Scotts shifts funds; Innophos reverse flexes; Blount shifts funds, lowers pricing; Garrett price talk surfaces

By Sara Rosenberg

New York, Aug. 5 - The Scotts Co. restructured its refinancing/repricing credit facility (Ba1/BB) on Thursday, shifting some funds from the term loan B to the term loan A and removing a step up in pricing provision from the term loan A. Also on the primary front, Innophos Holdings' lowered pricing on its term loan and added a step down provision, and pricing on Garrett Aviation emerged along with this deal's launch.

Scotts' term loan A is now sized at $250 million compared to an initial size of $200 million, according to a fund manager. Pricing on the tranche remained at Libor plus 125 basis points, but the syndicate removed the step up to Libor plus 150 basis points from the leverage-based pricing grid. Step downs to Libor plus 100 basis points and to Libor plus 75 basis points remained in the pricing grid.

Meanwhile, the term loan B is now sized at $150 million compared to an initial size of $200 million. Pricing on the tranche remained at Libor plus 150 basis points, the fund manager said. There is no pricing grid contained in the term loan B agreement.

"There was a lot of demand on the term loan A. [It was] significantly oversubscribed," the fund manager added.

This is not the only deal to recently lean toward more pro rata bank debt. Just the other day, Dean Foods Co. moved to an all pro rata structure on its $3 billion refinancing deal (Ba1), increasing the five-year term loan A to $1.5 billion from $1.25 billion, increasing the five-year revolver to $1.5 billion from $1 billion and removing the $750 million term loan B tranche.

And, on Thursday, Rite Aid Corp. made its move to essentially exit the institutional market and head toward the pro rata market with the launch of an amended and restated $1.3 billion credit facility that will basically increase the company's revolver to $850 million from $700 million, decrease the company's term loan to $450 million from $1.15 billion, and reduce pricing on both tranches to Libor plus 175 basis points from current pricing of Libor plus 350 basis points on the revolver and Libor plus 300 basis points on the term loan (see story elsewhere in this issue).

This shift to pro rata is seen as a direct result of banks having capital to put to use, according to one market source, who explained that usually it's hard to raise revolvers so when the ability is there people will take advantage of it. Not to mention, pro rata bank debt usually results in a lower cost of capital for the company, the source added.

JPMorgan and Citigroup are the lead banks on the Scotts credit facility, 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.

Innophos drops pricing

Innophos lowered pricing on its $220 million term loan to Libor plus 225 basis points from Libor plus 250 basis points and added a step down to Libor plus 200 basis points depending on leverage, according to a market source.

Pricing on the $50 million revolver was left unchanged at Libor plus 275 basis points, the source added.

Bear Stearns and UBS are the lead banks on the $270 million credit facility (B1/B+), with Bear Stearns listed on the left.

Proceeds will be used to help fund Bain Capital's acquisition of Rhodia's North American specialty phosphates business for an enterprise value of $550 million. The acquisition, which was first announced on June 11, is expected to close in the third quarter.

Blount size shifts, pricing

Blount Inc. increased the size of its six-year term loan B (B2/B+) to $265 million from $240 million and decreased the size of its five-year revolver (B2/B+) to $100 million from $125 million.

Furthermore, pricing on the term loan B and the $5.2 million six-year Canadian term loan (B2/BB) came in at Libor plus 300 basis points down from price talk of Libor plus 325 to 350 basis points, according to a market source. The term loan B was basically fully subscribed less then a full day after launch.

And, pricing on the $50 million 61/2-year non-amortizing second-lien term loan (B3/B-) was reduced to Libor plus 500 basis points from Libor plus 550 basis points, the source added.

These changes came on the heels of Wednesday's pricing of $175 million eight-year senior subordinated notes at par to yield 8 7/8%.

The credit facility will allocate on Friday, and closing is targeted for Monday.

Security is substantially all domestic assets and stock of some subsidiaries. The Canadian term loan will also be secured by the assets of Canadian subsidiaries.

Amortization on the term loan B is quarterly payments of $600,000, with a final payment of $225.6 million due on the maturity date.

Amortization on the Canadian term loan is quarterly payments of $13,000, with a final payment of about $4.9 million due on the maturity date.

The company is getting the amended and restated credit facility in connection with a $125 million common stock sale and the notes offering as part of a full recapitalization. Proceeds from the transactions will be used to refinance existing debt.

Blount is a Portland, Ore., international manufacturing and marketing company that operates in the outdoor products, lawnmower and industrial and power equipment segments.

Garrett Aviation price talk

Price talk on Garrett Aviation Services' proposed $287 million credit facility surfaced Thursday in connection with the company's bank meeting, with the $60 million revolver (B1/B+) talked at Libor plus 250 basis points, the $147 million term loan (B1/B+) talked at Libor plus 275 basis points and the $80 million second-lien term loan (B2/B-) talked at Libor plus 525 basis points, according to a market source.

Furthermore, some investors are expecting syndication of the deal to move along well for various reasons, including potential rollover from Piedmont Hawthorne's lenders and based on the success of the in-market Standard Aero deal.

"I think they'll take out Piedmont's credit facility and pay for the acquisition, a fund manager said. "Piedmont guys that are already in the deal will probably rollover their positions."

"Standard Aero was so oversubscribed. No reason to think that this one won't too," the market source added. "There's already an early commitment on it."

Standard Aero, a pretty comparable company to Garrett that is also in-market with an acquisition financing deal, increased the size of its eight-year term loan B (B2/B+) on Tuesday to $325 million from $260 million and decreased the size of its proposed bond offering to $200 million from $265 million on strong investor demand. Pricing on the tranche was left unchanged at Libor plus 275 basis points. The company is a provider of turbine engine maintenance, repair and overhaul for aircraft engines and industrial gas turbines.

Lehman Brothers and Citigroup are joint lead arrangers and joint bookrunners on the Garrett Aviation credit facility, with Lehman left lead and administrative agent.

Proceeds will be used to help fund The Carlyle Group's acquisition of Garrett from General Electric Co.

Carlyle plans on combining Tempe, Ariz.-based Garrett with one of its existing portfolio companies, Piedmont Hawthorne, in order to create a general aviation aftermarket service provider offering a more comprehensive range of services to better serve the needs of its broad customer base, according to a Carlyle release.

The transaction is expected to close in the third quarter.

PanAmSat still expected

In the bank loan market, the expectation seems to be that despite PanAmSat Corp.'s unfortunately badly timed satellite trouble, the acquisition will probably still get done and terms of the credit facility will probably not be changed.

"It's bad news in terms of timing but I haven't heard talk of tabling the facility," one market source said.

"I don't think that anything's going to happen with the bank debt. Satellite is still operational. It's fully insured. [The] bonds are trading down a little bit. [The] bank debt will probably stay at Libor plus 275. No one has withdrawn a commitment. And it's still expected to allocate early next week," a second source added.

On Thursday, PanAmSat announced that on Aug. 3 the secondary XIPS on the Galaxy 10R satellite experienced an unexpected shutdown, and the company has not been able to restart the system. The satellite is operating normally on its backup system and there has been no service interruption to customers and revenue is not expected to be affected either.

However, under the terms of the PanAmSat sale agreement, "the permanent XIPS failure on Galaxy 10R allows the purchasers to not consummate the transactions contemplated," the company news release said.

"The purchasers, including affiliates of Kohlberg Kravis Roberts & Co. LP., The Carlyle Group and Providence Equity Partners Inc., are evaluating the impact of the XIPS failure on the transactions and are working with the company and The DirecTV Group to address the affect of this event," the release added.

PanAmSat is in-market with a $2.91 billion credit facility consisting of a $1.86 billion seven-year term loan B with an interest rate of Libor plus 275 basis points (after being flexed up by 25 basis points on the bonds pricing wide last week), a $250 million five-year revolver with an interest rate of Libor plus 250 basis points and a 50 basis points commitment fee, and an $800 million five-year term loan A with an interest rate of Libor plus 250 basis points.

Citigroup and Credit Suisse First Boston are the joint lead arrangers and joint bookrunners on the deal, with Citigroup listed on the left. Bear Stearns, Lehman Brothers and Bank of America are co-documentation agents.

PanAmSat is a Wilton, Conn., satellite operator.

Investors may take time on AM General

AM General's recently launched $615 million credit facility is not expected to be a blowout right off the bat but it's expected to do well after investors have had time to do their credit work, according to a market source.

"The company presents well. Overall attendance was good [at Wednesday's bank meeting]. They've gotten a handful of commitments in. [But], it's not as straightforward as some other ones, like Loews. Here people need to do a little bit of work before they commit. Not to say it won't be a blowout. It [just] won't be a today event," the market source explained.

The facility consists of a $50 million five-year revolver with an interest rate of Libor plus 300 basis points, a $400 million seven-year first-lien term loan with an interest rate of Libor plus 300 basis points and a $165 million second-lien term loan C with an interest rate of Libor plus 525 basis points.

Citigroup is the sole lead bank on the deal.

Currently, AM General is owned by Renco Group Inc. However, a new holding company is being formed through a contribution partnership with MacAndrews & Forbes and Renco. Under the partnership, MacAndrews would have a majority stake of the company and Renco would have a minority stake. A portion of the proceeds from this credit facility will go toward the new holding company and a portion will go toward debt repayment.

AM General is a South Bend, Ind., military and special purpose vehicles company.

Bragg sees good interest

A lot of commitments have already come in on Bragg Communications' $200 million term loan B, which is something nice for this first-time B loan issuer, according to a market source.

Two of the biggest reasons for investors' positive attitude toward this deal are that the company has "high penetration of its services" and is the first company in Canada to offer telephone service through its cable systems, the source explained.

The term loan B is priced with an interest rate of Libor plus 275 basis points and is being offered at par.

Proceeds, along with proceeds from a C$300 million term loan A and a C$50 million revolver that are both priced with an interest rate of the Bankers Acceptance rate plus 275 basis points, will be used to refinance existing debt.

TD Securities is the sole lead bank on the deal.

Leverage at close will be 4.7x for the borrower.

Commitments are due Aug. 23 with closing targeted for Aug. 31.

A bank meeting was held in Canada this past Tuesday and in New York this past Wednesday to launch the deal to investors.

Bragg Communications is a Halifax, Nova Scotia, media company.

CCC close to subscription

CCC Information Services Group Inc.'s $207.5 million credit facility (B1/B+) is "almost fully subscribed now," since launching to investors on Tuesday, according to a market source.

The facility consists of a $30 million five-year revolver at Libor plus 300 basis points with a 50 basis points commitment fee and a $177.5 million six-year term loan B at Libor plus 300 basis points.

Credit Suisse First Boston is the sole lead arranger and bookrunner on the deal; Jeffries & Co. is syndication agent.

Proceeds will be used for recapitalization purposes.

Last week, the company announced the commencement of a self tender offer for up to 11.2 million shares at a price of $18.75 per share. The shares that the company is offering to purchase represent about 41.9% of its shares issued and outstanding on June 30. The tender offer will expire on Aug. 24.

CCC Information Services is a Chicago supplier of technology solutions to the automotive claims and collision repair industries.

Levi up on lender call

Levi Strauss & Co.'s bank debt was quoted "closer to 110" and could even be higher than that, although there was no trading activity in the name, as the company held a lender call Thursday to discuss amending its credit facility to allow for the sale of its Dockers casual clothing business, according to a trader.

"Immediately after the call I saw an opportunistic bid of 109 and then a short while later that same dealer was bidding 110 and offering paper at 115," another market source said.

Previously, the paper was said to be hovering around the 108 area.

The bank debt has not dropped to usual paydown levels on potential asset sale news since the paper is currently in a non-call period, a market source explained.

The San Francisco-based clothing company set a lender consent deadline for Aug. 12, and, assuming it's approved, the amendment is scheduled to close Aug. 13.

Calpine heavier

Calpine Corp.'s bank debt was heavier on Thursday following the release of earnings, although little trading activity was seen on the bank debt front, according to traders.

The Calpine Corp. second-lien bank debt was quoted wide at 83 bid, 85 offered by one trader and at 84 bid, 86 offered by a second trader, down about two to three points since the start of the week.

"It's down today," the first trader said. "It seems heavy but I haven't seen much trading in it."

"Pretty much the whole structure was down," a third trader added. "It's softer."

For the second quarter, the San Jose, Calif., power company reported a net loss of $28.7 million, or $0.07 per share, compared to a net loss of $23.4 million, or $0.06 per share, for the same period last year.

For the six months ended June 30, net loss was $99.9 million, or $0.24 per share, compared to a net loss of $75.4 million, or $0.20 per share, last year.

"During the second quarter, power plant performance remained strong, and we continued to execute on our liquidity-enhancing and financing programs," said Peter Cartwright, chief executive officer and president, in a company news release. "Calpine's earnings, however, were impacted by weak spark spreads across North America as well as additional operating, depreciation and interest costs associated with new plants coming on line."

NRG sees good flow

NRG Energy Inc. saw "good flow" in trading on Thursday after the release of earnings with the bank debt quoted at 103 1/8 bid, 103 7/8 offered, just north of the call level, and basically unchanged to maybe down an eighth of a point on the day, according to a trader.

For the second quarter, earnings were $83 million, or $0.83 per diluted share and earnings from ongoing operations were $69 million, or $0.69 per diluted share. EBITDA was $282 million and adjusted EBITDA was $233 million.

"Our strong second quarter performance was attributable to our employees maintaining focus on all phases of asset management: plant operations, managing commercial risk, resolving legacy issues, and continuing to pursue transactions which further reduce our balance sheet debt," said David Crane, president and chief executive officer, in a company news release. "Additionally, continued higher natural gas prices supported higher power prices, which improved margins at our coal facilities and helped to offset the impact of unseasonably mild weather during the quarter."

NRG is a Minneapolis owner and operator of power-generating facilities.

Portfolio auction Tuesday

In other secondary news, a bank debt portfolio is expected to be auctioned off on Tuesday, according to market sources; however, details on the upcoming transaction were not being revealed.

There was also talk of a second auction slated for a portfolio that was "sub $75 million in size," another source added, although timing and details were unavailable.

Intertape closes

Intertape Polymer Group Inc. closed on its new $275 million senior secured credit facility (Ba3/B+) consisting of a $200 million seven-year term loan with an interest rate of Libor plus 225 basis points and a $75 million five-year revolver with an interest rate of Libor plus 275 basis points.

Originally, the term loan was launched with a size of $175 million and pricing of Libor plus 275 basis points, but the size was increased and pricing was decreased during syndication.

Amortization on the term loan is 23 quarterly repayments of $0.5 million each commencing December 2004 and four final quarterly payments of $47.125 million.

Citigroup was the lead bank on the credit facility that actually funded on Wednesday.

Proceeds from the term loan and a bond offering were used to repay all existing bank debt, redeem all three series of existing senior secured notes, pay related make-whole premiums, accrued interest and transaction fees, and supply the company with about $20 million in cash.

The revolver was undrawn at closing.

Intertape Polymer Group is a Bradenton, Fla., developer and manufacturer of specialized polyolefin plastic and paper packaging products and complementary packaging systems.

Washington Group closes

Washington Group International Inc. closed on its $350 million credit facility consisting of a $115 million 31/2-year revolver with an interest rate of Libor plus 350 basis points and a 150 basis points commitment fee, and a $235 million four-year term loan B with an interest rate of Libor plus 250 basis points.

Through this refinancing deal, the company basically reduced pricing on its term loan B by 100 basis points and extended the tranche's maturity.

"Our financial performance continues to improve," said George H. Juetten, executive vice president and chief financial officer, in a company news release. "Because of that, we were again able to work with the financial markets to negotiate better terms on our credit facility.

"We now expect interest expense to be between $9 million and $10 million lower in 2004 compared to 2003. Coupled with our strong cash position and our debt-free balance sheet, the terms reinforce our liquidity and allow flexibility to address our markets," Juetten added in the release.

Credit Suisse First Boston was the sole lead arranger and bookrunner on the deal.

Washington Group is a Boise, Idaho, provider of engineering, construction and environmental services.

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