Maidenform restructures loan to change size, price of both the first and second lien term loans

By Sara Rosenberg

New York, May 5 - Maidenform Inc. decided to reduce the size of its second lien term loan by $10 million and increase pricing on the tranche by 100 basis points. Furthermore, the company opted to increase the size of its first lien term loan by $10 million and decrease pricing on the tranche by 50 basis points, according to a fund manager.

"This is all a result of the better-than-expected ratings from both Moody's and S&P as well as [it being] oversubscribed [on the] first lien versus the second lien that is just barely getting done," the fund manager explained.

Following the changes, the first lien term loan is now sized at $100 million, up from $90 million, and is priced with an interest rate of Libor plus 325 basis points, down from initial price talk of Libor plus 375 basis points.

The second lien term loan is now sized at $50 million, down from $60 million, and is priced with an interest rate of Libor plus 750 basis points, up from initial price talk of Libor plus 650 basis points.

Maidenform's $180 million credit facility also contains a $30 million revolver.

On Wednesday, Moody's Investors Service assigned a rating of Ba3 to the company's first lien term loan and revolver and a rating of B2 to the second lien term loan. This is the first time Moody's has rated the debt of Maidenform.

The rating reflects the high leverage of 4.5 times pro forma total debt to last 12 months ended March 27 EBITDA, negative tangible equity and moderate pro forma fixed charge coverage, the rating agency said.

The rating is supported by the positive contributions of new management which has generated a steady improvement in sales, operating margins and cash flow, created a diversified brand and distribution channel strategy, shifted from 100% domestic manufacturing to a high percentage of foreign-sourced product, and installed fully integrated financial and inventory systems and controls which, along with a significant SKU rationalization, improved inventory management and reduced working capital needs, the agency added.

BNP Paribas is the lead bank on the deal that will be used to help fund Ares Corporate Opportunities Fund LP's acquisition of Maidenform from Oaktree Capital Management.

Maidenform is a Bayonne, N.J., marketer and manufacturer of intimate apparel.

CACI up after call

CACI International Inc.'s new term loan B was up about a quarter of a point on the day following a public conference call held by the company that was "viewed favorably by the market," according to a trader.

The paper was seen trading around par 1/2, with the bid placed at par ¼ and the offer placed at par 3/4. On Tuesday, the paper was quoted at par bid, par ½ offered down by about half a point on allegations of improper employee behavior toward prisoners in Iraq.

"In being responsive to our investors and the public, two of the biggest challenges we're facing are the lack of information that has been provided from the U.S. government to our company in these matters and the fact that we are dealing with significant amounts of classified information. We are also dealing with the security and safety of CACI people in the theater at-large. We have received no information from the Department of Defense and the U.S. government on this matter," said J.P. London, chairman, president and chief executive officer, in the conference call, according to a company news release.

"The fact remains that we are simply not able to confirm in any fashion that any CACI employee was involved in prisoner abuse at Abu Ghraib prison, notwithstanding allegations reported through the media. Because of our relationship as a contractor for the Department of Defense, we must rely on formal communications from the department in this matter in terms of our work activity, the scope of work, the continuation of work, and the quality of our performance. We have no reports of any adverse nature," London continued.

"I must report that we have not received any information to stop any of our work, to terminate or suspend any of our employees, or otherwise show cause for any inability to perform in any fashion regarding the alleged, discussed and repeated issues in the press. We are eager to find out as soon as possible what has happened, and we have taken steps to inquire.

"There has been no immediate economic impact on CACI as a result of any of these allegations in terms of contracts or ongoing business in any form whatsoever. We are still aggressively recruiting to fill urgent and important assignments and requirements on our contracts based throughout the world. To date we have received no communication from the Defense Department concerning termination of any contracts, any delivery orders, any activities, any where in the world. And we do not expect any," London added.

CACI is an Arlington, Va., provider of IT and network solutions. The Defense and Intelligence Group is a Fairfax, Va., provider of business management solutions to the U.S. government.

Iasis nears par on anticipated refi

Iasis Healthcare Corp.'s bank debt moved to "right around par" from "around 101" on the anticipated refinancing of the company's credit facility as part of a leveraged buyout led by Texas Pacific Group, according to a trader.

Under the transaction agreement, an investor group led by Texas Pacific will acquire Iasis from JLL Partners in a transaction valued at about $1.4 billion. In connection with the transaction, an affiliate of JLL Partners, management and certain other current investors in Iasis will make significant new investments in the company as part of the Texas Pacific-led group.

Goldman, Sachs & Co. and Banc of America Securities LLC advised Iasis in the deal, and Lehman Brothers Inc. and Merrill Lynch & Co. advised Texas Pacific.

The LBO is subject to regulatory approvals, financing and other customary closing conditions and is expected to close by June 30, according to a company news release.

Details on the debt financing that will be used to back the LBO are not yet being released and lead banks have not yet been announced as it appears that information has not yet been finalized, according to various market sources.

In connection with the transaction, Iasis will begin a tender offer and consent solicitation relating to all of its 13% senior subordinated notes due 2009 and 8½% senior subordinated notes due 2009.

Iasis is a Franklin, Tenn., owner and operator of medium-sized acute care hospitals.

Reliant up on earnings

Reliant Energy Inc.'s term loan was up by about a quarter to a half a point on the day following the release of first quarter numbers. Interestingly, the company's 9¼% and 9½% bonds were said to be lower on the day in response to the same financial results.

"There might be different expectations between bank debt and bond guys," a trader explained.

Reliant's term loan was quoted at 98 bid, 98¾ offered, compared to 97¾ bid, 98½ offered on Tuesday, the trader added. A second trader had the bid side quoted a little higher at 981/4.

For the quarter, the company reported a loss from continuing operations of $46 million, or $0.15 per share, compared to a loss from continuing operations of $52 million, or $0.18 per share, for the same period of 2003. Retail gross margin was $162 million, compared to $185 million in the first quarter of 2003. Wholesale gross margin was $325 million, compared to $281 million in the first quarter of 2003. Operation and maintenance expense was $250 million, compared to $225 million in the same period last year. Other general and administrative expenses were $54 million, compared to $58 million for the first quarter of 2003. And, interest expense, net for the quarter was $105 million, compared to $83 million for the same period last year.

"First quarter results were consistent with the 2004 outlook we provided last quarter. While wholesale market conditions were weaker than the first quarter of 2003, we are seeing indications that the wholesale market is firming. Increasingly, we are using our improved liquidity to reduce our exposure to short-term market volatility and capture economic benefits where we see market improvements," said Joel Staff, chairman and chief executive officer, in a company news release.

"In our last earnings call, we identified strategic goals that will position us for future success and growth," Staff added, in the release. "During the first quarter we made significant progress toward achieving these goals by streamlining the organization and beginning to redesign our processes and systems. To date, we have identified over half of our announced $200 million cost reduction program and remain confident we will achieve that goal."

Reliant is a Houston provider of electricity and energy services.

Metris settling near 101

Metris Cos. Inc.'s $300 million term loan was said to be settling down a little bit by late afternoon on Wednesday at around par ½ bid, 101 offered after trading actively in the 101 context since breaking into the secondary bank loan market on Tuesday, according to a trader. The tranche was originally offered to investors at 99 during syndication.

The term loan was increased to $300 million from $175 million last week due to the company's decision to pull its proposed $250 million senior secured notes offering, and pricing had been revised to Libor plus 1,000 basis points from a fixed rate of 11%.

Then this week, pricing was once again modified, this time flexing lower to Libor plus 950 basis points.

Goldman Sachs is the lead bank on the deal.

Proceeds from the term loan will be used to refinance the company's $125 million one-year term loan that was obtained last June and is priced with an annual interest rate of 12% plus performance payments based on the excess spread in the Metris Master Trust. Proceeds will also be used to refinance existing bonds, including the 10% senior notes due in 2004 and a portion of the 10 1/8% senior notes due in 2006.

Metris is a Minnetonka, Minn., provider of financial products and services.

Exide closes

Exide Technologies closed on its $600 million exit financing credit facility (Ba3/BB-) arranged by Deutsche Bank in conjunction with its emergence from Chapter 11 on Wednesday, according to a market source.

Under the plan of reorganization, Exide reduced its debt by about $1.3 billion, or more than 70%, to approximately $540 million. Annual interest payments were reduced by about $70 million.

"This is an historic day for Exide and our global workforce. The reorganization process has enabled us to resolve financial issues and improve our operations," said Craig H. Muhlhauser, president and chief executive officer, in a company news release. "Exide is now able to capitalize on our global network and focus our full capabilities on making our customers successful and creating long-term value for our shareholders."

Exide is a Princeton, N.J., manufacturer of lead acid batteries.

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