Greif Bros. $500 million facility anticipated to join bustling primary market this week

By Sara Rosenberg

New York, July 15 - Another deal was added to this week's already busy primary calendar. Grief Brothers Corp. is expected to launch a $500 million credit facility (BB) some time this week. Salomon Smith Barney and Deutsche Bank are said to be the lead banks on the deal.

The loan, according to market sources, was originally scheduled for last week, but was pushed off possibly because of nervousness in the market.

The loan consists of a $250 million term loan that is said to have an interest rate of Libor plus 225 basis points and a $250 million revolver, according to a fund manager. Proceeds from the term loan combined with proceeds from a $300 million subordinated note sale will be used to repay the company's existing term loans.

"I don't know how well it will be received," the fund manager said. "They're Ba3 rated and I think they may be upgraded to Ba2. Libor plus 225 is slim for that rating. I would expect it to be closer to Libor plus 275."

"I haven't seen any pricing on this," an investment banker said. "I think their existing loan has an interest rate of Libor plus 325 basis points. If they try to bring it in to a spread of 225, that's pretty light."

Greif is a Delaware, Ohio manufacturer of industrial shipping containers, containerboard and corrugated products.

Neither the company nor the syndicate was immediately available to confirm this information.

New World Food Pasta, Jostens and Pinnacle Entertainment are the three deals that the fund manger plans to spend the most time watching this week.

Jostens, a Minneapolis, Minn. producer of yearbooks and class rings, is scheduled to hold a bank meeting on Tuesday regarding a new $330 million six-year term loan C, according to a syndicate source. JP Morgan Chase and Deutsche Bank are joint lead arrangers on the deal. The tranche C will be used to replace the company's existing term loan B that has an interest rate of Libor plus 350 basis points. The new term C is expected to "be tighter" than the term B, the syndicate source added.

"It's a refinancing so I don't really have much of a choice but to be interested," the fund manager said.

New World Pasta Co. is scheduled to hold a bank meeting on Thursday regarding a new $230 million credit facility, according to a syndicate source. Morgan Stanley is the lead bank on the deal. The Harrisburg, Pa. dry pasta maker's facility consists of a $200 million seven-year term loan B with an interest rate of Libor plus 325 basis points, a decrease from the current term B tranche's interest rate of Libor plus 400 basis points, and a $30 million five-year revolver with an interest rate of Libor plus 325 basis points, the syndicate source said. Proceeds from the loan are being used to refinance existing debt including the repayment of a term C bridge loan that was provided by Joseph Littlejohn & Levy.

"New World Pasta is a branded food company," the fund manager said. "I like that."

Pinnacle Entertainment Inc., a Glendale, Calif. gaming company, is scheduled to hold a bank meeting on Friday for a credit facility that will be approximately $300 million in size, according to market sources. Bank of America and Bear Stearns are joint leads on the deal.

The find manger explained that Pinnacle's attraction stems from the fact that "gaming companies have been recession resistant."

Meanwhile, Berry Plastics Corp., which was launched on June 20, upsized its term loan B by $25 million to a new total of $330 million, a syndicate source said. Furthermore, the interest rate on the term B was reverse flexed by 25 basis points to Libor plus 300 basis points. The Evansville, Ind. injection-molded plastic products company added the $25 million to the bank loan and decreased the upcoming bond sale by $25 million "to save the company the interest cost," the syndicate source said. Goldman Sachs and JPMorgan Chase are the lead banks on the deal.

Currently, the loan consists of a $100 million six-year revolver with an interest rate of Libor plus 275 basis points, a $50 million six-year delayed draw term loan with an interest rate of Libor plus 275 basis points and a $330 million eight-year term loan B with an interest rate of Libor plus 300 basis points, the syndicate source said. There is a 50 basis points commitment fee on the revolver and a 75 basis points commitment fee on the delayed draw term loan.

Proceeds will be used to fund the company's purchase by GS Capital Partners 2000 LP and repay outstanding debt.

In other news, Sinclair Broadcast Group Inc., a Hunt Valley, Md. broadcasting company, closed on a $600 million credit facility (BB), which is replacing the existing $800 million bank loan. The loan consists of a $225 million revolver due 2008 with an interest rate of Libor plus 225 basis points and a $375 million term loan due 2009 with an interest rate of Libor plus 225 basis points. JPMorgan Chase led the facility, Wachovia Bank was syndication agent and Deutsche Bank and BNP Paribas were co-documentation agents.

"We are very pleased with the terms of our new credit facility, which reflect our continued balance sheet improvements, consistently stable credit risk profile and sound financial statements and accounting practices," said David Amy, executive vice president and chief financial officer in a company press release. "Pricing for the new facility is significantly more attractive, with borrowing costs as much as 125 basis points lower than our previous facility, a reflection of our low senior leverage. Since April 2001, we have dramatically downsized our need for senior bank financing, reducing our commitments from $1.6 billion to $600 million today."

The Borgata, an Atlantic City, N.J. entertainment resort that is a joint venture by Boyd Gaming and MGM Mirage, closed on a $187.5 million term loan B (B2/B+) Monday, a syndicate source said. CIBC World Markets was the lead arranger for the deal. The term B is priced with an interest rate of Libor plus 400 basis points and is due Dec. 13, 2007. Proceeds are being used to refinance a bridge loan.

Key Energy Services Inc., a Midland, Tex. oil well service company, closed on a new $150 million three-year senior secured revolver that has an initial interest rate of Libor plus 225 basis points. PNC Capital Markets and Wells Fargo acted as co-lead arrangers, PNC Bank is the administrative agent and Credit Lyonnais, Lehman Commercial Paper and Royal Bank of Canada are co-documentation agents, a company spokesman told Prospect News.

Brandywine Realty Trust closed on a $100 million three-year term loan with an option for two one-year extensions. Interest on the loan can vary between Libor plus 140 basis points to Libor plus 190 basis points based on the Plymouth Meeting, Pa. real estate company's leverage ratio. Bank of America, NA is the administrative agent for the loan, with Commerzbank AG, New York and Grand Cayman Branches and Fleet National Bank as Co-Documentation Agents. Banc of America Securities LLC was sole lead arranger and sole book manager.

On Friday, CMS Energy Corp. closed on $1.3 billion in credit facilities for CMS Energy and its CMS Enterprises and Consumers Energy subsidiaries. The loan consists of a $295.8 million revolver for CMS Energy, due March 31, 2003, a $300 million revolver for CMS Energy, due Dec. 15, 2003, a $150 million short term loan for CMS Enterprises, due Dec. 13, 2002, a $250 million revolver for Consumers Energy, due July 11, 2003 and a $300 million term loan for Consumers Energy, due July 11, 2003 with a one-year extension at Consumers' option.

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