Culligan launches downsized $325 million credit facility; Qwest stronger on SEC settlement reports

By Sara Rosenberg

New York, Sept. 10 - Culligan US decided to launch a revised credit facility (B1) to potential lenders on Friday that included a downsized term loan when compared to the structure that was originally being contemplated.

In the secondary, Qwest Communications International Inc.'s bank debt was up a touch in Friday's market, helped along by news that the company reached a settlement agreement with the Securities and Exchange Commission.

Culligan's facility went out as a $225 million seven-year term loan talked at Libor plus 275 basis points and a $100 million six-year revolver talked at Libor plus 250 basis points, according to a market source. Initially, the syndicate was considering a $237.5 million term loan and a $100 million revolver.

Although the two businesses are not exactly the same, some sources are considering DS Waters of America LP's Friday amendment proposal launch unfortunate timing for the Culligan deal since the companies' activities are somewhat related, the source said.

DS Waters approached lenders with a request to increase the leverage covenant contained in its credit agreement to 4½ times from 3½ times to avoid a potential default, the source explained.

In connection with the amendment, DW Waters is offering to increase pricing on its credit facility to Libor plus 400 basis points and pay lenders a 25 basis point amendment fee, the source said.

JPMorgan is leading the amendment process for the Atlanta-based home and office water delivery service.

However, it is important to note that senior leverage on the Culligan deal is lower than DS Waters' leverage, with senior leverage on Culligan estimated to be around "2½ times or something," the source said.

Bank of America, BNP Paribas and Citigroup are the lead banks on the Culligan credit facility.

Proceeds will be used to help fund Clayton, Dubilier & Rice Inc.'s acquisition of Culligan from Veolia Environnement SA for $610 million.

The company will also be using €185 million 10-year senior subordinated notes to help fund the LBO, with a roadshow scheduled to kick off on Monday and pricing slated for the week of Sept. 20.

Culligan is a Northbrook, Ill., manufacturer and distributor of water treatment products and bottled water.

Qwest stronger

Qwest's bank debt was up an eighth to a quarter point on the day with the fixed-rate debt quoted at 98 bid, 98½ offered and the floating-rate debt was quoted in the low 103s bid context, according to a trader.

The strengthening was assisted by various news reports claiming that that company reached a $250 million settlement agreement with the SEC concerning the investigation into accounting and disclosure matters.

Denver-based telecommunications company Qwest has been under investigation for quite some time now with the SEC declaring a formal investigation on April 3, 2002 into accounting practices and related disclosures, transactions with some vendors and investments into securities of those vendors.

Charter active

Charter Communications Inc.'s term loan B continued to actively trade in the 99¼ bid, 99½ offered context, where it moved on Thursday after strengthening by about an eighth of a point, according to a trader.

The paper has been trading around simply on "fundamentals," the trader said, adding that if there was any positive news pushing the activity, bank debt levels would probably have changed over the course of the day instead of remaining basically flat.

Charter is a St. Louis-based broadband communications company.

Yellow Roadway closes

Yellow Roadway Corp. closed on its new $500 million five-year unsecured revolver (Ba1) that carries an initial interest rate of Libor plus 125 basis points and contains an accordion feature that would allow the company to increase the size by up to $250 million. JPMorgan was the lead bank on the deal.

This new revolver replaces the company's previous secured credit facility.

Borrowings will be available for general corporate purposes.

As a result of this new deal, the Overland Park, Kan., less-than-truckload trucking company was able to increase its asset backed securitization facility to $450 million from $300 million.

"Our strong financial performance combined with favorable financial market conditions allowed us to restructure our debt and gain even more flexibility," said Bill Zollars, chairman, president and chief executive officer, in a company news release. "The scale of our organization continues to provide us with significant debt-related synergies and the financial strength to pursue our strategies."

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