GNC bank meeting sees good attendance and some early institutional commitments

By Sara Rosenberg

New York, Nov. 12 - General Nutrition Cos. Inc.'s bank meeting was well attended and a couple of early bird commitments had already headed into the books following Wednesday's bank meeting.

An approximate tally, however, of total commitments received so far was not available by the end of the day being that the meeting ended around 4 p.m. ET.

"A lot of people were in the room and on the phone," a market participant said. "I heard they got a couple of early commitments."

The $360 million credit facility (B1/B+) consists of a $75 million five-year revolver with an interest rate of Libor plus 300 basis points and a $285 million six-year term loan B with an interest rate of Libor plus 325 basis points.

The institutional tranche is being offered to investors at par.

On the revolver, a $10 million commitment gets the investor 100 basis points upfront, while a $15 million commitment gets 125 basis points. Furthermore, if an investor commits $15 million to the revolver, the investor also is given the option to commit $5 million to the term loan, according to the market participant.

Commitments are due on Nov. 25.

Lehman and JPMorgan are the lead banks on the transaction that will be used by the company to help support its leveraged buyout by Apollo Management LP from Royal Numico NV.

GNC is also expected to start a roadshow Friday for an offering of $190 million of senior subordinated notes due 2010 (B3/B-). Pricing is expected during the week of Nov. 24. Lehman Brothers and JP Morgan are joint bookrunners.

Under the acquisition agreement, Numico has agreed to sell GNC for $750 million. The transaction is subject to customary regulatory approvals and is expected to be completed in the fourth quarter of 2003.

Numico will use the proceeds from the divestiture to pay down the dollar-denominated part of its existing senior credit facility, thereby substantially reducing its debt level and related interest expenses.

GNC is a Pittsburgh producer, marketer and seller of nutritional supplements.

In the secondary, Allegheny Energy Inc.'s bank debt was quoted higher at 99¼ bid, par offered, compared to levels in the high 98s last week, according to a trader.

"People are looking at the paper realizing it's basically an 8% coupon," the trader said in explanation of the upward momentum.

Allegheny is a Hagerstown, Md., energy company.

Huntsman LLC's bank debt has also been moving higher lately with Wednesday's quotes reaching the 90 bid, 92 offered area, compared to Monday's levels of 90 bid, 91 offered.

The paper started moving up at the beginning of the week from last week's 88 bid, 89 offered quotes in response to positive third-quarter numbers.

On Monday, the combined Huntsman companies reported third-quarter 2003 EBITDA of $170 million, which including $10.7 million in restructuring charges and losses on the sale of accounts receivable, compared to second-quarter 2003 pro forma EBITDA of $136.3 million and third-quarter 2002 pro forma EBITDA of $210.5 million.

For the quarter, Huntsman had EBITDA of $49.7 million on revenues of $828.9 million, compared to pro forma EBITDA of $70 million on revenues of $730.5 million for the same period in 2002.

Huntsman International had EBITDA of $104.2 million on revenues of $1.28 billion, compared to EBITDA of $131 million on revenues of $1.20 billion for the same period in 2002.

Furthermore, the company announced that it has commenced an initiative to reduce fixed costs by a minimum of $200 million over the next 18 months through cost reduction plans, increasing the use of shared services across its businesses, site consolidations and headcount reductions in the near future.

Huntsman is a Salt Lake City petrochemical company.

Itron Inc.'s term loan B, which broke for trading on Monday at par ¾ bid, 101¼ offered, moved up to slightly higher levels with quotes of 101 bid, 101½ offered on Wednesday, according to a trader.

"No one's going to sell it; no one's going to buy it at those levels," the trader added.

The $185 million institutional tranche (Ba3/BB-) was reverse flexed late last week by 25 basis points to Libor plus 225 basis points and a pricing grid was added to the tranche calling for even lower pricing of Libor plus 200 basis points if leverage falls below two times.

The tighter spread could have been anticipated based on the positive market reaction that the deal received. In fact, market sources who attended the Oct. 29 bank meeting indicated that books could shut down early due to the large amount of commitments that were coming in for the institutional piece.

The facility also contains a $55 million revolver with an interest rate of Libor plus 275 basis points.

Some things that were said to be working in the deal's favor include the fact that Itron is a first-time issuer, which is a big plus in the current market environment, where investors are itching to get their hands on some brand new paper, low senior and total leverage, and the overall simplicity in understanding the business.

Bear Stearns is the sole lead arranger, sole bookrunner and syndication agent. Wells Fargo is the administrative agent on the deal.

Proceeds will be used to help fund the acquisition of Schlumberger's Electricity Metering business for a purchase price of $255 million. This acquisition was first announced in July, however, in late August, the company received a second request for information from the FTC in connection with Itron and Schlumberger's filing under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

Itron is a Spokane, Wash., technology provider and source of knowledge for collecting, analyzing and applying critical data about electric, gas and water usage to the global energy and water industries.

Newkirk's $525 million term loan B, which was priced with an interest rate of Libor plus 450 basis points, saw some trading activity on Wednesday at 1013/4, according to a trader.

The Fleet led deal recently broke in the secondary with levels ranging in the par ½ to 102 area, the trader said, adding that the paper "is still very strong."

The real estate investment trust will use the new term loan B to refinance existing debt.

DSW Waters LP's $400 million term loan B (B1/B+), which broke late last week to trade as high as 101½ plus to 1015/8, was quoted slightly lower to unchanged on Wednesday at 101¼ bid, 101¾ offered, according to a trader.

The term loan B ended up being priced at Libor plus 275 basis points after being flexed down during syndication from original price talk of Libor plus 350 basis points.

JPMorgan and Citigroup are leading that deal that will be used to help support the joint venture between Danone and Suntory, which will operate the combined businesses of their subsidiaries, Suntory Water Group and the home and office delivery business of Danone Waters of North America.

The facility also contains a $150 million revolver with an interest rate of Libor plus 350 basis points.

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