Atrium mostly subscribed before late afternoon meeting; Goodman Manufacturing breaks at 101

By Sara Rosenberg

New York, Nov. 19 - Atrium Companies Inc.'s proposed $230 million credit facility (B1/B+) is moving along extremely well in the primary market with the deal reported as largely subscribed prior to Wednesday's late afternoon bank meeting, according to a market source. While, in the secondary, Goodman Manufacturing Co. LP's new deal allocated and broke for trading heading to plus par levels.

Atrium's $230 million facility, slightly larger than the previously anticipated size of $220 million, consists of a $50 million five-year revolver with price talk of Libor plus 300 basis points and a $180 million five-year term loan B with price talk of Libor plus 325 basis points. Previously the term loan B was expected to be sized at $170 million.

"There was a nice order book going into the meeting," the source said regarding Atrium.

"People are probably interested in the spread. They went out at 325 in a market where everything is in the 200s,"a fund manager said. "Also, it's comparable to the Associated Materials deal that was done a few months ago, since they both operate in the homebuilding sector and that deal was a complete blowout and trades at 101."

The term loan B has an option to be extended for an additional two years.

CIBC World Markets and UBS Securities are the lead banks on the deal.

Proceeds will be used to help support Kenner & Co.'s buyout of the Dallas window manufacturer in a transaction valued at about $610 million.

Under the agreement, each outstanding share of Atrium Corp.'s common stock and each option, with the exception of some shares and options owned by certain members of management, will be acquired by KAT Holdings Inc., a newly formed affiliate of Kenner & Co., and all outstanding debt will continue to be outstanding or refinanced.

The transaction, as contemplated, will be in compliance with the 10½% senior subordinated notes indenture, which requires Atrium to make an offer to buy the notes. Atrium will either commence the offer within 30 days after the closing of the transaction or solicit a consent to leave the notes outstanding, according to a news release.

Goodman Manufacturing's $150 million term loan B with an interest rate of Libor plus 200 basis points was bid at 101 on its first day in the secondary, but was not seen as trading actively.

"The book was pretty oversubscribed. Everybody kind of had small allocations. And, allocations didn't come out till late afternoon. Trading will probably pick up on it tomorrow once people have a chance to go through their positions," a fund manager said.

Besides the term loan B, Goodman's facility also contains a $150 million revolver and a $100 million term loan A, both priced at Libor plus 200 basis points as well.

JPMorgan is the lead bank on the Houston air conditioning and heating company's refinancing deal.

Also launching on Wednesday was United Agri Products North America's $500 million five-year asset-based revolving credit facility priced at Libor plus 275 basis points.

"There was a lot of interest. A lot of reverse inquiries. It only went out to a select few banks and even with that it looks like it will be oversubscribed," a market source said.

GE and UBS Securities are the lead banks on the deal.

Proceeds will be used to help support Apollo Management LP's acquisition of the company from ConAgra Foods Inc. in a management-led buyout. The purchase price for United Agri Products will be about $600 million, subject to adjustments for the final closing balance sheet.

In addition to the credit facility, the company plans on selling high-yield bonds via UBS to help support the acquisition. The transaction, which is expected to close by year end, will also include about $180 million of equity, consisting of about $120 million from Apollo and the management group and about $60 million of seller preferred stock held by ConAgra.

United Agri Products is a Greeley, Colo., developer and distributor of crop production products and services to growers.

Meanwhile, some early tickets have come in on Couche-Tard Inc.'s proposed credit facility that consists of both Canadian and U.S. dollar tranches ahead of Thursday's launch date, according to a market source. Scotia Capital, CIBC World Markets and National Bank of Canada are the lead banks on the deal.

The facility (Ba2) consists of a $150 million five-year revolver (available in both Canadian and U.S. dollars), a $280 million seven-year term loan B and a C$365 million term loan. All three tranches are priced with an interest rate of Libor plus 300 basis points

Proceeds from the term loans will be used to help fund the previously announced acquisition of The Circle K Corp. from ConocoPhillips. The revolver will be used for working capital purposes.

Couche-Tard is a Canadian-based convenience store operator.

Pinnacle Foods Corp.'s deal, which had a few people curious since as of late Tuesday there were only $450 million of commitments received for the $570 million institutional piece and the commitment deadline was Wednesday, apparently turned out just fine as one buy-side source said that "according to both agents, the deal is fully subscribed."

The credit facility consists of a $170 million term loan B that will be used to help support the acquisition of Pinnacle Foods by JPMorgan Partners, in partnership with C. Dean Metropoulos, from Hicks, Muse, Tate & Furst Inc., a $400 million delayed draw term loan that will be used to help finance the Aurora Foods Inc. acquisition and a $130 million revolver. All three tranches are priced at Libor plus 275 basis points.

Talk on Tuesday was that people were holding off on committing possibly due to the $400 million unfunded piece only earning an undrawn fee of 125 basis points and being that the tranche may not fund for six to nine months some people were skeptical about taking the risk, a fund manager previously told Prospect News.

Furthermore, according to the fund manager, the stand-alone Pinnacle deal historically performed around 99½ bid, par ½ offered in the secondary bank loan market, so some potential investors may have thought that if they waited until the deal funded they could probably purchase it in the secondary around par.

JPMorgan and Deutsche are the lead banks on the transaction.

Pinnacle Foods is a Cherry Hill, N.J., manufacturer and marketer of branded food products formed by Hicks, Muse, Tate & Furst and C. Dean Metropoulos in 2001 to acquire Swanson frozen foods, Vlasic pickles and condiments, and Open Pit barbeque sauce from Vlasic Foods International. Aurora Foods is a St. Louis producer and marketer of leading food brands.

Although it's still a little too early for pro rata commitments to flow in, the expectation is that MediaNews Group Inc.'s $350 million revolver, which is one piece of a $600 million credit facility, should end syndicating smoothly, according to a market professional.

"The company has a pretty supportive bank group. So, I think that's going to end up going well," the source added.

The facility also contains a $250 million term loan B that is said to be oversubscribed already, since launching late last week.

Both the Denver newspaper company's revolver and the institutional tranche are talked at Libor plus 225 basis points.

Bank of America and Bank of New York are leading the refinancing deal, with Bank of America listed on the left.

Advance Auto Parts Inc.'s proposed $455 million credit facility, which launched via a call on Tuesday, is expected to go well as existing lenders are anticipated to stay in the deal due to scarcity of paper in that sector and the company's solid performance history, according to a fund manager.

"I would imagine pretty much all the existing guys will stay in it because of lack of retail paper out there in the sector. And, it's a pretty solid company," the fund manager said.

The facility consists of a $105 million term loan D due Nov. 30, 2006 and a $350 million term loan E due Nov. 30, 2007, both priced with an interest rate of Libor plus 200 basis points. The rate, however, can go up to Libor plus 225 basis points and then Libor plus 250 basis points, if leverage increases to a certain level.

Proceeds will be used to repay the existing term loan A, term loan A-1, term loan C and term loan C-1.

"Pricing was Libor plus 275 on the existing deal but at the last reporting period the leverage ratio got to a point where they were able to step down pricing to Libor plus 225. Now, it's moving down to 200," the fund manager said.

JPMorgan is the lead bank on the deal for the Roanoke, Va., retailer of automotive parts, accessories and maintenance items.

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