Jack in the Box breaks for trading with B loan changing hands right around 101

By Sara Rosenberg

New York, Dec. 18 - Jack in the Box Inc.'s $475 million credit facility (Ba2/BB) broke for trading on Thursday with the $275 million term loan B seen trading close to 101 throughout the day, a trader said. The tranche was quoted with a par 7/8 bid and a 101 3/8 offer, a second trader added.

Proceeds from the term loan will be used to refinance the company's existing $150 million term credit facility and redeem its $125 million of 8 3/8% senior subordinated notes due April 15, 2008. The redemption of the notes and the write off of deferred financing fees will result in a pre-tax charge to earnings in the first fiscal quarter of $9 million to $10 million, but borrowing costs will fall by $3 million per year.

The facility also contains a $200 million revolver that will be used for general corporate purposes.

Wachovia Securities is the lead arranger on the San Diego restaurant operator's deal.

Jack in the Box's new facility is expected to give the company a more flexible capital structure to help it execute its previously announced strategic plan by extending maturities and decreasing borrowing costs.

Meanwhile, NRG Energy Inc.'s $1.45 billion exit financing facility (BB) is now expected to allocate late Thursday and break for trading early Friday morning, according to a source close to the deal. Previously, the facility was expected to hit the secondary during Thursday's market hours.

According to the source, the process is taking a little longer than expected since it is a big book and the syndicate is working on reconciling allocations.

The syndicate is aiming to close and fund the loan by Dec. 23.

Credit Suisse First Boston and Lehman Brothers are acting as joint lead arrangers on the Minneapolis energy company's deal.

The facility contains a $1.2 billion 61/2-year term loan B, increased from an original size of $950 million at the end of last week. The tranche carries an interest rate of Libor plus 400 basis points compared to initial pricing of Libor plus 450 basis points and a Libor floor of 1.50% compared to an initial Libor floor of 1.75%. Lastly, the upfront fee on the tranche is 991/2, changed from 99 during syndication.

There also is a $250 million four-year revolver with an interest rate of Libor plus 400 basis points, flexed down from initial pricing of Libor plus 425 basis points, and an unchanged commitment fee of 100 basis points. The Libor floor on this pro rata tranche was reduced to 1.50% from 1.75% as well. However, the upfront fee remained the same at 99.

Pricing reductions on the credit facility were of little surprise as the deal had in excess of $3 billion in the book two days after launching via a conference call.

NRG filed for Chapter 11 in May. On Dec. 5, the company announced that it successfully completed its Chapter 11 reorganization and emerged from bankruptcy. Through the reorganization process, the company eliminated corporate level debt and other claims totaling more than $6 billion and emerged from Chapter 11 with $510 million of corporate debt and about $4.4 billion in project level debt.

Rite Aid Corp.'s term loan B fell by about a quarter of a point to 101½ bid, 102 offered, according to a trader, despite Thursday's release of seemingly very positive financial results for the third quarter.

For the quarter, the company reported a 6.1% increase in revenues to $4.1 billion versus revenues of $3.9 billion in the prior-year third quarter.

Net income for the quarter was $22.5 million or 3 cents per common share compared to last year's third-quarter loss of $16.4 million or 5 cents per common share. The improvement was due primarily to a 10.2% increase in adjusted EBITDA and a reduction in the LIFO charge, according to a company news release.

Adjusted EBITDA was $177.5 million or 4.3% of revenues compared to $161.1 million or 4.2% of revenues last year.

"We had a very good third quarter with a 10.2 percent increase in EBITDA, thanks to our focus on improving customer satisfaction and increasing sales," said Mary Sammons, president and chief executive officer, in the release. "As we move into the fourth quarter, this positive momentum continues and we are comfortable with achieving the substantial improvement in results we've forecasted for this year."

The company also updated its guidance for 2004, confirming that it expects sales of $16.5 billion to $16.7 billion. The company also anticipates anywhere between a $13 million net loss and $15 million net income. Adjusted EBITDA guidance for the year was confirmed between $700 million and $725 million.

In follow-up news, the acquisition of Bombardier Recreational Products Inc. by a group of investors comprised of the Bombardier family, Bain Capital and the Caisse de depôt et placement du Québec from Bombardier Inc. has been completed for C$960 million.

In connection with the transaction Bombardier Recreational Products closed on a new credit facility consisting of a US$275 million term loan B priced with an interest rate of Libor plus 300 basis points and a C$250 million revolver with an interest rate of Libor plus 300 basis points.

The term loan B was flexed down during syndication from Libor plus 325 basis points.

BMO and Royal Bank of Canada are leading the revolver portion of the deal, and Merrill Lynch and UBS Securities are leading the term loan portion.

Bombardier Recreational Products is a Canadian-based manufacturer of recreational products.

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