Packaged Ice postpones Thursday's bank meeting for $170 million credit facility

By Sara Rosenberg

New York, June 17 - Packaged Ice Inc.'s proposed credit facility $170 million credit facility that was scheduled to launch on Thursday has been tabled for now, according to a market source, although no specific reason for the delay was given.

One fund manager had heard that the deal might actually be launching next week. The syndicate could not be immediately reached for confirmation.

Price talk of Libor plus 400 basis points emerged last week on the deal that consists of a $35 million revolver and a $135 million term loan B. This talk seemed slightly aggressive to the fund manager, however, due to the current market environment in which there is a lot of cash and not a lot of new deals, the possibility remains that the deal will move along just fine once it actually hits the market.

Commenting on the strong market technicals, a Banc of America Securities research report highlighted five factors in issuers' favor at the moment: spreads are continuing to come down, new-issue flow is relatively light, investors are rich with cash, average leverage levels appear to be on the rise and lenders are getting more aggressive.

As evidence the report cited 10 deals coming inside of talk in the last two weeks by an average of 40 basis points, three deals reverse flexing by an average of 25 basis points in the last two weeks, a high-yield loan forward calendar of just $12.5 billion in 48 deals and Merisant being the seventh recapitalization transaction to pay a dividend to a sponsor in the last month and half.

"It's a good equity story. Bad loan," the fund manager said in regards to Packaged Ice. "It's a tough business they operate in. Collateral is questionable too because they lease a lot of their machines. For a leveraged company, not the most margin expansive business. Don't have a lot of downside protection."

The facility is being led by Credit Suisse First Boston, Bear Stearns and CIBC.

Proceeds will be used to help fund the leveraged buyout of the Dallas packaged ice company by Trimaran Capital Partners and Bear Stearns Merchant Banking.

Meanwhile, talk is that Domino's Inc.'s credit facility (B1/B+) is being upsized by $50 million to $735 million due to a decision to downsize the bond offering to $400 from $450 million.

Originally, the loan consisted of a $560 million seven-year term loan B with an interest rate of Libor plus 325 basis points and a $125 million six-year revolver with an interest rate of Libor plus 325 basis points.

The Ann Arbor, Mich. pizza chain is seeking the new credit facility as part of its recapitalization plan.

JPMorgan is the lead bank on the deal.

In the secondary, everything continues to be better bid and the offer is king for the same reason that the primary is hot right now, demand outweighs supply, according to a traders.

"The LCD [S&P's Leveraged Commentary & Data] flow names rose again this week, settling at 99.85% of par; this is the ninth straight week of advances. The flow names are now at their highest levels since June 2002," the Banc of America report said. "The tone of the market remains strong, however, with such high offer levels, volume is down as buyers are reluctant to pay such high prices."

For example, Nextel Communications Inc.'s term loan B and C were quoted at 99 7/8 bid on Tuesday, according to a trader who said that there was no significant change but the paper continues to feel really strong. The Reston Va. wireless company's bank debt was quoted around 99¾ bid on Monday and traded around that level to 99 7/8, according to a second trader.

AES Corp.'s bank debt hasn't traded but it is being quoted around par, according to a trader since whether the company uses proceeds from its planned equity sale to pay down debt or refinances the credit facility, existing lenders will be taken out par levels.

"The bonds are stronger but you can't get much higher than par on hopes of getting paid down," the trader said.

On Monday, the Arlington, Va. company announced that although it is required to use proceeds from a proposed public offering of 40 million shares of common stock to repay bank debt it may seek a waiver to postpone or eliminate its obligations to prepay the bank debt since it is also exploring refinancing the facilities with new ones.

More specifically, AES must use $162.5 million of the net proceeds from the offering to repay $75 million of the secured equity-linked loan due 2004 issued by AES New York Funding LLC and $87.5 million of its tranche C term loan facility under its senior secured credit facilities due 2005.

Furthermore, the company is required to use one half of the net proceeds from this offering in excess of $162.5 million to repay its obligations under its credit facilities other than its revolver, according to a news release.

In follow-up news, WEG Acquisitions LP closed on a new $200 million term loan with an interest rate of Libor plus 425 basis points (Ba3/BB+). Lehman Brothers was the lead bank on the loan, which was offered at 99.

Proceeds from the facility were used to help fund the acquisition of Williams Energy Partners L.P. by Madison Dearborn Partners LLC and Carlyle/Riverstone Global Energy and Power Fund II L.P.

"We look forward to our relationship with Madison Dearborn and Carlyle/Riverstone and feel confident that the expertise and relationships these investment firms possess will provide additional momentum for the partnership's growth," said Don Wellendorf, chief executive officer, in a news release. "We remain focused on our goal of growing cash distributions by at least 10% per year while maintaining safe and efficient operations."

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