Graham Packaging shifts funds to B loan from notes; AAi.FosterGrant breaks; Dobson rebounds

By Sara Rosenberg

New York, Sept. 27 - Graham Packaging Co. LP upsized its already well-received in-market term loan B by $100 million and downsized its not-yet-priced senior notes offering by the same amount. While on the secondary front, AAi.FosterGrant broke for trading and Dobson Communications Corp.'s loan came back from Friday's loss.

Graham's "way oversubscribed" term loan B (B2/B) is now sized at $1.45 billion compared to an initial size of $1.35 billion, according to a market source. Price talk on the tranche remained at Libor plus 275 basis points.

To counteract this upsizing, Graham's senior note offering was decreased to $250 million from $350 million, according to the source. The size of the $375 million senior subordinated note offering was left unchanged. Both bond deals are in the roadshow stage through Tuesday.

All other tranches of the credit facility - the $250 million revolver (B2/B) talked at Libor plus 275 basis points and the $350 million second-lien term loan C (Caa1/CCC+) talked at Libor plus 475 to 500 basis points - were left unchanged.

Deutsche Bank, Citigroup and Goldman Sachs are the lead banks on the deal, with Deutsche left lead.

Proceeds from the credit facility, combined with proceeds from the now $625 million bond deal, will be used to help fund the acquisition of Owens-Illinois Inc.'s Plastic Container business for about $1.2 billion and to fund tender offers for Graham's $250 million of 8¾% senior subordinated notes due 2008, $75 million of floating-rate subordinated term securities due 2008, and $169 million of 10¾% senior discount notes due 2009.

Closing of the acquisition is subject to regulatory approval and other customary conditions.

Graham Packaging is a York, Pa., designer, manufacturer and seller of blow-molded plastic containers.

AAi.FosterGrant around par

AAi.FosterGrant Inc.'s $115 million credit facility allocated and broke for trading on Monday with the term loan B quoted by traders at par bid, par ½ offered but no activity spotted on the credit.

The syndicate recently finalized terms of the credit agreement, with a number of changes made to the deal this past Wednesday, including reducing the term loan B size to $90 million from $100 million, adding a $10 million term loan A tranche, upping pricing, adding soft call protection of 102 in year one and 101 in year two, and changing the amortization schedule.

"Allocations were good," a fund manager told Prospect News. "We got all we put in for. That's a pretty good indication that the book wasn't way oversubscribed."

The six-year term loan B is priced at Libor plus 500 basis points, up from initial price talk of Libor plus 350 basis points, and is being offered at par. The $15 million five-year revolver and the term loan A are both priced at Libor plus 450 basis points.

Bear Stearns is the sole lead bank on the deal that will be used to help fund the acquisition of Magnivision Inc. from American Greetings Corp. in an all-cash transaction.

AAi.FosterGrant is a Smithfield, R.I., eyewear and jewelry company. Magnivision is a reading glasses company.

Dobson rebounds

Dobson Communications Corp.'s bank debt headed back up to the low 99 area from the low 98 area, where it dropped on Friday on worries of Cingular Wireless invading some of its operational space, according to a trader.

"Cingular announced that it may expand its service into a Dobson market so that's why it traded down last week. Now it came back," the trader said, quoting the bank debt at 99¼ bid, 99 5/8 offered.

However, another trader said the paper was in a "locked market of 99 3/8," up from 98 bid, 98 7/8 offered in the "wake of the acquisition news".

Late Thursday, Dobson announced that, pending bankruptcy court approval, it would purchase the Michigan wireless assets of RFB Cellular Inc. and some affiliates for $26 million using borrowings under its credit facility.

The purchase is hoped to close by year-end.

Dobson Communications is an Oklahoma City-based provider of wireless phone services to rural markets.

Invista reworks term B price cut

Invista modified its repricing proposal to seek pricing of Libor plus 275 basis points on its $1.275 billion term loan B as opposed to initially proposed pricing of Libor plus 250 basis points, according to a market source.

The approximately $200 million term loan A will still be repriced at Libor plus 250 basis points.

JPMorgan and Deutsche Bank are the lead banks on the deal, with JPMorgan listed on the left.

Through the amendment, the company is also looking to get greater flexibility for the payment of dividends and other distributions by changing some covenants.

Invista is a Wichita, Kan.-based integrated polymers, intermediates and fibers business

PanAmSat shrugs off downgrade

PanAmSat Corp.'s term loan held relatively steady throughout trading on Monday, with quotes of par 1/8 bid, par 3/8 offered, as investors showed little reaction to news of a ratings downgrade and a new bond deal for a dividend payment.

"It traded a fair amount, hasn't moved a ton. It was maybe an eighth weaker if anything. Basically [it is] unchanged. For the most part guys aren't shocked at these dividend deals," a trader said.

Wilton, Conn.-based PanAmSat approached the high-yield market Monday with $416 million of new senior discount notes that will be used for a dividend payment to shareholders that purchased the satellite operator last month via a leveraged buyout.

In reaction to this development, Moody's Investors Service downgraded PanAmSat, including the company's senior secured bank debt rating to B1 from Ba3.

"The downgrade reflects Moody's concern with the effect that the new debt issue and dividend will have on the company. It also reflects our view that the company will have minimal equity capitalization and that this unanticipated move discounts our expectations for credit improvement and maintenance driven largely by the company's recently communicated business plan," the rating agency said.

"The unanticipated decision to increase debt so quickly and despite the lack of any financial flexibility within its ratings to do so, is also likely to make us more cautious about rating the company as prospectively in the future. Moreover, this material distribution to the holders of its equity interests, raises concerns of how prudently they will manage the balance sheet and its debt levels going forward," Moody's added.

Unlike, Moody's, Standard & Poor's opted to affirm all of PanAmSat's ratings, including the BB corporate credit rating, and left the outlook at stable.

AM General finds offer

AM General Corp.'s first- and second-lien term loans found an offer with unchanged bids in sparse trading on Monday after only being quoted on the bid side following late day allocations on Friday, according to a trader.

The first-lien term loan was quoted at 99 bid, 99½ offered and the second-lien term loan was quoted at 101 bid, 102 offered, the trader said.

The $400 million seven-year first-lien term loan is priced at Libor plus 450 basis points, was issued at 99 and contains call protection of 105 in year one, 103 in year two and 101 in year three. The $165 million second-lien term loan C is priced at Libor plus 900 basis points, was issued at par and is non-callable for two years with call protection of 102 in year three and 101 in year four.

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

ATP closes

ATP Oil & Gas Corp. closed on the amendment of its first-lien term loan, increasing the size to $185 million from $150 million and decreasing pricing to Libor plus 625 basis points from 950 basis points, according to a company news release.

Credit Suisse First Boston was the lead bank on the Houston natural gas and oil company's deal.

"The performance of ATP over the past six months was the driver for the improved terms. Lowering our cost of capital and further enhancing our liquidity position were accomplished with this amendment. In summary, the amended credit facility substantially improves ATP's financial and operating capabilities," said T. Paul Bulmahn, chairman and president, in the release.

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