Global eXchange, Eye Care Centers, Nellson Neutraceutical, TransCore loans launch

By Sara Rosenberg

New York, Sept 10 - Predictions that the month of September would bring with it a truckload of new issuance are proving true. On Monday, two deals were introduced to the market - Gray Television Inc. and GenCorp Inc. This number doubled on Tuesday with four new deals - Global eXchange Services, Eye Care Centers of America Inc., Nellson Neutraceutical Inc. and TransCore Holdings Inc. - flooding the market.

Global eXchange Services, GE's e-commerce company, launched a new $210 million credit facility, consisting of a $175 million six-year term loan B with an interest rate of Libor plus 375 basis points and a $35 million five-year revolver with an interest rate of Libor plus 350 basis points. Credit Suisse First Boston was the lead bank on the deal.

Proceeds will be used to help fund the company's leveraged buyout by Francisco Partners.

"What I like is that it's a very credible sponsor," a sell-side source said. "It is e-commerce but what bodes well for the company is that GE is going to maintain a 10% equity stake. It's a smartly structured deal. Hopefully it goes according to plan."

Eye Care Centers of America Inc. launched a new $135 million credit facility on Tuesday, consisting of a $35 million five-year revolver with an interest rate of Libor plus 400 basis points and a $100 million five-year term loan B with an interest rate of Libor plus 400 basis points, according to market sources. Bank of America and FleetBoston Financial Corp. are the lead banks on the San Antonio, Tex. eyewear chain's deal.

Proceeds will be used to refinance existing debt.

"I'm on the fence with this deal, "the sell-side source said. "I don't know enough about the credit to have a really good view on it. It's specialty retail and their performance hasn't been stellar.

"Pricing on the deal is a function of the market," he continued. "It's a tough deal and they priced it where the market is for a single-B credit."

Nellson Neutraceutical Inc. launched a new $145 million secured credit facility, consisting of a $15 million five-year revolver with an interest rate of Libor plus 425 basis points and a $130 million seven-year term loan B with an interest rate of Libor plus 425 basis points, according to a syndicate source. UBS Warburg is sole lead arranger and sole bookrunner for the deal.

"The meeting was well attended," a market participant told Prospect News.

Proceeds from the loan will be used to effect the company's leverage buyout by Fremont Partners.

Nellson is an Irwindale, Calif. formulator and manufacturer of functional bars and powders.

TransCore Holdings Inc. launched a new $175 million credit facility, consisting of a $50 million four-year revolver with an interest rate of Libor plus 325 basis points and a $125 million four-year term loan B with an interest rate of Libor plus 375 basis points, according to market sources. Bank of Montreal is the lead bank on the deal.

Proceeds will be used for general corporate purposes.

The Hummelstown, Pa. transportation communications company has senior leverage of about 2.1 times and total leverage of about 3.1 times, market sources said.

In other news, Brand Services Inc.'s proposed $220 million credit facility was tabled, according to market sources. The loan was expected to be led by Credit Suisse First Boston and JPMorgan Chase.

Talk is that there have been some issues about the ratings and the company has gone back to the rating agencies to discuss it, one source told Prospect News. No confirmation could be obtained of this information.

"I don't like to say the loan was pulled because look at what happened with Swift. They had to table the bank deal because of the bonds and now they're back in the market," the source added.

The loan was expected to consist of a $50 million six-year revolver with an interest rate of Libor plus 275 basis points, a $20 million letter of credit facility with an interest rate of Libor plus 275 basis points and a $150 million seven-year term loan B with an interest rate of Libor plus 325 basis points.

Proceeds from the facility were to be used to help finance the purchase of the St. Louis, Mo. scaffolding company by J.P. Morgan Partners from DLJ Merchant Banking.

Ball Corp., which is expected to launch sometime around mid-October is now said to contain an institutional tranche that is roughly sized around $600 million, according to a syndicate source. The overall size and pricing are still being determined but it is expected to be a multi-currency deal, the syndicate source added. However, market talk has the loan sized at approximately $1.55 billion in size, sources previously told Prospect News.

Although the deal is about a month away from hitting the bank loan market, investors and professionals have been repeatedly expressing interest in the loan. When asked why the loan is already receiving attention, a market professional replied simply "people love Ball Corp.". The facility "should be an absolute blowout. It's kind of been a Midwestern blue chip for a long time. The industry coupled with the name and management...it should be a good one," he explained.

Deutsche Bank, Bank of America, Lehman and Bank One are the lead banks on the deal.

Proceeds will be used to help fund the acquisition of Schmalbach-Lubeca AG.

Ball is a Broomfield, Colo. supplier of metal and plastic packaging to beverage and food industries.

Meanwhile, secondary activity was relatively quiet, according to a trader, and is expected to remain that way throughout the week due to the anniversary of Sept. 11.

"Deals get launched in the primary and chug along," the trader said. "In the secondary, people go to the sidelines and nothing happens."

Nextel Communications Inc. did begin the day "better offered", the trader continued, "but then it moved back down to yesterday's level of 871/4/881/4."

On Monday, the Reston Va. mobile communications company announced that it would meet or exceed previous financial guidelines for 2002 of approximately 2 million net subscriber additions and over $3 billion in operating cash flow.

Following that announcement, the company's bank debt may have traded up about ½ a point, according to a fund manager, which "is not much of a move".

"Nextel had a lot of momentum until it got to about 88 on the B loan and then it slowed down," he explained. "I also heard that the bonds are up about 25 points, so people may be trying to get their profits over there. It's had its run and everyone feels good about it, but the rally is ready to end. The debt is taking a pause."

Some participants, however, are not overly concerned with whether the paper has reached a plateau or not, they are simply happy to see a bid in the market. "The good news is there's a bid in the market. There hasn't been a bid for a long time," a market professional said.

Calpine Corp. is another name that, according to the fund manager, is taking a pause from recent upward movement. The San Jose, Calif. power company's loan was quoted sideways on Tuesday with a bid of 87 and an offer of 88, a trader said.

"[Calpine] moved up over the last week or so," the fund manager said. "Now it's in the 88 region. It's an emotional name. There was some negative news on its stock with people saying that the electricity market is over billed. Maybe it had its run-up too and now its time for a pause as well."

On Tuesday, the company provided an update on its non-strategic asset sales program. Since Jan. 2002, more than $260 million of asset sales have been identified, out of approximately $650 million of potential asset sales.

"We are very pleased with the progress made to date on the sale of non-strategic assets. Calpine remains focused on further enhancing our liquidity position and improving our balance sheet, while preserving the long-term value of our business," stated Bob Kelly, chief financial officer and executive vice president, in a news release.

© 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.