Veritas DGC joins calendar, Kmart DIP trades down

By Paul A. Harris

St. Louis, Mo., Oct. 22--As the week of Oct. 21 got underway in the leveraged loan market sources reported that a general quiet was pervading in both the primary and the secondary.

"Let's face it," one source said, "the only ones who are coming into this market are the ones that really need the money."

New paper from Veritas DGC, Inc. was heard to be headed into the market and National Waterworks Inc.'s bank meeting was reported to be set for Wednesday. Meanwhile Constar International Inc.'s deal, to help fund its spin-off from Crown Cork & Seal, was heard to have launched last Friday.

One informed source reported that the bank meeting on the National Waterworks Inc.'s $325 million credit facility, via JPMorgan, Goldman Sachs and UBS Warburg, would take place on Wednesday.

The deal has a $75 million six-year revolver at Libor plus 275, and a $250 million seven-year term B at Libor plus 325. A $200 million 10 -year senior subordinated deal to fund the acquisition of the Vivendi subsidiary is also heard to be in the works, with timing dependent upon the strength of the high-yield market.

Houston-based geophysical services provider Veritas DGC also hopes to shake investors awake with a $275 million credit facility via Deutsche Bank, according to a market source, who added that the deal will be comprised of a $200 million term loan and a $75 million revolver. One source said that the meeting could conceivably take place during the week of Oct. 21.

Of the smattering of news that emerged Monday from the secondary market, one source expressed an interest in the Kmart DIP. On Monday it was reported that despite the dearth of good news from the retail sector the company is expected to emerge from Chapter 11 during 2003.

"The Kmart DIP is trading down," this official and others told Prospect News on Monday.

"DIP loans are not supposed to trade at discounts," the source added. "You've got a super-priority lien. Other than our friends at Windstar, almost every DIP in my memory you get your money back.

"It's interesting that Citigroup is trying to buy the paper at 96.50 which is a fairly significant discount for a DIP. That tells me there is some concern about the viability of Kmart even in restructure."

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