Traders captivated by CLO portfolio auction; CalGen lower with rest of market

By Sara Rosenberg

New York, May 12 - Many secondary bank loan players spent their day focusing on a CLO auction that began Wednesday morning, but that did not stop traders from noticing that the market in general felt off, with Calpine Generating Co. LLC's paper cited as an example of the slight weakening.

The CLO auction is for an entire portfolio that contains $300 million of bank debt, bonds and equity, according to various sources.

"Everybody was dealing with that auction today," a market source added.

The auction is expected to close on Thursday, sources added.

Meanwhile, the secondary was said to "off a little bit" during trading hours on Wednesday, according to one trader who placed CalGen's bank debt down by about a quarter of point in response to this market weakening.

CalGen's first lien paper was quoted at 98 5/8 bid, 99 3/8 offered and its second lien paper was quoted at 91½ bid, 93½ offered, according to a few traders.

"It moved around today just a little bit. Maybe not in the Street but between accounts," a second trader said.

CalGen is a wholly owned subsidiary of Calpine Corp., a San Jose, Calif., power company.

Levi holds firm

Levi Strauss & Co.'s term loan B stayed around 105½ bid, 106½ offered, after rallying by about half a point to those levels during Tuesday's session on news of a possible sale of the Dockers asset that generates annual worldwide revenue of about $1.4 billion.

Although an asset sale usually brings bank debt levels back to where the paper is callable, in this case, levels headed higher immediately following the news. Some speculated that the movement could be due to a possible need for lender approval for Levi to sell the asset, which could in turn result in lenders demanding to be paid a premium for the paper. Under the credit agreement, the paper is non-callable for 2½ years from the time the deal was done, and then it is callable at par.

Citigroup Inc. has been retained by the San Francisco branded apparel company to assist with the potential Dockers sale.

Consolidated Container reworked

Consolidated Container Co. LLC increased the size of its term loan B due in 2008 to $220 million from $200 million following the decision to decrease the size of its five-year senior secured PIK note offering to $150 million from $170. Furthermore, pricing on the tranche was lowered to Libor plus 325 basis points from Libor plus 350 basis points, according to a market source.

The decision to increase the bank deal and decrease the bond deal was a result of an overall technically better loan market as compared to the current bond market. And, the ability to reverse flex the term loan B was a result of strong institutional demand, the source explained.

The PIK notes priced Tuesday at 10¾%. Price talk had been in the area of 10½%.

Consolidated Container's now $265 million credit facility (B2/B-) also contains a $45 million revolver with an interest rate of Libor plus 375 basis points, unchanged from initial size and pricing.

Deutsche Bank is the sole lead bank on the deal.

Proceeds from the bank and bond deals will be used to refinance existing senior credit facilities. The company will also receive a capital contribution of $45 million from its parent company, Consolidated Container Holdings LLC, to help in the refinancing.

The refinancing is expected to close on or about May 20, subject to customary closing conditions.

Consolidated Container is an Atlanta manufacturer of rigid plastic containers.

Maidenform closes

Maidenform Inc. closed on its new $180 million credit facility consisting of a $30 million revolver, a $100 million first lien term loan with an interest rate of Libor plus 325 bps (Ba3/B+) and a $50 million second lien term loan (B2/B) with an interest rate of Libor pus 750 basis points.

Originally, the deal was launched as a $90 million first lien term loan with price talk of Libor plus 375 basis points, a $60 million second lien term loan with price talk of Libor plus 650 basis points and the $30 million revolver.

However, the deal was restructured during syndication to reduce the size of its second lien term loan by $10 million and increase pricing on the tranche by 100 basis points, and increase the size of its first lien term loan by $10 million and decrease pricing on the tranche by 50 basis points.

The changes to the credit facility were a result of better-than-expected ratings from both Moody's and S&P as well as the first lien being oversubscribed versus the second lien that was just barely getting done.

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

Oaktree, which had owned a majority interest in Maidenform, will continue to be a significant minority shareholder in the company.

"We are very excited about closing this transaction. The world-class management team, steadily improving sales, and cash flow are all bright spots for Maidenform. In addition to improving its inventory management, the company has diversified the sourcing of its product, which has improved the bottom line," said David Kaplan, a partner of Ares, in a company news release.

"With the support of Ares Management we look forward to exploiting the still untapped potential of our strong brands and to formulate acquisition strategies to further strengthen our brand portfolio," added Tom Ward, president and chief executive officer, in the release.

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

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