DSW Waters term loan B sees $130 million in commitments by mid-day Monday

By Sara Rosenberg

New York, Oct. 20 - More than a quarter of the institutional tranche in DSW Waters LP's recently launched credit facility has already been spoken for even though it is an entirely new company, which probably will result in potential investors taking more time to do credit work.

As of Monday afternoon, DSW's $400 million term loan B, which carries an interest rate of Libor plus 350 basis points, already had $130 million on the books in commitments, according to a fund manager.

"This is a new company altogether so I think people will take a little bit more time than they normally would," the fund manager explained.

"There's about 2¾ times total leverage and that's all senior," the fund manager said, adding that it's a manageable amount of leverage for a company.

"It seems reasonable. Both sponsors are reasonable sponsors and they seem to be committed to the transaction. We've committed," the fund manager concluded.

The $550 million credit facility (B+), which launched via a bank meeting this past Friday, also contains a $100 million revolver with an interest rate of Libor plus 350 basis points and a $50 million funded letter of credit facility with an interest rate of Libor plus 350 basis points.

JPMorgan and Citigroup are the lead banks on the transaction.

Proceeds will be used to help support the joint venture between Groupe Danone and Suntory, which will operate the combined businesses of their subsidiaries, Suntory Water Group and the home and office delivery business of Danone Waters of North America.

Under the terms of the agreement, announced on Sept. 4, each company will have an equal ownership stake in the venture. The new management team will be comprised of executives from both firms' existing water operations, as well as new management. The closing of the transaction is subject to the satisfaction of customary conditions and is expected to close this fall.

Danone is a Paris-based producer of fresh dairy products and packaged water, biscuits and cereal products. Suntory is a Japan-based producer of alcoholic and non-alcoholic beverages.

In the secondary, Huntsman Corp.'s bank debt traded at 89½ on Monday and then closed the day bid at that level with a 90½ offer, according to a trader.

"There was a trade on Friday and a trade today. There's one new retail buyer out there. But there isn't much paper available at these levels," the trader said.

On Friday, a different trader told Prospect News that the Huntsman paper was being quoted all over the place due to the entrance of a new buyer into the market. The trader placed the Salt Lake City chemical company's paper around 89 bid, 90 offered.

Meanwhile, coming up in the primary this week are such deals as Quality Distribution Inc., dj Orthopedics Inc. and MPS Group Inc.

Quality Distribution is scheduled to hold a bank meeting on Tuesday for a $235 million credit facility, consisting of a $140 million six-year delayed draw term loan, a $75 million five-year revolver and a $20 million six-year synthetic term loan.

All three tranches are priced with an interest rate of Libor plus 350 basis points. The delayed draw term loan and the revolver both carry a commitment fee of 50 basis points, according to a syndicate release.

Previously, the deal was anticipated to be sized at $200 million, consisting of a $140 million delayed draw term loan and a $60 million revolver.

Credit Suisse First Boston is the lead arranger and bookrunner on the deal with Deutsche Bank acting as joint lead arranger and syndication agent and Bear Stearns participating in the syndicate as well.

Security for the loan, which is being obtained in conjunction with an initial public offering, is a first priority perfected lien on substantially all of the company's properties and assets.

The IPO is conditioned not only on the successful completion of the new credit facility but also on a private offering by Quality Distribution LLC, a wholly owned subsidiary, of its unsecured notes, and the exchange of all outstanding shares of the 13.75% preferred stock for shares of the common stock, according to a filing with the Securities and Exchange Commission.

Revolver borrowings will be used for working capital and general company purposes, including effecting certain permitted acquisitions. Term loan borrowings will be used to repay existing debt.

More specifically, Quality Distribution plans to use proceeds of $115 million from the IPO, proceeds of $125 million from the note sale and $149.953 million from the credit facility to repay the $279.278 million outstanding under the existing credit facility, redeem the $57.548 million 12.5% senior subordinated secured notes, redeem the $18.1 million 10% senior subordinated notes, redeem the $14.027 million 12% junior PIK notes and pay $21 million in transaction fees and expenses.

Quality Distribution is a Tampa, Fla. operator of a bulk tank truck network.

dj Orthopedics is scheduled to hold a bank meeting on Tuesday for a $125 million senior credit facility (B1/B+), consisting of a $100 million term loan and a $25 million undrawn revolver. Wachovia is the lead bank on the deal.

Proceeds from the credit facility will be used to refinance the company's existing credit facility and help finance the acquisition of the bone growth stimulation business from OrthoLogic Corp. for $93 million in cash. The acquisition is subject to the approval of OrthoLogic's stockholders and customary governmental approvals and closing conditions. The transaction is expected to be completed before the end of the year.

dj Orthopedics is a Vista, Calif. orthopedic sports medicine company.

And MPS Group is scheduled to hold a bank meeting on Thursday for a $150 million three-year revolver. Wachovia is the lead bank on the deal.

Proceeds will be used to refinance existing debt.

MPS Group is a Jacksonville, Fla. provider of IT and professional staffing services.

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