Primary bank loan activity surges as July 4 holiday lull fades away

By Sara Rosenberg

New York, July 12 - New life is hitting the primary bank loan market now that the Fourth of July holiday has passed. During the week of July 15, a bunch of new deals are expected to launch including Jostens Inc., New World Pasta Co., Pinnacle Towers Inc., Horizon Natural Resources Co. and Pinnacle Entertainment Inc.

"There was a lull going into the Fourth, but now [primary activity] is back with a vengeance," a market participant said.

Two refinancing deals that are expected to launch next week include Jostens Inc. and New World Pasta Co.

Jostens is scheduled to hold a bank meeting on Tuesday regarding a new $330 million six-year term loan C, according to a syndicate source. JP Morgan Chase and Deutsche Bank are joint lead arrangers on the deal.

Pricing on the new term C is not available yet, the syndicate source said. The tranche C will be used to replace the company's existing term loan B that has an interest rate of Libor plus 350 basis points. The new term C is expected to "be tighter" than the term B, the syndicate source added.

Security for the term loan C is basically all assets, the syndicate source said.

Jostens, an Investcorp portfolio company, is a Minneapolis, Minn. producer of yearbooks and class rings.

New World Pasta Co. is scheduled to hold a bank meeting on Thursday regarding a new $230 million credit facility, according to a syndicate source. Morgan Stanley is the lead bank on the deal.

The facility consists of a $200 million seven-year term loan B with an interest rate of Libor plus 325 basis points, a decrease from the current term B tranche's interest rate of Libor plus 400 basis points, and a $30 million five-year revolver with an interest rate of Libor plus 325 basis points, the syndicate source said.

Proceeds from the loan are being used to refinance existing debt including the repayment of a term C bridge loan that was provided by Joseph Littlejohn & Levy.

Security for the Harrisburg, Pa. dry pasta maker's loan is essentially all company assets.

Also next week, two bankruptcy exit financing deals - Pinnacle Towers Inc. and Horizon Natural Resources Co. - are expected to hit the market.

Pinnacle Towers is scheduled to hold a bank meeting on Wednesday regarding $340 credit facility, according to a syndicate source. Deutsche Bank and Bank of America are joint lead arrangers for the deal.

The loan consists of a $40 million revolver with an interest rate of Libor plus 350 basis points and a $300 million term loan B with an interest rate of Libor plus 400 basis points, the syndicate source said.

Basically all assets will be used to secure the loan, the syndicate source said.

Pinnacle Towers, a Fortress Investment Group and Greenhill Capital Partners portfolio company, is a Sarasota, Fla. provider of communication site rental space. The company filed for reorganization under Chapter 11 in May.

Horizon Natural Resources, previously AEI Resources Holding Inc., is scheduled to hold a bank meeting on Thursday regarding a new $250 million revolving credit facility, according to a syndicate source. Deutsche Bank is the sole lead arranger on the deal.

The revolver has an interest rate of Libor 350 basis points and is secured by essentially all assets, the syndicate source said.

Horizon Natural Resources, an Ashland, Ky. producer of steam coal, emerged from Chapter 11 in May after 10 weeks.

On Friday, Pinnacle Entertainment Inc. is scheduled to hold a bank meeting for a credit facility that will be approximately $300 million in size, according to market sources. Bank of America and Bear Stearns are joint leads on the deal.

Details on the Glendale, Calif. gaming company's new loan were not immediately available.

This resurgence in activity is needed. During the three weeks starting from the week of June 20 to the week of July 4 volume in terms of the amount of deals and monetary value of loans in the market is down from the same period last year, a market participant said.

In 2001, for the three weeks starting with the week of June 20, there was $23.5 billion in the market with 45 deals. The following week there was $18.7 billion in the market with 43 deals and during the third week there was $18 billion with 43 deals, the market participant said.

In 2002, for the three weeks starting with the week of June 20, there was $18.5 billion in the market with 39 deals. The following week there was $14.2 billion in the market with 32 deals and during the third week there was $16.4 billion with 37 deals, the market participant said.

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