Dynegy sets talk; Levi expected OID in question; American Cellular overfills; Valassis breaks

By Sara Rosenberg

New York, March 2 - Dynegy Holdings Inc. came out with price talk on its credit facility as the deal was launched with a bank meeting during Friday's market hours.

Also, Levi Strauss & Co. launched an unsecured term loan during the session and failed to mention an original issue discount, making some investors wonder whether the previously anticipated OID might disappear, and American Cellular Corp.'s credit facility reached oversubscription levels as the books were closed on the deal.

Meanwhile, in the secondary, Valassis Communications Inc.'s credit facility freed for trading, with the strip of term loan debt wrapped around the mid par area.

Dynegy held a bank meeting on Friday to launch its proposed $1.25 billion senior secured credit facility, and during the launch, price talk on the transaction was revealed, according to a market source.

The $750 million revolver due April 2012 was presented to lenders with talk of Libor plus 150 basis points, and the $500 million synthetic letter-of-credit facility due April 2013 was presented with talk of Libor plus 175 bps, the source said.

Citigroup and JPMorgan are the lead arrangers on the deal.

Proceeds will be used to refinance the company's existing $470 million revolver and $200 million term letter-of-credit facility, for general corporate purposes and to support activities of certain subsidiaries.

Closing is targeted for the end of the first quarter.

Dynegy is a Houston-based electric company.

Levi OID uncertain

Levi Strauss held a lender call on Friday morning to launch its $325 million seven-year senior unsecured term loan (/B/BB-), and to some people's surprise there was no mention of an OID on the transaction, according to a fund manager.

"They made no mention of [it] despite Bank of America telling all of the potential lenders via an e-mail yesterday that there would be an OID," the fund manager said.

"Given the current market conditions and how every deal blows out, I'm sure they're thinking they probably won't have to offer an OID. They'll wait it out and see how the book shapes up. If it blows out, then no OID. If it struggles, then they'll determine the OID amount at that point," the fund manager added.

As was previously reported, the unsecured term loan is being talked at Libor plus 225 bps and is non-callable for one year and then at par thereafter.

Bank of America and Goldman Sachs are the bookrunners on the loan, with Bank of America the lead bookrunner.

Proceeds, along with cash on hand, will be used to call the San Francisco apparel maker's existing floating-rate notes due 2012.

American Cellular oversubscribed

American Cellular's $850 million senior secured credit facility (Ba2/B-) was well-oversubscribed by Friday's 5 p.m. deadline, at which time the books were closed, according to a market source.

The facility consists of a $75 million revolver, a $700 million term loan B and a $75 million delayed-draw term loan, with all tranches talked at Libor plus 225 bps.

The term loan B and the delayed-draw term loan were launched with leverage-based step downs in pricing, but the actual grid is still being determined. There is no anticipated ticking fee for the delayed-draw loan.

Revolver pricing will also be tied to a grid, although it will be different than the grid on the two term loans.

Lehman and Morgan Stanley are the joint lead arrangers on the deal, with Lehman the left lead.

Proceeds from the credit facility, along with $425 million of senior notes, will be used to refinance existing debt, including the company's existing senior secured credit facility, $18.1 million 9½% senior subordinated notes due 2009 and $900 million 10% senior notes due 2011.

The tender offer for the 10% notes will expire on March 15.

American Cellular is a subsidiary of Dobson Communications Corp., an Oklahoma City-based provider of wireless phone services to rural markets.

MacDermid going well

Syndication on MacDermid Inc.'s $560 million senior secured credit facility (B1/B+) is moving along nicely, creating the expectation that the deal "will clear at [the] tight end of talk for sure," according to a market source.

The facility consists of a $510 million seven-year term loan B and a $50 million six-year revolver, with both tranches still officially being talked at Libor plus 225 to 250 bps.

The term loan B is covenant-light, and the revolver has trigger covenants that kick in when more than $10 million is outstanding under the tranche.

Commitments are due during the week of March 5.

Credit Suisse, Goldman Sachs, Bear Stearns, CIBC and RBS Securities are the lead banks on the deal, with Credit Suisse the left lead.

Proceeds from the credit facility, along with $250 million of senior notes and $215 million of senior subordinated notes, will be used to fund the leveraged buyout of the company by Daniel H. Leever, the company's chairman and chief executive officer, and investment funds managed by Court Square Capital Partners and Weston Presidio in a transaction valued at more than $1.3 billion, including the assumption or repayment of about $301 million of debt.

MacDermid is a Denver-based specialty chemical manufacturer.

Cenveo trims spread

Cenveo Inc. lowered pricing on its $725 million term loan (Ba3/B+) to Libor plus 175 bps from original talk of Libor plus 200 bps, according to a market source.

Of the total term loan amount, $125 million is delayed draw and the remaining $600 million will be funded.

Wachovia is the lead bank on the deal that will be used to help fund the acquisition of Cadmus Communications Corp. for $24.75 per share in cash.

Cenveo is a Stamford, Conn., provider of print and visual communications. Cadmus is a Richmond, Va., provider of end-to-end integrated graphic communications and content processing services to professional publishers, not-for-profit societies, and corporations.

Natural Products flexes

Natural Products Group LLC reverse flexed pricing on both tranches under its $590 million credit facility to Libor plus 225 bps from original talk that was in the Libor plus 250 bps area, according to a market source.

Tranching on the deal is comprised of a $25 million revolver and a $565 million term loan B.

CIBC and Credit Suisse are the lead banks on the facility, with CIBC the left lead.

Proceeds will be used to refinance the company's existing credit facility. Essentially, through this deal, the company is taking out its second-lien term loan with more first-lien debt.

The existing holdco mezzanine debt will be staying in place.

Natural Products Group, a Harvest Partners portfolio company, is a Chatsworth, Calif., manufacturer and marketer of branded natural and organic personal care products.

Valassis frees to trade

Over in the secondary market, Valassis' credit facility broke for trading, with the strip of funded and delayed-draw term loan B debt quoted at par 3/8 bid, par 5/8 offered, according to a trader.

The $590 million funded term loan B and the $160 million delayed-draw term loan B are both priced at Libor plus 175 bps. The ticking fee on the delayed-draw tranche is 100 bps for the 15-month delayed-draw period.

During syndication, the funded term loan B was upsized from $540 million after the company downsized its bond offering to $540 million from $590 million, and pricing on the two term loans firmed up at the low end of revised talk of Libor plus 175 to 200 bps, and 50 bps lower than original talk at launch of Libor plus 225 bps.

Valassis' $870 million senior secured credit facility (Ba2/BB-) also includes a $120 million revolver priced at Libor plus 225 bps.

Bear Stearns and Bank of America acted as the lead banks on the deal, with Bear Stearns the left lead.

Proceeds from the funded bank debt and the bonds were used to fund the acquisition of ADVO Inc. for $33 per share in cash, or about $1.2 billion, including the refinancing of about $125 million in existing ADVO long-term debt. The acquisition was finalized on Friday.

The delayed-draw debt will be used to refinance an existing note.

Valassis is a Livonia, Mich., marketing services company. ADVO is a Windsor, Conn., direct mail media company.

Affinion unsecured trades lower

Affinion Group Holdings Inc.'s new unsecured PIK toggle term loan took a hit on Friday as recent weakness in the loan market has shown up a bit more in this type of paper, according to traders.

The unsecured term loan ended the day at 98¼ bid, 99 offered, down around three quarters of a point to maybe even a full point, one trader said.

"Generally speaking, all of the recently done PIK toggle loans are down," the trader remarked.

"It makes sense," a second trader added. "They're following the market down. PIKs are a little more risky so they just got hit harder."

Affinion is a Norwalk, Conn., direct marketer of membership clubs and insurance products.

Reader's Digest closes

An investor group led by Ripplewood Holdings LLC completed its leveraged buyout of The Reader's Digest Association Inc., according to a news release.

To help fund the LBO, Reader's Digest got a new $1.61 billion senior secured credit facility (B1/B) consisting of a $1.31 billion seven-year term B at Libor plus 200 bps and a $300 million six-year revolver.

During syndication, the term loan B was upsized from $1.16 billion as the company's bond deal was downsized and pricing ended up at the low end of original talk of Libor plus 200 to 225 bps.

JPMorgan, Citigroup, Merrill Lynch and RBS Securities acted as the lead banks on the deal.

Reader's Digest is a Pleasantville, N.Y., publisher and direct marketing company that creates and delivers products and content for magazines, books, recorded music collections, home videos and online web sites.

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