Dana tweaks deal; Rock-Tenn sets talk; FiberMark done at juicier terms; Cash, LCDX slide

By Sara Rosenberg

New York, Jan. 30 - Dana Corp. made some changes to its term loan B, including increasing the spread and the original issue discount, and adding call protection.

Also in the primary, Rock-Tenn Co. came out with price talk on its credit facility as the deal was launched with a bank meeting during Wednesday's market hours and FiberMark Inc. filled out the books on its credit facility after pricing was increased and the original issue discount widened.

Meanwhile, in trading, cash and LCDX 9 were noticeably weaker as yields are looking less attractive, and PanAmSat's term loan B dropped on the heels of a ratings downgrade.

Dana modified its $1.35 billion seven-year term loan B (Ba3/BB) in an attempt to gain some momentum in syndication, according to a market source.

Under the changes, pricing on the B loan was flexed up to Libor plus 375 basis points from original talk at launch of Libor plus 350 bps and the original issue discount was raised to 92 from the initially proposed 97 area, the source said.

Furthermore, hard call protection of 102 in year one and 101 in year two was added to the term loan B. The only time the call premiums don't apply is when it relates to cash flow sweep, the source continued.

Dana's $2 billion exit financing credit facility also includes a $650 million five-year asset-based revolver (Ba3/BB+) that is priced at Libor plus 200 bps, with a commitment fee of 37.5 bps.

Upfront fees on the asset-based revolver are 25 bps for $25 million, 50 bps for $50 million and 75 bps for $75 million.

According to the source, syndication on the revolver "went very well."

Citigroup, Lehman Brothers and Barclays are the lead banks on the deal that will be used to repay the company's debtor-in-possession credit facility, to make other payments required upon its exit from bankruptcy and to provide liquidity to fund working capital and other general corporate purposes.

Dana is a Toledo, Ohio-based supplier of components, modules and systems to vehicle manufacturers and related aftermarkets.

Rock-Tenn talk emerges

Rock-Tenn held a bank meeting on Wednesday morning to kick off syndication on its $1 billion credit facility (Ba2), and in conjunction with the launch, pricing guidance was revealed, according to a market source.

The $450 million five-year revolver and the $350 million five-year term loan A were both presented to lenders with talk of Libor plus 250 bps and are being offered with an upfront fee of 1 bps per $1 million commitment, the source said.

And, the recently added $200 million six-year term loan B that is open to banks and institutional investors is being guided in the area of Libor plus 275 bps to 300 bps, including spread and original issue discount, the source continued.

The term loan B was carved out of the term loan A tranche - which was originally expected to be sized at $550 million - earlier this week due to a show of interest from institutional accounts.

"A lot of it was because [they] had reverse inquiry from institutional accounts. [I heard they] were a little surprised by the number of guys that called in asking if [they] could carve a term loan out of this thing," the source remarked.

"With this rating (corporate Ba2/BB+), some accounts will find it advantageous because a lot of guys are overloaded with single-B credits," the source continued.

The source went on to say that this positive reverse inquiry from institutional guys was also the reason behind imbedding the spread and the original issue discount in the term loan B pricing guidance.

Wachovia Bank, Bank of America and SunTrust Bank are the lead banks on the deal.

Proceeds from the credit facility, along with $400 million of unsecured senior notes, will be used to fund the acquisition of Southern Container Corp., to refinance the company's existing credit facilities and provide in excess of $200 million of undrawn capacity.

A roadshow for the bonds is expected to take place in mid-February, with pricing end of February or first days of March.

At the close, $132.4 million is expected to be drawn under the revolver.

Total net debt will be around $1.8 billion, debt to capitalization will be around 75.7% and pro forma net debt to trailing 52 weeks EBITDA will be around 4.1 times.

The company has a debt reduction target of 3.0 times by Sept. 30, 2010.

Rock-Tenn is buying Southern Container, a Hauppauge, N.Y., privately held containerboard manufacturing and corrugated packaging business, for $851 million in cash. The purchase price, including debt of Southern Container, represents a multiple of about 6.9 times Southern Container's pro forma EBITDA for the 52-week period ended Sept. 8.

Rock-Tenn is a Norcross, Ga., manufacturer of packaging products, merchandising displays and bleached and recycled paperboard.

FiberMark fully syndicated

FiberMark was able to successfully syndicate its $167.5 million credit facility, but pricing had to be flexed higher and investors got to buy the debt at a larger discount than was originally proposed, according to a market source.

Both the $25 million revolver and the $142.5 million term loan now carry pricing of Libor plus 500 bps, compared to original price talk at launch of Libor plus 425 bps, the source said.

And, the two tranches were sold to investors at an original issue discount of 981/2, compared to initial guidance of 99, the source added.

GE Capital is the lead bank on the deal that is being used to help fund American Securities Capital Partners' already completed buyout of the company.

FiberMark is a West Springfield, Mass., producer and specialty converter of fiber-based materials serving high-end niche markets.

Cash, LCDX soften

Switching to secondary happenings, cash and LCDX 9 were lower probably because yields are getting less and less attractive now that the Fed announced another rate cut, this one for 50 bps, on Wednesday, according to a trader.

"Feeling like a lot of guys are selling loans and buying bonds," the trader said.

For example, Texas Competitive Electric Holdings Co. LLC (TXU), a Dallas-based energy company, saw its term loan B-2 drop to 91½ bid, 92 offered from 93 5/8 bid, 94 offered on Tuesday, the trader said.

First Data Corp., a Greenwood Village, Colo., provider of electronic commerce and payment services, saw its term loan B-1, B-2, and B-3 all quoted in the 90 bid, 91 offered context, down from the 91 bid, 92 offered context, the trader continued.

And, Alltel Communications Inc., a Little Rock, Ark., provider of wireless voice and data communications services, saw its term loan B-3 quoted at 90 5/8 bid, 91 5/8 offered, down from 91 5/8 bid, 92 5/8 offered.

As for LCDX, that went out around 93.15 bid, 93.30 offered, down from 94.05 bid, 94.25 offered, the trader added.

Stocks were minimally weaker on the day, with Nasdaq down 9.06 points, or 0.38%, Dow Jones Industrial Average down 37.47 points, or 0.30%, S&P 500 down 6.49 points, or 0.48%, and NYSE down 51.57 points, or 0.57%.

PanAmSat falls on downgrade

PanAmSat, which has been renamed Intelsat Corp., saw its term loan B weaken in trading in reaction to a downgrade by Moody's Investors Service as well as the overall market tone, according to a trader.

The term loan B ended the day at 87¾ bid, 88¼ offered, down from 91¼ bid, 92¼ offered, the trader said.

Late Tuesday, Moody's announced that it downgraded the company's senior secured credit facility to B1 from Ba2.

Moody's said that the downgrade was done to reflect the impact of increased leverage resulting from an additional $5 billion in debt ($3.7 billion incremental) that is being incurred to facilitate the purchase of the company by BC Partners, Silver Lake Partners and certain other investors, and repay certain outstanding indebtedness.

Quebecor levels widen

Quebecor World Inc. saw trading levels on its debtor-in-possession term loan widen on Wednesday as the bid inched lower, according to a trader.

The term loan was quoted at 98¾ bid, 99¾ offered, compared to Tuesday's levels of 99¼ bid, 99¾ offered, the trader said.

The $600 million debtor-in-possession term loan, which just broke for trading on Tuesday, is priced at Libor plus 500 bps, with an original issue discount of 98.

Pricing on the term loan was originally expected to be Libor plus 375 bps, based on court documents.

The company's $1 billion 18-month DIP also includes a $400 million ABL revolver.

Credit Suisse and Morgan Stanley acted as the lead banks on the deal that is being used to fund operating needs, including wages, benefits and other operating expenses.

Quebecor is a Montreal-based provider of marketing and advertising services to retailers, catalogers, branded-goods companies and other businesses, as well as complete, full-service print services for publishers.

Paetec closes

Paetec Holding Corp. closed on its $100 million term loan B add-on (B-) that is due in 2013, according to a news release.

The add-on is priced at Libor plus 250 basis points, in line with existing B loan pricing, and was sold at an original issue discount of 941/2.

During syndication, the discount on the debt was increased to 96½ from initial guidance of 96.

Merrill Lynch and Deutsche Bank acted as the joint bookrunners on the deal, with Merrill the left lead, Deutsche the administrative agent, and CIT the documentation agent.

Proceeds can be used for working capital, capital expenditures and other general corporate purposes. The company may apply a portion of the proceeds toward the satisfaction, as of the closing of its proposed acquisition of McLeodUSA Inc., of McLeodUSA's outstanding 10½% senior second secured notes due 2011.

Paetec is a Fairport, N.Y., communications provider.

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