Dean Foods recent trading at a premium in the secondary leads to repricing of term loan B

By Sara Rosenberg

New York, April 15 - Dean Foods Co. took the spotlight in secondary trading on Monday as the company took advantage of favorable market conditions by repricing its term loan B tranche to Libor plus 250 basis points from Libor plus 300 basis points, according to a financial professional. The company's paper has recently been trading at almost 102.

All holders had to agree to the change in price in order for the company to amend its current agreement.

"I expect more announcements like this in the future because so many loans are trading at a premium," the financial professional said. "Supply of new loans and refinancings are fairly slow and demand is high. This is causing paper to trade at a premium. It's supply/demand dynamics at work."

In other secondary news, Exide Technologies Inc., a Princeton, N.J. industrial and transportation battery producer and recycler, traded in the high 60s on Monday, up from a previous trading level around 62, after news of the company's filing for Chapter 11 bankruptcy protection was released.

According to a fund manager, the rise in price is due to increased investor certainty about the direction of the company.

"Sometimes after a Chapter 11 filing, the paper trades up because people think the situation is working towards resolving itself," the fund manager explained.

The company has arranged for $415 million in new financing, including $250 million of debtor-in-possession financing from Citicorp USA, according to a company press release. All new financing is still subject to court approval.

In this week's upcoming primary activity, Titan Corp., a San Diego, Calif. technology company, is scheduled to hold a bank meeting on Wednesday for its $450 million senior secured credit facility. Wachovia is sole bookrunner and lead arranger for the transaction.

The loan consists of a $350 million seven-year term B tranche with an interest rate of Libor plus 325 basis points and a $100 million six-year revolver with an interest rate of Libor plus 225 basis points, according to a syndicate source. The unused fee ranges from 50 to 100 basis points depending on amounts drawn. If less than 30% of the revolver is used, the company has to pay a commitment fee of 100 basis points, the syndicate source said.

Substantially all of the company's assets are being used to secure the loan, excluding SureBeam, the syndicate source said. The loan is principally a refinancing of the previous loan. Moody's Investors Service rates the loan Ba3 and Standard and Poor's rates the loan BB-.

RailAmerica Inc., a Boca Raton, Fla. short line and regional railroad operator, is also scheduled to hold a bank meeting on Wednesday for its new $475 million credit facility. UBS PaineWebber and Morgan Stanley Dean Witter are joint lead-arrangers for the deal. The credit facility is expected to close sometime in May.

The loan consists of a $100 million six-year revolver with an interest rate of Libor plus 200 basis points and a $375 million seven-year term B tranche with an interest rate of Libor plus 275 basis points, a syndicate source said. There is a commitment fee of 50 basis points on the revolver.

All company assets will be used to secure the loan. Proceeds will be used to refinance existing debt. According to the syndicate source, the company's current ratings are expected to be affirmed since it is a refinancing. Moody's Investors Service rates the existing debt Ba3 and Standard and Poor's rates the debt BB-.

Also, Seagate Technology International is hoping to hold a bank meeting regarding its new $500 million credit facility within the next two weeks, according to a company spokesman, which will be used to refinance the current loan. J.P. Morgan Securities and Morgan Stanley Senior Funding are joint lead arrangers and joint bookrunners. JP Morgan Chase Bank will act as administrative agent. And, Morgan Stanley Senior Funding will act as syndication agent. The credit facility is expected to consist of a $350 million term and a $150 million revolver.

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