Syndication wraps on NUI in less than a week; pricing reverse flexes on strong demand

By Sara Rosenberg

New York, Nov. 14 - Syndication on NUI Corp.'s $405 million credit facility (split between the holding company and the operating company) closed down at the end of the day on Friday as the syndicate received more than $1 billion in orders for the deal since its launch this past Monday.

In fact, demand was so strong that all four tranches of the facility were flexed down on Friday as well, according to a market source.

The Bedminster, N.J., diversified energy company's facility contains a $255 million term loan at the holding company level with an interest rate of Libor plus 562.5 basis points, reverse flexed by 3/8 from initial pricing of Libor plus 600 basis points.

At the operating company level, NUI is obtaining a $50 million revolver, a $50 million term loan and a $50 million delayed draw term loan, all priced with an interest rate of Libor plus 475 basis points and all reverse flexed by 25 basis points from initial pricing of Libor plus 500 basis points, according to the source.

There is an undrawn commitment fee of 62.5 basis points on the revolver and the delayed draw term loan. There is also a one-time draw down fee of 50 basis points on the delayed draw term loan, which the company has a year to use.

All four tranches have a Libor floor of 2% and a lifespan of 364 days. However, the tenor of all the tranches can be extended by six months for a fee of 50 basis points and then for another six months for an additional 50 basis points fee.

Credit Suisse First Boston is the sole lead on the refinancing deal, which will address maturities during 2004 and provide financial flexibility and liquidity while the sale of NUI is pursued.

Meanwhile, now that Roper Industries Inc. has filed a prospectus for the equity component of its funding for its acquisition of Neptune Technology Group Holdings Inc., it will be much easier for the syndicate to nail down a date for the company's bank meeting, a source said. In fact, talk is that currently the target date for the meeting is Nov. 20, although timing is still relatively fluid and therefore is subject to change.

The $625 million senior secured credit facility consists of a $450 million five-year term loan B and a $175 million three-year revolver.

Price talk on both tranches is in the range of Libor plus 200 basis points to Libor plus 250 basis points, but firmer pricing will depend on ratings, which have not yet been received, the source said. Previous market talk had the rating expected in the mid-to-high double B area.

"They're waiting to hear from the agencies. The desire is to get the ratings before the bank meeting but that's not an absolute necessity," the source added.

JPMorgan, Wachovia and Merrill Lynch are the lead banks on the deal.

Proceeds from the credit facility along with proceeds from the issuance of $150 to $200 million of convertible subordinated notes and $150 to $200 million of common stock will be used to help fund the acquisition of Neptune Technology from Investcorp for $475 million, net of cash acquired and including debt assumed, retire Roper's existing senior notes and repay its existing revolver, according to a company news release announcing the acquisition.

On Friday, Roper filed a prospectus with the Securities and Exchange Commission calling for an offering of up to $450 million of debt securities, common stock, stock purchase contracts and equity units.

Neptune provides automatic meter reading, data collection and metering to the North American water industry; manufactures fully rugged hand-held data collection equipment and computers; and automation software for meter reading and service order management.

Roper, a Duluth, Ga., diversified company, said it will incur debt extinguishment costs of $13 million to $17 million in connection with the redemption of its notes due 2007 and 2010.

In the secondary, Levi Strauss & Co.'s bank debt basically stabilized on Friday following a two point decline during the previous day's activity, although the bid side moved up just a touch.

Both the fixed-rate and the floating-rate tranches were quoted at 102¼ bid, 103 offered compared to prior levels of 102 bid, 103 offered, according to a trader.

The bank paper headed south on Thursday in response to a change in financial guidance for 2003, downgrades by two rating agencies and being placed on CreditWatch negative by a third rating agency.

Levi's issued revised financial guidance for the full year 2003, lowering full-year net sales expectations to down 6% to 7% from the prior year versus previous guidance of flat, plus or minus 2%, lowering full-year gross margin excluding restructuring-related expenses expectations to about 39% of sales, rather than 40% to 42%, and lowering the operating margin excluding restructuring charges, net of reversals, and restructuring-related expenses expectations to 7% to 8% of sales, rather than 8% to 10% as previously indicated. The company also increased net debt at year-end guidance to between $2.1 billion and $2.2 billion, as compared to previous guidance of about $2.1 billion.

In response to this announcement, Moody's Investors Service downgraded Levi's $500 million senior secured term loan facility due 2009 to Caa2 from Caa1 and confirmed the approximately $1.6 billion of senior unsecured notes maturing through 2012 at Ca. Fitch Ratings downgraded Levi's senior unsecured debt to B- from B, $650 million asset-backed loan to BB- from BB and $500 million term loan to B+ from BB-. And, Standard & Poor's placed Levi's ratings on CreditWatch with negative implications, including the senior secured debt rating of BB- and the senior unsecured debt rating of B.

Levi Strauss is a San Francisco-based branded apparel company.

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