners and co-syndication agents on the deal, with Well Fargo the administrative agent.

Proceeds from the credit facility will be used to help fund the buyout of the company by Fertitta Holdings Inc.

Under the buyout agreement, Landry's stockholders will get $21 per share in cash. The total value of the deal is about $1.3 billion, including about $885 million of debt.

Other financing will come from $315 million of senior secured notes that are backed by a commitment for a one-year senior secured increasing rate bridge loan from Jefferies, $50 million of preferred equity, $90 million of equity contributed by the buyer and at least $125 million of rollover common equity.

Fertitta is a newly formed entity wholly owned by the company's chairman, president, chief executive officer and original founder, Tilman J. Fertitta, who beneficially owns about 39% of the company's outstanding common shares.

Landry's is a Houston-based restaurant, hospitality and entertainment company.

Turner launch postponed

Turner Bros. opted to delay the launch of its proposed $88 million six-year credit facility, which was originally scheduled for Aug. 6 and then tentatively reset for Aug. 13, according to a market source.

New timing on the deal is still to be determined, the source said.

However, some market participants are expecting the deal to be September business, a second source added.

The facility consists of a $15 million revolver and a $73 million term loan, with both tranches talked at Libor plus 475 bps with an original issue discount of 98. There is no Libor floor.

GE Capital is the lead bank on the deal that will be used to fund Huntsman Gay Capital Partners' acquisition of the company from Saw Mill Capital.

Other financing will come from $52 million of mezzanine debt that is being placed by the company/sponsor.

Turner Bros. is a provider of industrial plant maintenance services using its fleet of cranes and specialized transportation equipment.

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