Berry Plastics C loan breaks in mid-101 context; General Growth falls to par as repricing resurfaces

By Sara Rosenberg

New York, June 3 - Berry Plastics Corp.'s new term loan C freed up for trading Friday morning with the deal breaking in the 101s, trading slightly higher immediately following the open and then settling back down to original levels.

Meanwhile, General Growth Properties Inc. headed down closer to par as news came out that the company is bringing back its term loan B repricing proposal with the difference being that this time around underwriters have been enlisted to help get the deal done.

Berry Plastics' $465 million term loan C opened for trading in the morning at 101 3/8 bid, 101 5/8 offered, traded as high as 102 quickly afterwards and then settled back down to the 101 3/8 bid, 101 5/8 offered context by afternoon, according to a trader.

The term loan C, which is a new tranche that is being added into the existing credit agreement, is priced with an interest rate of Libor plus 225 basis points.

Berry's newly marketed $615 million credit facility (B1/B+) also contains an amended and upsized $150 million revolver (existing revolver is sized at $100 million).

The company's existing term loan B, which according to a recent 10-Q filing is now sized around $330 million, is remaining in place, as is.

Goldman Sachs & Co. and JPMorgan are the lead banks on the deal.

Proceeds from the new term loan C will be used to fund the acquisition of Kerr Group Inc. for $445 million.

The Evansville, Ind., maker of plastic containers said that on a pro forma basis its leverage is expected to be similar to the level after its acquisition by Goldman Sachs Capital Partners and JP Morgan Partners in July 2002 and after it acquired Landis Plastics in November 2003.

Closing of the Kerr acquisition is scheduled for the second quarter.

Kerr is a Lancaster, Pa.-based maker of plastic packaging.

General Growth nears par

General Growth Properties' term loan B headed down to levels of par bid, par ½ offered as the market discovered the company's intention to relaunch its B loan repricing proposal this coming Tuesday, according to a trader. Prior to the news, the term loan B was quoted at par ¾ bid, 101 offered, the trader added.

Under the proposal, the company is looking to lower the interest rate on its $2 billion four-year term loan to Libor plus 175 basis points from Libor plus 225 basis points, which is the same repricing request that was first announced in April.

The difference this time around though is that the Chicago-based regional shopping mall real estate investment trust has now decided to use underwriters as opposed to simply approaching lenders directly in hopes of ensuring the deal's success.

"They tried to do the repricing without the underwriters. Now they're bringing it back with [underwriters]. They got four. I guess they really want to make sure they get the deal done," a market source joked.

Credit Suisse First Boston, Lehman Brothers, Wachovia and Bank of America are the banks that have been appointed to lead the repricing transaction.

LBO deals still ways off

Leveraged buyout/acquisition financing deals for Fresenius Medical Care AG, Medicis Pharmaceutical Corp., Global Toys Acquisition LLC (Toys "R" Us) and School Specialty Inc. - most of which have been talked about for awhile but have yet to materialize - are still at least a month away from launching into syndication, with most of them expected to even be post-Labor Day weekend business, according to a market source.

Fresenius has received a commitment for a new $5 billion senior credit facility to fund its all-debt financed acquisition of Renal Care Group Inc. for about $3.5 billion, plus the assumption of about $500 million of Renal debt. Bank of America and Deutsche Bank equally provided the loan commitment.

The facility, as committed, consists of a $1 billion revolver, a $1.5 billion five-year term loan A and a $2.5 billion seven-year term loan B.

In addition to funding the acquisition, Fresenius will also use the new loan to replace its existing $1.2 billion credit agreement.

At closing, debt to EBITDA will be a little over 4x but the company hopes to bring that multiple down to 21/2x to 3x over the next two to three years, Rosen added in the call.

Under the acquisition agreement, Fresenius will pay $48.00 per Renal share in cash. The transaction, which is expected to close in the second half of the year, is subject to Renal Care shareholder approval and other customary closing conditions, including Hart-Scott Rodino.

Fresenius is a Bad Homburg, Germany-based dialysis products and services provider. Renal Care is a Nashville, Tenn.-based dialysis service provider.

Medicis has received a commitment for a $650 million seven-year senior secured credit facility to help fund its acquisition of Inamed Corp. in a transaction with a total equity value of about $2.8 billion. Deutsche Bank is the lead bank on the deal.

Early in May, the companies received a request for additional information from the Federal Trade Commission regarding the proposed merger. The information request was issued under notification requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

Medicis is a Scottsdale, Ariz., specialty pharmaceutical company. Inamed is a Santa Barbara, Calif., healthcare company.

Global Toys Acquisition LLC has received a commitment for a $2.85 billion U.S. asset-based debt facility to help fund its approximately $6.6 billion leveraged buyout of Toys "R" Us Inc., plus the assumption of debt. Deutsche Bank and Bank of America are expected to be involved in the financing package.

The asset-based facility's borrowing base is based on specified percentages of the value of eligible inventory, eligible credit card accounts receivable and eligible real estate, with a limit of $725 million on borrowing based on eligible real estate at closing.

Global Toys Acquisition is the investment group formed for the Toys "R" Us LBO consisting of affiliates of Bain Capital Partners LLC, Kohlberg Kravis Roberts & Co. and Vornado Realty Trust. These three equity sponsors have committed to provide a total of $1.2 billion of equity to help fund the acquisition as well, and each of the investors will own equal stakes in the company upon completion of the transaction.

Toys "R" Us is a Wayne, N.J.-based specialty toy retailer.

Lastly, School Specialty has received commitment letters from Bank of America, JPMorgan Chase Bank and Deutsche Bank AG for bank facilities to help finance Bain's leveraged buyout of the company.

The Greenville, Wis., education company has agreed to be acquired by Bain in a $1.5 billion transaction including assumption of non-convertible debt totaling $101 million.

Lee Enterprises closes

Lee Enterprises Inc. completed its acquisition of Pulitzer Inc. on Friday in a transaction valued at about $1.46 billion, according to a company news release.

To fund the acquisition, Lee got a new $1.55 billion credit facility consisting of $450 million seven-year revolver with an interest of Libor plus 150 basis points, an $800 million seven-year term loan A with an interest rate of Libor plus 150 basis points and a $300 million eight-year term loan B with an interest rate of Libor plus 150 basis points.

Deutsche Bank and SunTrust were the lead banks on the deal, with Deutsche the left lead.

Under the acquisition agreement, Pulitzer stockholders will receive $64.00 in cash for each share of common stock or class B common stock.

Lee is a Davenport, Iowa, newspaper publisher.

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