Primary sees Lamar Media, Burns Philp meetings; Penn National Gaming expected Thursday

By Sara Rosenberg

New York, Jan. 22 - Once again, the secondary bank loan market was relatively quiet Wednesday but the primary is still seeing a respectable amount of activity. During the day both Burns Philp & Co. Ltd. and Lamar Media Corp. launched their new credit facilities. And coming up on Thursday is the long-talked-about Penn National Gaming Inc. deal.

Burns Philp hosted a call on Wednesday morning for a new $375 million six-year term loan B with an interest rate of Libor plus 400 basis points, according to a fund manager. Credit Suisse First Boston is the lead bank on the deal.

"We couldn't hear everything all that well," one fund manager told Prospect News in regards to the call, citing technical difficulties as the problem.

"The company makes yeast. Maybe it's not the most exciting thing in the world, but I have to go back over it," the fund manager said, adding that pricing on the term loan B seems to be in line with pricing on food industry deals.

Proceeds from the term loan B will be used to help fund the acquisition of Goodman Fielder Ltd. Also, to help fund the acquisition the company received commitments for a A$1.3 billion multi-currency five-year term loan A via Credit Suisse First Boston, BOS International Ltd. and Credit Agricole Indosuez Australia Ltd., a $100 million one-year subordinated bridge loan via Credit Suisse First Boston to be repaid with an issuance of senior subordinated notes and a NZ$250 million bridge loan due Sept. 30 via Credit Suisse First Boston to be repaid with capital notes. The term loan A and the capital notes bridge loan have already been executed, according to a company news release.

Burns Philp is an Australian producer of bakers' yeast, yeast extracts, specialty yeast products such as wine/brewers' yeast, bakery ingredients, and herbs and spices.

Lamar Media launched a $1.3 billion credit facility on Wednesday, according to market source. JPMorgan is the lead bank on the deal.

The loan consists of a $300 million revolver, a $350 million term loan A and a $650 million term loan B. Preliminary pricing on the pro rata tranches was previously reported to be Libor plus 200 basis points and preliminary pricing on the term B was previously reported to be Libor plus 250 basis points, market sources said.

Proceeds will be used to replace the company's existing bank facility.

Lamar is a Baton Rouge, La. outdoor advertising company.

The time has finally come for Penn National Gaming's credit facility to hit the primary market with the launch date set for Thursday, according to market sources. News of the deal has been circulating around the market since this past summer.

Bear Stearns and Merrill Lynch are joint lead arrangers, joint bookrunners and syndication agents on the deal.

The loan is expected to consist of a $600 million term loan B with an interest rate of Libor plus 350 basis points and a $200 million revolver with an interest rate of Libor plus 300 basis points, sources said. Originally, the term B was talked at Libor plus 275 basis points and the pro rata was talked at Libor plus 250 basis points, according to a filing with the Securities and Exchange Commission.

The loan is secured by assets and stock and will be used to help fund the acquisition of Hollywood Casino Corp. and refinance debt.

Penn National Gaming is a Wyomissing, Pa. owner and operator of gaming properties.

Meanwhile, responses were due on Fleming Companies Inc.'s proposed amendment on Wednesday. Whether the amendment was approved or not was not available by press time.

The company is seeking relief on its total leverage covenant for the first quarter, a fund manager previously told Prospect News. "I think that has to do with the timing of the asset sales," the fund manager said in regards to the proposed amendment. "If they don't get release and they don't get asset sales, they may be in violation.

"There was a mixed reception to the amendment," the fund manager continued. "Not everyone was enamored by the proposals."

However, since the lender call was held, the fund manager has heard positive feedback in regards to the amendment, he told Prospect News on Wednesday.

The lender call discussing the amendment was held following the release of worse-than-expected financial estimates, at which time the company also updated participants on the progress of the previously announced asset sales.

The company explained during the call that the sale of 110 existing price-impact stores that operate under the Food 4 Less and Rainbow Foods banners are going slower than planned. Furthermore, the company expects the asset sales to bring in less than the previously anticipated amount of $450 million.

Last month Fleming sought and successfully completed an amendment to its credit facility agreement that allowed for the sale of the retail assets. Under the amendment, Fleming agreed to sell $150 million in assets by Dec. 31 and an additional $250 million by March 31, 2003, a source previously told Prospect News.

With the proceeds from the asset sales, Fleming plans to repay its entire term loan. As the amendment started to gain momentum, the bank debt started to strengthen because people figured that they could make a quick profit by purchasing the paper now and getting paid down at par in the near future, a source explained at the time.

Other terms of the amendment included the increase of pricing on the term loan B to Libor plus 250 basis points from Libor plus 225 basis points and the payment of a 12.5 basis point amendment fee.

Fleming is a Lewisville, Tex. distributor of consumable goods and operator of price impact supermarkets.

Jack in the Box Inc. closed on its new $350 million senior credit facility consisting of a $200 million three-year revolver with an interest rate of Libor plus 225 basis points and a $150 million 41/2-year term loan B with an interest rate of Libor plus 325 basis points.

Originally the loan was launched as a $125 million term loan B with an interest rate of Libor plus 350 basis points and a $175 million three-year revolver with an interest rate of Libor plus 250 basis points. However, it was modified during the syndication process, with increases in size in both the revolver and the term B and a flex down in pricing on both tranches as well.

Wachovia Securities was the lead bank on the deal. Other banks involved as lead agents were Fleet National Bank, U.S. Bancorp, Rabobank and BNP Paribas.

The facility replaces a $175 million revolver that was due to expire on March 31.

The new financing will be used for general corporate purposes, including letters of credit, working capital, capital expenditures, costs associated with the company's recent acquisition of Qdoba Restaurant Corp. and to refinance existing indebtedness, according to a news release.

Jack in the Box is a San Diego operator and franchiser of hamburger restaurants.

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