Handful of new deals hit hot secondary with bids moving to 101 or higher

By Sara Rosenberg

New York, July 12 - The secondary bank loan market saw a flurry of deals breaking for trading Monday including Pride Offshore Inc., Rent-A-Center Inc., AAT Communications and Horizon Lines LLC. And, something all four deals have in common was their ability to reach at least 101 bid by day's end.

Pride Offshore's term loan was quoted at 101¼ bid, 101½ offered by late day, after climbing from the par ¼ bid, 101 offered context that was first seen on the break, according to a trader.

The $300 million seven-year term loan B is priced with an interest rate of Libor plus 175 basis points, after being lowered during syndication from Libor plus 200 basis points on good demand.

The company's $800 million credit facility (Ba1/BB+/BB) also contains a $500 million five-year revolver, which remained unchanged with an interest rate of Libor plus 175 basis points and a commitment fee of 37.5 basis points.

Citigroup is the sole lead bank on the deal.

Proceeds will be used to refinance existing debt.

Pride Offshore is a wholly owned subsidiary of Pride International Inc., a Houston provider of contract drilling services to oil and gas exploration and production companies.

Rent-A-Center 101 bid

Rent-A-Center's term loan B was quoted at 101 bid, 101½ offered, according to a trader.

The $350 million tranche is priced with an interest rate of Libor plus 175 basis points, but pricing on the term loan can step down to Libor plus 150 basis points if leverage falls below 1.5 times.

Originally, the term loan was sized at $400 million at launch but was later reduced by $50 million as the company opted to increase its revolver to $250 million from $200 million. Furthermore, once the term loan was reduced in size the stepdown in pricing was added to the credit agreement.

The revolver is priced with an interest rate of Libor plus 175 basis points.

Lehman Brothers and JPMorgan are co-lead arrangers and joint bookrunners on the deal, with Lehman listed on the left.

In addition to repaying its existing facility, Rent-A-Center, a Plano, Texas, operator of rental purchase stores, will use proceeds from this new deal (Ba2) for general corporate purposes.

AAT tops 101

AAT Communications' term loan was quoted at 101 to 101¼ bid, 101½ offered, depending on which trader was asked by the end of the day Monday. When the paper first broke it was quoted at par ¾ bid, 101 offered "but that only lasted for like a second," a trader said.

The $200 million seven-year term loan B is priced with an interest rate of Libor plus 275 basis points.

The $325 million credit facility (B1/B-) also contains a $50 million seven-year revolver with an interest rate of Libor plus 275 basis points and a 50 basis points commitment fee, and a $75 million seven-year delayed-draw term loan with an interest rate of Libor plus 275 basis points.

TD Securities and Credit Suisse First Boston are joint lead arrangers and joint bookrunners on the deal, with TD listed on the left.

Proceeds will be used by the St. Louis owner and operator of wireless communications towers for acquisition financing.

Horizon Lines wraps around 101½

Horizon Lines' term loan was quoted at 101 3/8 bid, 101 5/8 offered toward the end of the day, moving up on the bidside from its initial 101 1/8 level on the break, according to a trader.

The $250 million seven-year term loan is priced with an interest rate of Libor plus 275 basis points, after a reverse flex during syndication from Libor plus 300 basis points.

The $275 million credit facility (B2/B+), which actually closed last week, also contains a $25 million five-year revolver with an interest rate of Libor plus 250 basis points.

UBS and Goldman Sachs were joint lead arrangers on the credit facility, with UBS listed on the left. ABN Amro was the documentation agent.

Proceeds from the bank deal and a bond deal were used to help fund Castle Harlan Inc.'s acquisition of Horizon Lines from The Carlyle Group for $650 million. Castle Harlan Partners IV LP, an investment fund totaling $1.163 billion in commitments that closed last September, is the actual buyer of Horizon Lines.

Total leverage is 5x and senior leverage is 2.5x.

Horizon Lines is a Charlotte, N.C., container shipping company.

Ceradyne oversubscribed

Ceradyne Inc.'s $110 million seven-year term loan B, which just launched this past Friday and is priced with an interest rate of Libor plus 225 basis points, is already two times oversubscribed, according to a fund manager who, based on the amount of demand, is speculating that pricing will "probably" come in to Libor plus 200 basis points before the deal closes.

However, no talk of a reverse flex has been heard from the syndicate as of yet, the fund manager added.

The flood of commitments may have been a bit of a surprise to some as one investor had previously told Prospect News that the Libor plus 225 basis points pricing on the B tranche was a bit low given the fact that it's a small company that is approaching the institutional market for the first time.

Prior to this proposed deal, Ceradyne only had a $10 million revolver with no borrowings outstanding as of March 31.

Company slides shown during a conference call the other week estimated that the term loan would carry an interest rate of Libor plus 250 basis points, but, a source close to the deal had previously disputed that estimation saying that pricing would probably come lower at launch, which indeed ending up being the case.

The proposed facility (Ba3) also contains a $50 million five-year revolver. The company estimated pricing on the revolver to fall around Libor plus 200 basis points.

Wachovia Capital Markets LLC is the lead bank on the deal.

Proceeds from the credit facility along with cash will be used to help fund the acquisition of ESK Ceramics, which is expected to close in the third quarter.

Under the acquisition agreement, Ceradyne will purchase the Germany based industrial technical ceramic manufacturer for about €111.4 million, or about $136 million, in cash payable at closing.

Ceradyne is a Costa Mesa, Calif., developer, manufacturer and marketer of advanced technical ceramic products and components for defense, industrial, automotive/diesel and commercial applications.

Bucyrus oversubscribed

Bucyrus International Inc.'s $150 million senior secured credit facility (BB-) is now around six to seven times oversubscribed since launching last week, according to a market source. And, in fact, due to the strong demand, the commitment deadline was accelerated to Tuesday at which time the books will close, the source added.

The deal received enormous interest with both the $50 million revolver and the $100 million term loan priced at Libor plus 250 basis points. When initial price talk first emerged in May, both tranches were talked in the Libor plus 300 basis points context and the revolver had been fully syndicated.

Goldman Sachs Credit Partners LP and GMAC Commercial Finance LLC are the lead banks on the deal, which is expected to allocate alongside the initial public offering of common stock in a "couple of weeks," the source added.

Proceeds from the bank deal, combined with expected proceeds of $122.6 million from the IPO, will be used to redeem all the company's $150 million outstanding 9¾% senior notes due 2007 and repay its existing bank debt.

Bucyrus is a South Milwaukee, Wis., manufacturer of surface mining equipment.

Scotts price talk

Price talks on Scotts Co.'s $400 million credit facility surfaced with the $200 million term loan A talked at Libor plus 125 basis points and the $200 million term loan B talked at Libor plus 150 basis points, according to a market source.

The refinancing/repricing deal is expected to launch this week.

JPMorgan and Citigroup are the lead banks on the deal, with JPMorgan listed on the left.

Proceeds from the term loans combined with cash on hand will be used refinance and retire the company's existing $500 million term loan B, providing for lower interest rate spreads and modifying many of the borrowing covenants for additional operating flexibility.

Scotts is a Marysville, Ohio, marketer of branded consumer products for lawn and garden care.

Venetian sets meeting date

Venetian Casino Resort is scheduled to hold a bank meeting for its $975 million senior secured credit facility on July 19, according to a market source. Until now it was known that the deal would be first half of July business but specific timing was unavailable. Furthermore, the deal size was previously said to be about $1 billion.

The facility will consist of an approximately $750 million term loan B and about $225 million of pro rata bank debt, the source said.

Goldman Sachs is the sole lead bank on the deal.

Proceeds will be used by the Las Vegas hotel and casino to refinance existing debt and to finance construction of the new Palazzo casino resort project.

The Palazzo casino resort is estimated to have cash costs of about $1.6 billion. To finance the costs of the project, the company intends to not only use the new credit facility but also a $135 million equipment financing, a $250 million construction loan for the Palazzo mall that will be borrowed by an unrestricted subsidiary, net proceeds from the recently completed sale of the Grand Canal Shoppes Mall and operating cash flow, according to a company news release.

Closing on the credit facility is expected to take place in August.

In connection with the financing, Las Vegas Sands will acquire all of the capital stock of Interface Group Holding Inc. from Sheldon G. Adelson in consideration for additional common stock of Las Vegas Sands. Interface Group Holding indirectly owns the Sands Expo and Convention Center and holds all of the preferred interest in Venetian Casino Resort. The company is exploring alternatives to refinance and/or repay the debt of the Sands Expo and Convention Center, the release added.

Dean Foods launch

Dean Foods Co. is expected to hold a bank meeting for its proposed $3 billion credit facility on Thursday, according to a market source. Previously timing on the deal was somewhat vague with the meeting slated for sometime this week.

The facility consists of a $750 million term loan B, a $1.25 billion five-year term loan A and a $1 billion five-year revolver, sources said.

According to one market source, pricing on the term loan B is Libor plus 175 basis points and pricing on the term loan A and revolver is Libor plus 125 basis points.

However, according to a source close to the deal, pricing on the tranches is not available at this time.

Wachovia and Bank One - otherwise know as JPMorgan - are the lead banks on the deal.

Proceeds will be used by the Dallas food and beverage company to refinance existing debt.

Banks surface for Dana

The new credit facility that will be used to help fund The Cypress Group's acquisition of Dana Corp.'s Automotive Aftermarket Group for about $1.1 billion in cash is now expected to be led by Credit Suisse First Boston, JPMorgan and Goldman Sachs, according to sources.

As was previously reported, it was known that Credit Suisse First Boston would be involved in the deal, however, what role the bank would play and whether there would be other banks involved was unavailable.

No other details on the debt financing are being revealed at this time.

The acquisition, which is expected to close in the third quarter of 2004, is subject to the receipt of financing and other customary conditions, including regulatory approvals.

Dana plans to use the proceeds from the sale to reinvest in the company's core businesses, contribute to the company's pension plans and to further reduce debt, moves that are expected to accelerate the company's return to investment-grade status, the company previously said in a news release.

Credit Suisse First Boston LLC and Goldman, Sachs & Co. are acting as financial advisers to Dana for this transaction.

Dana's Automotive Aftermarket business is a producer of automotive replacement products.

Resolution Specialty modifies B loan

Resolution Specialty Materials' term loan B underwent some changes recently, with the tranche upsized by $10 million to $125 million and pricing lowered by 25 basis points to Libor plus 275 basis points, according to a market source.

The company's $30 million five-year revolver with an interest rate of Libor plus 300 basis points was left unchanged in terms of size and pricing.

The term loan is being offered at par. Revolver commitments are being offered 100 basis points.

JPMorgan and Bear Stearns are the lead arrangers on the now $155 million facility (B+), with JPMorgan listed on the left.

Proceeds will be used to help finance the Apollo Management LP's acquisition of some businesses and product lines in Eastman Chemical Co.'s coatings, adhesives, specialty polymers and inks segment.

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