Southwest Sports, SunCal, Southern Graphic set talk at launch; IAP floats talk; Toys 'R' Us, Day break

By Sara Rosenberg

New York, Nov. 30 - Southwest Sports Group Inc., SunCal Master I and Southern Graphic Systems Inc. revealed price talk on their credit facilities as all of these deals were launched with bank meetings on Wednesday. And, IAP Worldwide Services Inc. price talk has started floating around the marketplace as the $675 million credit facility is gearing up for its Monday bank meeting.

In secondary happenings, Toys "R" Us Inc.'s real estate facility broke for trading in the lower-par context, and Day International Group Inc. started trading as well, with its first-lien term loan quoted atop 101 and its second-lien term loan quoted atop par.

Southwest Sports decided to launch its credit facility Wednesday with opening price talk of Libor plus 250 basis points on both its $40 million revolver and a $260 million term loan, according to various market sources.

Goldman Sachs and JPMorgan are the lead banks on the $300 million deal, with Goldman the left lead.

Southwest Sports is a Frisco, Texas-based holding company formed by Thomas Hicks to house interests in the Texas Rangers professional baseball team and the Dallas Stars pro hockey team, as well as to own various real estate properties in Dallas.

SunCal sets pricing guidance

Also launching Wednesday was SunCal Master I, and it was during the meeting that investors were presented with opening price talk on all tranches and call protection provisions for the second-lien term loan.

The company's $75 million three-year revolver and $160 million four-year term loan were launched with opening spreads of Libor plus 325 basis points, and the $85 million five-year second-lien term loan was launched with an opening spread of Libor plus 725 basis points, according to a market source.

In addition, the second-lien term loan was launched with call protection of 103 in year one, 102 in year two and 101 in year three, the source said.

Lehman is the lead bank on the $320 million deal that will be used primarily to fund a dividend a payment, and then remaining proceeds will be used to repay some existing debt and to fund some property development.

SunCal is an Irvine, Calif., developer of master-planned communities.

Southern Graphic in mid-200s

In addition, Southern Graphic Systems came out with price talk at its Wednesday bank meeting as well, with all tranches contained in its $194.4 million senior credit facility launched at Libor plus 250 basis points, according to a market source.

The facility consists of a $35 million five-year revolver, a $40 million six-year acquisition facility and a $119.4 million six-year term loan.

UBS Investment Bank is the lead bank on the deal that will be used to help fund the acquisition of Southern Graphic Systems by Citigroup Venture Capital Equity Partners LP from Alcoa Inc. for about $410 million.

The transaction is expected to close by the end of December.

Southern Graphic Systems is a Louisville, Ky., packaging design and imaging business.

IAP talk circulates

IAP Worldwide Services Inc. price talk has started to make its way around to investors ahead of the Monday bank meeting that will launch the $675 million credit facility into syndication.

The $100 million revolver and the $350 million first-lien term loan are being talked at Libor plus 300 basis points, and the $225 million second-lien term loan is being talked at Libor plus 575 basis points, a buyside source said.

Goldman Sachs and Deutsche Bank are the lead banks on the deal, with Goldman the left lead.

Proceeds will be used to refinance existing debt and to fund a dividend payment.

IAP Worldwide Services is a Cape Canaveral, Fla., provider of logistic services to public and private sector companies and government agencies.

Harlan, Compass Minerals talk emerges

Price talk on Harlan Sprague Dawley Inc. and Compass Minerals Group surfaced now that both of these deals have officially entered into the syndication process with the completion of bank meetings on Tuesday.

Harlan's $15 million five-year dollar denominated revolver and the $15 million five-year euro-equivalent revolver were both launched with opening price talk of Libor plus 250 basis points, and the $160 million six-year term loan was launched with opening price talk of Libor plus 275 basis points, according to one market source.

Meanwhile, Compass Minerals' $100 million revolver and $350 million term loan were both launched with opening price talk of Libor plus 175 basis points, according to a different market source.

Harlan's $190 million credit facility is being led by UBS and Credit Suisse First Boston and will be used to help finance Genstar Capital LLC's acquisition of the company.

Compass Minerals' $450 million senior secured credit facility (B1/BB-) is being led by JPMorgan and Goldman Sachs. The facility will be used to help fund the company's tender offer for its $325 million 10% senior subordinated notes due 2011. The tender offer, which is conditioned on successful completion of the new loan financing, is scheduled to expire on Dec. 19.

Harlan is an Indianapolis-based provider of laboratory animals and services to support the scientific community.

Compass Minerals is an Overland Park, Kan., producer of salt and sulfate of potash.

Toys 'R' Us around par

Toys "R" Us' $1.3 billion three-year real estate facility (B2/B-) freed for trading on Wednesday, with levels quoted at par bid, par ¼ offered, according to a trader.

The facility is priced with a interest rate of Libor plus 300 basis points. During syndication, the facility was downsized from $1.5 billion and flexed up from Libor plus 275 basis points.

Deutsche and Bank of America are the lead banks on the deal.

The Wayne, N.J., specialty toy retailer's facility contains two one-year extension options for a 25 basis point extension fee.

Proceeds will be used to repay the majority of a $1.9 billion bridge loan used in the leveraged buyout of Toys "R" Us by an investment group consisting of affiliates of Kohlberg Kravis Roberts & Co., Bain Capital Partners LLC, and Vornado Realty Trust.

Day breaks

Day International also freed for trading during market hours, with its $275 million first-lien term loan (B1/B) quoted at 101 1/8 bid, 101 5/8 offered and its $115 million second-lien term loan (B2/CCC+) quoted at par 3/8 bid, par 7/8 offered, according to a trader.

The first-lien term loan is priced with an interest rate of Libor plus 250 basis points, and the second-lien term loan is priced with an interest rate of Libor plus 700 basis points. Originally, the first-lien term loan was sized at $250 million and the second lien was sized at $140 million, but $25 million was shifted out of the second-lien term loan and into its first lien during syndication.

The $415 million credit facility also contains a $25 million revolver (B1/B) with an interest rate of Libor plus 250 basis points.

Goldman Sachs is the lead bank on the deal that will be used to refinance existing debt.

The company is currently tendering for any and all of its $115 million 9½% senior subordinated notes due 2008.

Day International is a Dayton, Ohio, producer and distributor of consumable products for the offset printing and textile industries.

Rockwood dips on repricing

Rockwood Specialties Group Inc.'s term loan gave up about a quarter to three eighths of a point on Wednesday after the company launched a repricing amendment that would initially reduce the spread by 25 basis points, according to a trader.

The term loan ended the day quoted at 101 bid, 101 3/8 offered, the trader added.

Under the proposal, the company is asking lenders to lower term loan pricing to Libor plus 175 basis points from Libor plus 200 basis points, and add a step down to Libor plus 150 basis points that would become effective under certain conditions.

Credit Suisse First Boston and Goldman Sachs are the lead banks on the deal.

Rockwood is a Princeton, N.J., specialty chemicals and advanced materials company.

Calpine up on bankruptcy buzz

Calpine Corp.'s second-lien bank debt headed higher on Wednesday, with some market players pointing to rumors of a potential Chapter 11 filing as the driver behind the new found momentum.

The San Jose, Calif., power company's second-lien debt was quoted at 77 bid, 78 offered, up about a point and a half from Tuesday's levels of 75½ bid, 76½ offered, according to a trader.

"Speculation is they will file. And, speculation is that recovery will not get any worse. No one knows for sure what the final recovery will be but if they file for bankruptcy they will have to pay down debt," the trader explained.

Bankruptcy talk began to circulate around the market on Tuesday after the company announced that Peter Cartwright, chairman, president and chief executive officer, and Robert D. Kelly, executive vice president and chief financial officer, were leaving the company.

Calpine lead director Kenneth T. Derr has been named chairman of the board and acting chief executive officer and Eric N. Pryor, executive vice president and deputy chief financial officer, will serve as interim chief financial officer.

Chiquita unchanged

Chiquita Brands International Inc.'s bank debt fell off early on in the day after the company announced that some of its banana farms have been flooded, but as the day progressed, the bank debt headed back up to end the session unchanged, according to a trader.

The bank debt got as low as par bid, par ¼ offered, traded as high as 101, and then settled in unchanged at par ½ bid, 101 offered where it closed the day, the trader said.

On Wednesday morning, the company announced that about 1,600 hectares of its banana farms in Honduras and more than 500 hectares of banana farms of independent growers have been severely flooded due to heavy rains from Tropical Storm Gamma.

As a result of flood damage, the company expects to incur a significant, mostly noncash, charge in the fourth quarter for asset writedowns and flood- related costs, with the preliminary estimate of that charge being in the range of $13 million to $18 million.

Chiquita is a Cincinnati-based marketer and distributor of fresh produce.

Kodak takes a breather

Eastman Kodak Co.'s term loan finally took a step back after about a week and a half of gains, with levels slipping off to 99¾ bid, par offered from 99 7/8 bid, par 1/8 offered, according to a trader.

The momentum upwards had started early last week after a bullish report from Barron's was released, creating positive investor sentiment for the paper.

Kodak is a Rochester, N.Y.-based digital imaging products, services and solutions company.

Workflow closes

Workflow Management Inc. closed on its new $425 million credit facility consisting of a $40 million five-year revolver (B2/BB-) at Libor plus 400 basis points, a $275 million six-year term loan B (B2/BB-) at Libor plus 400 basis points and a $110 million seven-year second-lien term loan (B3/B) at Libor plus 825 basis points.

The first-lien term loan has 101 soft call protection for one year and the second-lien term loan has call protection of 103 in year one, 102 in year two and 101 in year three.

The revolver contains a 50 basis point commitment fee.

The company also closed on $30 million of 71/4-year holdco mezzanine debt at 12% plus 4% pay-in-kind interest.

Originally, the deal was launched as a $40 million five-year revolver talked at Libor plus 300 basis points, a $300 million five-year first-lien term loan B (B2/BB-) talked at Libor plus 300 basis points and a $115 million seven-year second-lien term loan (B3/B) talked at Libor plus 700 basis points - but, sizes, pricing and call protection were all tweaked during syndication.

Credit Suisse First Boston, National City Bank and Royal Bank of Canada acted as joint lead arrangers on the deal.

Proceeds were used to fund the acquisition of The Relizon Co.

Workflow Management is a New York-based full-service print and promotional products provider.

Metals USA closes

Apollo Management LP completed its leveraged buyout of Metals USA Inc. for $22 per share in cash on Wednesday, according to a company news release.

In connection with the LBO, Metals USA got a new $450 million six-year asset-based revolving credit facility divided into a $415 million first out tranche with an interest rate of Libor plus 150 basis points and a $35 million last out tranche with an interest rate of Libor plus 375 basis points.

The revolver has a 25 basis point commitment fee.

Credit Suisse First Boston and Bank of America acted as joint lead arrangers on the deal.

Metals USA is a Houston-based metals processor and distributor.

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