SBA hits the secondary loan market with term loan bids jumping to par 7/8

By Sara Rosenberg

New York, Feb. 2 - SBA Senior Finance Inc.'s $400 million senior secured credit facility (B2/CCC+) allocated, broke for trading and closed on Monday with the term loan B moving up to par 7/8 bid, 101 offered from its offer price of par during syndication, market sources said.

The $325 million term loan B due October 2008 is split into two parts: a $275 million term loan B with an interest rate of Libor plus 350 basis points and a $50 million delayed draw term loan B with an interest rate of Libor plus 350 basis points.

The delayed draw term loan is available until Nov. 15 subject to covenant compliance, according to a company news release.

The facility also contains a $75 million revolver due July 2008 with an interest rate of Libor plus 350 basis points and an upfront fee of 200 basis points.

Lehman Brothers Inc. and Deutsche Bank Securities Inc. were joint lead arrangers and bookrunners on the deal. Lehman Commercial Paper Inc. is the administrative agent, Deutsche Bank Securities Inc. and General Electric Capital Corp. are co-syndication agents and TD Securities Inc. is the documentation agent.

Security is all the assets of SBA and its subsidiaries.

About $152 million of the proceeds from the facility were used to repay borrowings and assignment fees under SBA's prior senior secured credit facility. About $53 million of proceeds is expected to be used to call the remaining $49.6 million of the company's 12% senior discount notes on March 1. The balance of the proceeds may be used for general corporate purposes.

"Since the middle of 2003, we have been focused on replacing our higher cost debt with lower-cost and longer-term financing," said Jeffrey A. Stoops, president and chief executive officer, in the news release. "With the closing of the new credit facility and application of a portion of the proceeds to retire the last of our 12% senior discount notes, since last year we have reduced annual cash interest costs by over $40 million.

"Liquidity has been improved materially and we have eliminated any material debt amortization requirements prior to maturity of the new credit facility in 2008. We expect cash flows to be improved materially and as a result we are now anticipating positive cash flow from operating activities in 2004."

SBA is a Boca Raton, Fla., owner and operator of wireless communications infrastructure.

Del Monte finalizes amendment

Del Monte Corp. closed on the amendment to its senior credit facility that increased the size and reduced pricing on the term loan B and decreased pricing on the revolver.

The term loan B due December 2010 is now sized at $883 million and is priced with an interest rate of Libor plus 225 basis points, decreased from previous pricing of Libor plus 375 basis points.

The $300 million revolver due December 2008 is now priced with an interest rate of Libor plus 250 basis points compared to previous pricing of Libor plus 350 basis points.

Furthermore as part of the amendment, the San Francisco processed foods company repaid its term loan A in full.

Banc of America Securities LLC and J.P. Morgan Securities Inc. acted as joint book managers, and Bank of America is the administrative agent on the deal.

"We believe these changes reflect, in part, the company's improved credit profile, as we have used the company's strong cash flow to reduce leverage since the completion of our merger. Additionally, we believe that these reduced pricing levels and improved financial flexibility demonstrate the continued, supportive relationship between the company and its lenders," said Richard G. Wolford, chairman and chief executive officer, in a company news release.

CommScope closes

CommScope Inc. completed its acquisition of the Connectivity Solutions business of Avaya Inc. for a total purchase price that consists of $250 million in cash, subject to post-closing adjustments, and about 1.8 million shares of CommScope common stock. In addition, CommScope will assume up to $65 million of specified liabilities, primarily related to employee benefits.

In connection with the acquisition, CommScope obtained a $185 million senior secured credit facility consisting of a $75 million five-year term loan A with an interest rate of Libor plus 275 basis points and a $110 million five-year revolver with an interest rate of Libor plus 250 basis points.

The term loan A was originally sized at $65 million but was upsized during syndication.

Wachovia Securities was the lead bank on the deal.

About $100 million was borrowed under the new credit facility to help fund the cash portion of the purchase price of the acquisition. The company also used $150 million from existing cash balances to fund the cash portion as well.

CommScope is a Hickory, N.C., manufacturer of cable products.

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