Nextel trades higher on $5 billion shelf filing; Dole captures attention on first full trading day

By Sara Rosenberg

New York, March 28 - Nextel Communications Corp.'s bank debt traded pretty actively and stronger on Friday, according to market sources, with the term loan B and term loan C quoted at 97¾ by the end of the day, up about a point from Thursday's levels. Meanwhile, Dole Foods Co. Inc.'s newly allocated credit facility was also a focus of attention in its first full session since breaking for trading late Thursday.

Some speculated that Nextel's bank paper traded higher in response to the company's $5 billion shelf filing after market hours on Thursday. The shelf covered the possible issuance of debt securities, preferred stock, class A common stock, depositary shares, warrants, purchase contracts, units and trust preferred securities.

According to the filing, the Reston, Va. mobile phone company will use proceeds for expansion, strategic investments, working capital, debt service and other general corporate purposes.

"I guess some people think the bank debt will be paid down," a trader explained.

Dole's term loan B, which was issued at par, was quoted with a par 3/8 bid, par 5/8 offer and the term loan A was quoted with a par bid, par 1/8 offer. Both tranches are basically being quoted in line with Thursday's levels.

"We're long the paper and we're enjoying it," a trader said about Dole. "It's a fun deal to trade because it breaks down into some interesting pieces. You can pick your borrower, pick your collateral pool. There are lots of ways to peel the onion."

The facility, which closed on Friday, contains a $575 million 51/2-year term loan B (downsized by $25 million following pricing of an upsized bond deal) with an interest rate of Libor plus 375 basis points. A Bermuda-based subsidiary of Dole is the borrower on this tranche. In addition to the B loan, there is a $250 million five-year term loan A with an interest rate of Libor plus 325 basis points that a U.S. subsidiary is the borrower of and a $300 million five-year revolver (in dollars and euros) with an interest rate of Libor plus 325 basis points.

Proceeds are being used to help fund the buyout of Dole by DHM Acquisition Co., which is wholly owned by David H. Murdock.

"This transaction is a momentous occasion in Dole's 152-year history, and we are extremely excited about the long-term advantages for Dole without the short-term pressures and constraints of the public equities markets," said Murdock, in a news release. "As a privately-held company, Dole will be better positioned to achieve its growth and earnings potential, building on its leadership position in the fresh fruit, fresh vegetables, packaged foods and fresh-cut flowers industries."

Deutsche Bank, The Bank of Nova Scotia, Bank of America, Fleet National Bank and Societe Generale were the lead banks on the loan.

Dole is a Westlake Village, Calif. producer and marketer of fresh fruit, vegetables and flowers.

In the primary, expected timing on Allied Waste Industries Inc.'s bank meeting for a $3 billion credit facility emerged on Friday as market sources told Prospect News that the launch is anticipated during the week of April 7.

The facility consists of a $1.5 billion five-year revolver and a $1.5 billion seven-year term loan B. Price talk on the revolver is Libor plus 300 basis points and price talk on the term loan is Libor plus 350 basis points, according to sources.

The company has already received commitments for the entire $1.5 billion revolver. And the term loan B is expected to syndicate successfully, according to one sell-side source. The reasoning behind this expectation is that the company currently has a large lender group since it already has $1.5 billion of term loan B and C paper floating around the market place. Essentially with the new financing, the company is taking two tranches and consolidating them into one with a more attractive interest rate for investors. Based on these facts alone, the company should be able to get a lender group together.

JPMorgan, Citibank, Credit Suisse First Boston, Deutsche Bank and UBS Warburg are the lead banks on the deal.

In addition to the credit facility, the company will issue $100 million of common stock, $300 million of three-year mandatory convertible preferred stock and $300 million of 10-year senior notes. It has already obtained a $150 million on-balance sheet accounts receivable securitization.

Furthermore, the company anticipates divestitures generating approximately $300 million of after-tax proceeds during 2003.

One market professional went so far to say that if Allied Waste manages to execute this new capital structure, under which junior capital is added and bank debt is consolidated, the company may warrant an upgrade in ratings. Earlier this month, Fitch Ratings raised the company's outlook to stable from negative and confirmed the bank debt rating at BB. In November, Standard & Poor's confirmed the bank debt rating at BB and Moody's Investors Service confirmed the bank debt rating at Ba3.

The financing is expected to be completed within the next 45 days, a company news release said on Thursday.

"They want to do a lot," the sell-side source said in regards to Allied Waste's financing and divestiture plan. "There are a lot of moving parts. They should be able to meet the time schedule but we'll see."

However, this 45-day time schedule is a goal the company set for itself rather than a mandatory time in which the company needs to complete the financing. "This is something they want to do, not something they have to do. They're just cleaning up the capital structure," the source concluded.

International Steel Group's $1 billion senior credit facility is now also expected to hit the bank loan market sometime during mid-April, a source close to the deal said. Previously the loan was slated as either March or April business.

The facility consists of a $300 million two-year term loan A, a $400 million four-year term loan B and a $300 million three-year revolver. Pricing on the tranches is not available at the present time.

UBS Warburg, Goldman Sachs and CIT are the lead banks on the Cleveland steel company's deal that will be used help fund the acquisition of certain Bethlehem Steel Corp. assets and for working capital.

Meanwhile, market talk is that Goodyear Tire & Rubber Co.'s credit facility may get tweaked. According to various sources, pricing on the loan may be flexed up, with one source saying that he heard that the interest rate might be raised by 50 basis points. Furthermore, the collateral package on the loan may be modified as well.

Overall though, syndication of the loan was said to be "going okay", a source added.

Goodyear's $1.3 billion asset-based credit facility due 2006 (Ba2/BB+) consists of an $800 million term loan and a $500 million revolver. Price talk on both tranches previously was Libor plus 350 basis points.

Proceeds from the Akron, Ohio tire company's loan will be used to provide additional liquidity and funds to repay certain facilities.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.