Rock-Tenn details B loan guidance; Landmark tweaks expected around month's end; Press Ganey sets talk

By Sara Rosenberg

New York, Feb. 15 - Rock-Tenn Co. came out with more specific price talk on its term loan B based on feedback from investors, and Landmark FBO LLC is currently anticipated to come out with some modifications to its struggling credit facility toward the end of the month.

In other news, price talk on Press Ganey Associates, Inc.'s credit facility surfaced now that the deal has been launched to investors.

Rock-Tenn released details on the spread and original issue discount guidance on its $200 million six-year term loan B, as opposed to the previous all-in price talk that was available, according to a market source.

The term loan B is being talked at Libor plus 275 basis points, with an original issue discount of 99, the source said. By comparison, when the deal was launched, price talk was labeled as Libor plus 275 bps to 300 bps, including spread and original issue discount.

"The specificity on the B loan is just part of the process," the source explained. "Traction appears to have occurred at the L+275 level at 99."

Rock-Tenn's $1 billion credit facility (Ba2/BBB-) also includes a $450 million five-year revolver talked at Libor plus 250 bps with an unused fee of 40 bps (subject to a pricing grid) and a $350 million five-year term loan A talked at Libor plus 250 bps.

The revolver and term loan A are being offered with an upfront fee of 1 bps per $1 million commitment.

The term loan B, which is open to banks and institutional investors, was carved out of the term loan A tranche, which was originally expected to be sized at $550 million, prior to the deal's bank meeting in late January as a result of reverse inquiry from institutional accounts.

"Haven't finalized tranching as [the banks] are looking to see what has been raised," the source remarked. "Probably won't look to make a decision on that specifically until next week. Haven't changed anything yet on the tranches. Syndication seems to be going well."

According to a different source, some people are hearing "the opposite on the success of the syndication."

This source said that "given where other credits are, like Boise, it seems to be pretty low on pricing. We've heard that a lot of banks have passed. [And], when you have other BB credits that are significantly under that 275, I have a hard time believing that institutional investors are coming in."

Wachovia Bank, Bank of America and SunTrust Bank are the lead banks on the deal.

Proceeds from the credit facility, along with $400 million of unsecured senior notes, will be used to fund the acquisition of Southern Container Corp., to refinance the company's existing credit facilities and to provide in excess of $200 million of undrawn capacity.

At the close, $132.4 million is expected to be drawn under the revolver.

Total net debt will be around $1.8 billion, debt to capitalization will be around 75.7% and pro forma net debt to EBITDA for the trailing 52 weeks will be around 4.1 times.

The company has a debt reduction target of 3.0 times by Sept. 30, 2010.

Rock-Tenn is buying Southern Container, a Hauppauge, N.Y., privately held containerboard manufacturing and corrugated packaging business, for $851 million in cash. The purchase price, including debt of Southern Container, represents a multiple of about 6.9 times Southern Container's pro forma EBITDA for the 52-week period ended Sept. 8.

Rock-Tenn is a Norcross, Ga., manufacturer of packaging products, merchandising displays and bleached and recycled paperboard.

Landmark changes likely coming soon

Landmark FBO is expected to make some revisions to its credit facility late this month as the deal has yet to fill out and syndication seems to have pretty much stalled, according to a buyside source.

"They're working through some items and will probably come back in about two weeks with changes," the buyside source said.

Previous speculation was that everything on the deal - meaning pricing and original issue discount - will have to change in order for it to get done.

Landmark FBO's $338 million credit facility consists of a $30 million revolver (B1/BB-), a $188 million first-lien term loan (B1/BB-) and a $120 million second-lien term loan (Caa2/B-).

The revolver and first-lien term loan were launched with price talk of Libor plus 375 bps, and the second-lien term loan was launched with talk of Libor plus 725 bps.

Also at launch, investors were told that the first-lien term loan is being offered at a discount of 98½ and the second-lien term loan is being offered at a discount of 98.

Barclays Capital is the lead bank on the deal.

Proceeds will be used to help fund GTCR Golder Rauner LLC and Encore FBO, LLC's acquisition of the fixed base operator business, including the related charter, aircraft sales and maintenance parts assets, of Landmark Aviation from Dubai Aerospace Enterprise.

Landmark Aviation is a Tempe, Ariz., provider of aftermarket services to the business aviation industry.

Press Ganey price talk

Press Ganey price talk made its way around the market now that the Thursday bank meeting that kicked off syndication has already taken place, according to a market source.

The $20 million revolver and the $200 million first-lien term loan are both being talked at Libor plus 400 bps, the source said.

The term loan is being offered with an original issue discount of 98, the source continued.

The revolver has a 50 bps unused fee.

The facility is mostly being marketed toward banks, who have already shown some interest as turnout at the actual bank meeting was good, the source continued.

Commitments are due on Feb. 28.

Lehman Brothers and GE Capital are the lead banks on the deal, with Lehman the left lead.

Proceeds will be used to help fund Vestar Capital Partners' acquisition of a majority interest in the company from American Securities Capital Partners, LLC.

Other financing will come from $100 million of mezzanine debt priced at 12½% being led by Lehman and ICG, and Vestar and management are contributing over 50% in equity.

The mezzanine debt is already fully committed, the source added.

First-lien leverage is around 3.8 times, and leverage through the mezzanine is around 5.75 times.

Press Ganey is a South Bend, Ind.-based provider of quality improvement solutions to hospitals and health care facilities.

Boise nets interest

Boise Inc.'s $1.2357 billion senior secured credit facility is said to be "going well" in terms of its syndication process, according to a market source.

The facility consists of a $250 million five-year revolver (Ba2/BB+) talked at Libor plus 325 bps, a $250 million five-year term loan A (Ba2/BB+) talked at Libor plus 325 bps, a $475 million six-year first-lien term loan B (Ba2/BB+) talked at Libor plus 350 bps and a $260.7 million seven-year second-lien term loan (B2/B) talked at Libor plus 700 bps.

For commitments toward the revolver and the term loan A, lenders will get a two-point discount for orders of $75 million and up, a 11/2-point discount for orders of $50 million and up and a one-point discount for orders of $25 million and up.

The first-lien term loan B is being offered with an original issue discount of 95, has a 4% Libor floor and carries call protection of 102 in year one and 101 in year two.

The second-lien term loan is being offered with an original issue discount in the 95 area, has a 4½% Libor floor and is non-callable for two years, then at 105 in year three, 103 in year four and 101 in five.

Covenants under the revolver, term loan A and first-lien term loan B include total leverage, interest coverage and capital expenditures. The second-lien term loan covenant package includes total leverage and capital expenditures.

Goldman Sachs and Lehman Brothers are the joint lead arrangers and joint bookrunners on the deal, with Goldman the administrative agent on the first-lien debt and Lehman the administrative agent on the second-lien debt. Goldman is the syndication agent on the entire deal.

Proceeds from the credit facility will be used to fund Aldabra 2 Acquisition Corp.'s acquisition of the paper, packaging and newsprint assets of Boise Cascade LLC, which includes Boise White Paper LLC, Boise Packaging & Newsprint LLC and Boise Cascade Transportation Holdings Corp., for $1.63 billion.

Originally, the second-lien term loan was expected to be sized at $200 million, but there was a built-in option under the commitment letter to increase the tranche by $60.7 million to fund an incremental cash portion of the purchase price in the event that some of Aldabra's stockholders elected to exercise their conversion rights.

Aldabra is a special-purpose acquisition corporation that was formed to acquire an unidentified operating business. It will be renamed Boise Inc. following completion of the transaction.

Boise is a Boise, Idaho-based manufacturer and seller of uncoated free sheet, market pulp and containerboard.

Aldabra's stockholders have already approved the acquisition, and the transaction is expected to close during the last week of February.

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