General Growth doubles size of revolver, Jarden cuts pricing by 50 bps, Valor breaks, trades near 102

By Paul A. Harris

St. Louis, Nov. 8 - Not for the first time, General Growth Properties Inc. grabbed the leveraged loan market's attention on Monday as it doubled the size of its revolver to $500 million in what is reported to be a highly oversubscribed deal.

Meanwhile Jarden Corp., which is in the market with a $1.05 billion credit facility (B1/B+), made some buy-side eyes pop when it cut the price of its $850 million seven-year term loan B by 50 basis points.

And a downsized and upwardly repriced Valor Telecommunications term loan broke and traded near 102.

Demand continues to outpace supply

An investor who spoke Monday with Prospect News said that the rumor that General Growth Properties Inc.'s $6.4 billion credit facility ($10 billion with the bridge loan) might break for trading later this week is welcome news in a market in which supply continues to be significantly outpaced by demand.

On Monday the Chicago shopping mall owner doubled the size of its three-year revolver to $500 million from $250 million.

The buy-sider said that the deal, led by Lehman Brothers and Credit Suisse First Boston, is highly oversubscribed.

"Paper has really run up in the past week or two," added the investor. "A couple of loans that had some hair on them that were just over par, are now just over 101 after sitting at par all summer.

"Structures are getting done. Money has to be put to work. We keep hearing about the low defaults picture. The market is pretty frothy right now."

Jarden cuts pricing

As an example, the investor said, Rye, N.Y., niche consumer products company Jarden Corp. cut the price of its $850 million seven-year term loan B to Libor plus 200 basis points from Libor plus 250 basis points.

The $1.05 billion credit facility (B1/B+) is also comprised of a $200 million five-year revolver, which remains priced at Libor plus 250 basis points.

Citigroup Global Markets and CIBC World Markets are leading the deal acquisition and debt refinancing deal.

"It got its loan pricing cut to Libor plus 200 today, with a massive oversubscription and a single-B rating," said the investor.

"That's pretty frothy."

Cosmetic Essence meeting Tuesday

The investor seemed more interested in the Libor plus 700 basis points price talk announced Monday for Cosmetic Essence Inc.'s $36 million seven-year second-lien loan.

It's part of the $151 million credit facility that will be used to back the buyout of BMP/CEI Holdings, Inc. the parent of Cosmetic Essence, Inc.

The bank meeting for the BNP Paribas-led facility is set for Tuesday.

The facility will also be comprised of a $25 million six-year revolver and a $90 million six-year first-lien term loan, both priced at Libor plus 325 basis points.

The source said that levels such as the Cosmetic Essence second-lien Libor plus 700 get people's attention.

The investor pointed to the Northwest Airlines $975 million credit facility (B1/B+), via JP Morgan and Citigroup, which contains a $300 million six-year term B talked at Libor plus 750 basis points.

"That's one of the more interesting deals," the investor commented. "With a B1/B+ and a recovery rating of one, Libor plus 750 has got to be interesting to people - especially with a 103 call.

"It all comes down to the collateral package. But Northwest looks like it is in a lot better shape than some of the other airlines.

"Delta, which everybody knows is not in the world's greatest shape, had lower pricing.

"When I saw the Northwest package my reaction was 'The hedge funds are going to be all over it.'

"Libor plus 750 on a B1, where everybody figures that they are going to be fine through at least 2006, seems like a better deal than a lot of these second-lien loans that are going to trade pretty funkily, if anything bad happens."

Valor breaks near 102

Meanwhile in a quiet secondary market Monday a downsized Valor Telecommunications $1.17 billion first-lien term loan broke for trading near 102 on Monday.

A trader told Prospect News that pricing was increased to Libor plus 350 basis points from Libor plus 300. The tranche had been cut from $1.3 billion.

Another source had the Valor term loan trading 101.5 bid, 101.75 offered.

The credit facility replaced an $890 credit facility that Valor planned as part of a financing that included an offering of Income Deposit Securities that the company subsequently abandoned, the trader added.

Meanwhile in secondary trading, Mediacom Communications Corp., whose paper broke Friday and traded in a 101 bid, 101.50 offered context, sat motionless on Monday amid news of the company's disappointing third-quarter results, even after accounting for the ill effects of Hurricane Ivan.

The Middletown, N.Y., broadband, digital and high-definition signals company, which serves mostly small towns, posted a quarterly net loss of $12.8 million, or 11 cents per share, compared with a profit of $1.9 million, or 2 cents per share, a year earlier.

GenCorp structure emerges

In other news Monday, GenCorp Inc., a Rancho Cordova, Calif. technology-based manufacturer of aerospace and defense products and systems, announced the structure of its $175 million secured credit facility.

The loan will be comprised of a $75 million revolver, a $25 million term loan and a six-year $75 million letter of credit.

Wachovia is leading the debt refinancing deal.

Independent leaf tobacco dealers Dimon Inc. and Standard Commercial Corp. announced in a Monday press release that they plan to obtain a new syndicated senior bank facility to back the merger of the two companies.

Tim Price of Standard Commercial investor relations told Prospect New on Monday that Wachovia is likely to lead the deal (see related story in this issue).

Doane Pet closes

In follow-up news, Doane Pet Care Co. said late Friday that it closed on its $230 million senior secured credit facility (B2/B+).

The facility was made up of a $195 million five-year term loan at Libor plus 400 basis points and a $35 million five-year revolver. The maturities will be advanced to 91 days before the maturity of its notes due May 15, 2007 if those notes are not refinanced first.

Credit Suisse First Boston was lead arranger and administrative agent.

The Brentwood, Tenn.-based manufacturer of private label pet food will use proceeds to refinance its existing credit facility due December 2005.

"We are pleased to have obtained this favorable credit facility, which improves our capital structure by replacing our previous senior secured credit facility, which was scheduled to mature in December of 2005, as well as lowering our debt service costs and increasing our liquidity," said Philip Woodlief, Doane Pet's vice president and chief financial officer, in a news release.

Meanwhile Fairpoint Communications Inc. abandoned a planned $500 million credit facility (B2/B+) as part of its postponement of a proposed initial public offering of Income Deposit Securities.

The facility was to have been made up of a $100 million five-year revolver at Libor plus 325 basis points and a $400 million five-year term B at Libor plus 350 basis points.

Deutsche Bank, CIBC and Citigroup were to have been leads, with Deutsche on the left.

The Charlotte, N.C., provider of telecommunications services would have used proceeds to help its repay existing credit facility and to fund the repurchase of all outstanding senior notes and senior subordinated notes.

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