Market readies for new deal announcements; Express Scripts emerges, Nextel trades

By Paul A. Harris

St. Louis, Jan. 2 - Friday's abbreviated session in the leveraged loan market came and went with a level of calm that had been roundly anticipated throughout the market, sources said.

"It's as quiet as it can be," one official said late Friday. "With the early close in the bond market I think people kind of extended their vacations a little bit."

"The phone won't even ring," quipped another source. "I keep picking it up to make sure there is a dial tone.

"But we hear that there are a bunch of guys who have deals coming. There's no real concrete information, but I expect to hear announcements on Monday or Tuesday."

One source told Prospect News that St. Louis-based independent pharmacy benefits manager Express Scripts, Inc. is expected to obtain a new $500 million credit facility, with negotiations commencing sometime during the Jan. 5 week.

No syndicate names were heard on the deal that is expected to be comprised of a $300 million revolver at Libor plus 175 basis points, and a $200 million term loan B.

Express Scripts announced on Dec. 22 that it had signed a definitive agreement to acquire the capital stock of Orlando-Fla.-based CuraScript Pharmacy, Inc. and CuraScript PBM Services, Inc. for $335 million. That deal is expected to close during the first quarter of 2004.

The deal figures to benefit to both companies because it will result in a including greater scale of operations and complementary service capabilities, Barrett Toan, chairman and chief executive officer of Express Scripts, said in a news release.

Elsewhere in the market, news of another acquisition, the Clayton, Dubilier & Rice-led buyout with FedEx Corp. of Kinko's Inc. for $2.4 billion caused the latter company's proposed leveraged loan deal to disappear.

According to an informed source Kinko's pulled its anticipated $825 million new credit facility in the wake of news.

JP Morgan and Bank of America were to have been the bookrunners.

Finally, allocations are expected during the Jan. 5 week on Giant Eagle, Inc.'s $100 million add-on to its term loan B. The Citigroup-led deal will fund the Pittsburgh grocery store acquisition of stores. Pricing is Libor plus 250 basis points.

"It's a redo of their revolver and B loan," said the source. "It's really just an add-on the B loan, but they're going to redo the whole thing in the process."

Meanwhile the aftermarket sat motionless on Friday, according to all sources save one.

The trader in question reported having seen paper of Reston, Va.-based Nextel Communications Inc. changing hands.

"I saw some Nextels traded at par and a half," said the trader late in Friday's session, adding that the trading level represented no change in price.

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