Primary picks up with Del Monte, Atlantis Plastics, Aero Products tapping the market

By Sara Rosenberg

New York, Nov. 21 - It was a busy day Thursday in the primary bank loan market with the launch of a few new credit facilities, including Del Monte Foods Co.'s large $1.4 billion, Atlantis Plastics Inc.'s $110 million loan and Aero Products International Inc.'s $120 million loan.

Del Monte Foods launched its $1.4 billion credit facility (Ba3) to retail investors on Thursday. Bank of America, JPMorgan Chase, UBS Warburg, Morgan Stanley and Bank of Montreal are the lead banks on the deal that will be used to help fund the merger with certain H.J. Heinz Co. businesses.

"It's going really well," said a source close to the deal. "I think the institutional market will love this deal. It's priced fairly attractively for the ratings."

The facility consists of a $350 million six-year revolver with an interest rate of Libor plus 350 basis points, a $250 million six-year term loan A with an interest rate of Libor plus 350 basis points, a $300 million term loan A-1 (bridge loan to be taken out by bond deal) with an interest rate of Libor plus 350 basis points and a $500 million eight-year term loan with an interest rate of Libor plus 400 basis points.

Also, there will be $300 million of senior secured floating-rate notes, which will basically act like a term loan. Interest on the floating-rate notes is Libor plus 425 basis points.

One fund manager who attended the bank meeting was "favorably impressed" with the presentation. "The company generates a decent amount of free cash flow. They're picking up some strong brands, like Starkist and College Inn, and some weaker brands. The management team presented well."

The loan has met some skepticism due to the term A-1 since if the proposed bond sale is not completed the term loan will remain in place, adding more senior secured debt to the capital structure.

"There are five arrangers and it's $300 million. Between five of them, that's $60 million of capital that each firm has put up. My understanding is that those five are putting a lot of pressure on the company [to get the bond deal done]," the fund manager said.

Del Monte is a San Francisco processed food company.

Atlantis Plastics launched a new $110 million credit facility consisting of a $35 million five-year revolver with an interest rate of Libor plus 375 basis points, a $35 million five-year term loan A with an interest rate of Libor plus 375 basis points and a $40 million six-year term loan B with an interest rate of Libor plus 425 basis points, according to a syndicate source.

"[The bank meeting] was very well attended by traditional middle-market guys," the syndicate source told Prospect News. "It's a nice little company, a pretty straight-forward company. [There's] good asset coverage, about 3 times senior leverage and about $30 million EBITDA."

CIBC World Markets and GE Capital are joint lead arrangers on the Atlanta plastics manufacturer's deal, which will be used to refinance existing senior debt.

Aero Products held a retail bank meeting on Thursday afternoon regarding a $120 million credit facility, according to a syndicate source. CIBC World Markets is administrative agent and co-lead. Wachovia is syndication agent and co-lead.

"It's going really well," the syndicate source said on the morning of the bank meeting. "[We already have] a number of pre-commitments. We expect a good turnout [this afternoon at the retail meeting]."

The company currently has about 2.5 times leverage, all senior, he added.

The loan consists of a $105 million six-year term loan B with an interest rate of Libor plus 450 basis points and a $15 million five-year revolver with an interest rate of Libor plus 450 basis points, according to the syndicate source.

Closing on the loan is expected to take place during the end of December.

An agent meeting was held last week in Chicago, a syndicate source said. The deadline for commitments is this week.

Proceeds are being used to help fund the acquisition of Aero Products by Investcorp from Trivest Partners LP.

Aero Products is a Wauconda, Ill. marketer of air-filled bedding products.

Meanwhile, commitments for Therma-Tru Corp.'s $305 million credit facility (Ba3/BB-) are due by Friday at 5 pm ET, according to a syndicate source. The loan, which is basically a pricing refinancing, has only gone out to agent banks.

CIBC World Markets is the lead bank on the deal.

The loan consists of a $75 million five-year revolver with an interest rate of Libor plus 275 basis points and a $230 million seven-year term loan B with an interest rate of Libor plus 325 basis points.

The loan was originally closed and funded in June 2000, a fund manager previously told Prospect News, with the term loan B priced at Libor plus 325 basis points. However, the company fell short on its performance and amended its facility, changing the interest rate on the term B to Libor plus 375 basis points. Now that performance is back on track, the company is looking to obtain the original pricing on the loan again, the fund manager explained.

The Maumee, Ohio fiberglass door manufacturer has senior and total leverage of 2.69 times.

As for the secondary, Wyndham International Inc.'s bank debt moved up two to three points over the past two days with a 74½ bid on the term B and a 75 bid on the IRL, according to a fund manager.

"It's a function of supply and demand," the fund manager said, explaining that the bid moved up to meet the offer as some buyers entered the market.

Also, "all telecommunications names continue to get stronger [like] Nextel [and] Western Wireless," the fund manager added.

Nextel Communications Inc. was quoted in the 93's on Thursday, up from Wednesday's quotes that were in the 91 to 92 range, a trader said.

But, this rally was not confined to the telecommunications sector alone. Generally speaking, the secondary bank loan market continued to be up as whole over the course of the day, the trader remarked. Traders discussed this bank loan market improvement on Wednesday as well.

Previously, a different trader had told Prospect News that inflows in the bond markets, CLO's ramping up, some fixed income guys buying bank debt and primary deals being pulled or hiked up are creating a new supply/demand equation that is causing more aggressive bids to take place.

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