LNR Property term loan B breaks at plus par levels in otherwise silent pre-holiday market

By Sara Rosenberg

New York, Dec. 22 - LNR Property Corp.'s recently upsized $1.8 billion credit facility (B2/B+) allocated on Wednesday morning with the term loan B trading in the mid-to-high par area during the eerily quiet pre-holiday session.

By the end of the day LNR's $1.5 billion term loan B was quoted at par ¼ bid, 101 offered, a trader said, adding that he really didn't see the deal trading much in the Street.

The tranche was recently increased by $100 million from $1.4 billion and pricing firmed up at Libor plus 300 basis points - the low end of the Libor plus 300 to 325 basis point price talk. In connection with the term B upsizing, the amount of mezzanine debt being obtained was downsized.

The facility also contains a $150 million revolver and a $150 million term loan A, both priced with an interest rate of Libor plus 300 basis points.

Proceeds from the credit facility and the mezzanine financing will be used to help fund the acquisition of LNR by Riley Property Holdings LLC, a newly formed company majority owned by affiliates of Cerberus Capital Management LP and its real estate affiliate, Blackacre Institutional Capital Management LLC, in a transaction valued at about $3.8 billion.

Deutsche Bank and Goldman Sachs are joint lead banks on the deal.

LNR is a Miami Beach, Fla.-based real estate investment, finance and management company.

Associated Materials closes

Associated Materials Inc. closed on its $255 million credit facility (B2/B+) consisting of a $175 million term loan B due 2010 with an interest rate of Libor plus 225 basis points and an $80 million revolver due 2009 with an interest rate of Libor plus 250 basis points, according to a market source.

UBS Securities LLC and Citigroup Global Markets Inc. acted as joint lead arrangers on the deal, with UBS the left lead.

Essentially through this deal the company increased its term loan B by $42 million, increased its revolver by $10 million, changed maturities and lowered interest rates. The company's previous term loan B carried an interest rate of Libor plus 275 basis points and the previous revolver carried an interest rate of Libor plus 300 basis points.

The facility was obtained in connection with a recapitalization of the parent company, AMH Holdings Inc., under which Investcorp and its co-investors got an indirect equity ownership interest in Associated Materials of 50%, with current shareholders, led by Harvest Partners and including co-investor Weston Presidio, retaining 50%.

Investcorp and its co-investors purchased from the existing shareholders $150 million of convertible preferred stock of the newly formed holding company.

And, the newly formed holding company issued $75 million of senior notes via Apollo Investment Corp.

These senior notes, along with the extra term loan debt were used to pay about $118 million in the form of a dividend to existing shareholders and payments to management stockholders.

The remaining portion of the new facility was and will be used to refinance existing debt and for general corporate purposes.

Pro forma for the transaction, senior debt is 1.3x, total debt through the operating company is 2.6x and total debt through the holding company is 5.3x.

Associated Materials is a Cuyahoga Falls, Ohio-based manufacturer of exterior residential building products.

SFBC closes

SFBC International Inc. closed on its $160 million senior secured credit facility (B2/B+) consisting of a $120 million six-year term loan with an interest rate of Libor plus 300 basis points and a $40 million five-year revolver with an interest rate of Libor plus 275 basis points.

UBS Securities was the sole lead bank on the deal.

Approximately $125 million of the new credit facility was drawn down to help fund the acquisition of PharmaNet Inc., a private international drug development company based in Princeton, N.J., for about $248.6 million in cash.

The company also used about $134 million of cash from its balance sheet to fund the acquisition.

SFBC is a Miami provider of specialized drug development services to pharmaceutical, biotechnology and generic drug companies.

International Mill closes

International Mill Service Inc. completed its acquisition of Glassport, Pa.-based Tube City Holdings LLC, a provider of specialty services to the global steel industry, according to a company news release.

To help fund the transaction, the company got approximately $180 million of incremental bank debt and decided to basically reprice its existing bank debt.

The facility contains a $265 million first-lien term loan B (B1/B+), which includes a $140 million add-on, with an interest rate of Libor plus 250 basis points and a step down to Libor plus 225 basis points if total leverage falls below 2.75x. Originally, the existing B loan and the add-on were priced at Libor plus 275 basis points.

There is also a $50 million second-lien term loan (B3/B-), including a $20 million add-on, with an interest rate of Libor plus 575 basis points and a step down to Libor plus 550 basis points if total leverage falls below 2.75x. Originally, the existing second lien and the add-on were priced at Libor plus 600 basis points.

Lastly, there is a $45 million revolver, including a $20 million add-on, (B1/B+) with an interest rate of Libor plus 275 basis points.

Bear Stearns and UBS were the lead banks on the deal, with Bear Stearns the left lead.

International Mill Service is a Horsham, Pa.-based provider of specialty services to the North American steel industry. The company closed on its credit facility about a month ago in connection with its acquisition by Wellspring Capital Management LLC.

Constellation Brands closes

Constellation Brands Inc. completed its acquisition of The Robert Mondavi Corp. for approximately $1.36 billion, including about $1.03 billion of equity on a fully diluted basis plus the assumption of about $325 million of Mondavi net debt, according to a company news release.

To help fund the acquisition, Constellation got a new $2.9 billion credit facility (Ba2/BB) consisting of a $1.8 billion term loan B with an interest rate of Libor plus 175 basis points, a $500 million revolver with an interest rate of Libor plus 150 basis points and a $600 million term loan A with an interest rate of Libor plus 150 basis points.

JPMorgan and Merrill Lynch were the lead banks on the deal, with JPMorgan the left lead.

Constellation Brands is a Fairport, N.Y.-based producer and marketer of beverage alcohol brands. Mondavi is a Napa, Calif.-based producer and marketer of table wines.

Green Valley Ranch closes

Green Valley Ranch Station Casino closed on its $250 million credit facility, consisting of a $50 million revolver due 2009 and a $200 million term loan due 2011. Bank of America and Wells Fargo were the lead banks on the deal.

Proceeds were used to refinance the company's existing bank debt.

Green Valley is a Henderson, Nev., resort jointly owned by Station Casinos Inc. and GCR Gaming.

Huntsman closes

Huntsman International LLC successfully completed the amendment of its senior secured credit facility, which lowered the pricing grid on its approximately $1.3 billion U.S. term loan B and its €50 million term loan B to Libor plus 225 and 250 basis points from Libor plus 300 and 325 basis points, according to a company news release.

The initial interest rate on the amended term loan B is Libor plus 250 basis points down from Libor plus 325 basis points.

The repricing amendment also added 101 soft call protection to the term loan B for one year.

Deutsche Bank and Citigroup were the lead banks on the Houston chemical company's deal, with Deutsche listed on the left.

Jostens closes

Jostens IH Corp. closed on its new $870 million term loan C that was used to reprice its term loan B, according to an 8-K filed with the Securities and Exchange Commission Wednesday. The term loan C is priced with an interest rate of Libor plus 225 basis points with a step down to Libor plus 200 basis points if leverage falls below 4.25x, whereas the term loan B was priced with an interest rate of Libor plus 250 basis points.

Originally, the syndicate was looking to price the term loan C at Libor plus 200 basis points but the proposal was reworked to add a grid and only request a 25 basis point drop in pricing to appease investors. AT the same time that the pricing grid was added, call protection at 101 for one year only in the event of a pure repricing was also added.

Credit Suisse First Boston was the lead bank on the deal that closed Tuesday for the Minneapolis-based printing and marketing services enterprise.

The term loan B was just obtained about two months ago in connection with the creation of one large company through the combination of Jostens Holding Corp., Von Hoffmann and Arcade Marketing that is owned by Kohlberg Kravis Roberts & Co., DLJ Merchant Banking Partners, management and certain other investors.

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