Stanadyne reverse flexes second-lien term loan by 25 basis points

By Sara Rosenberg

New York, Aug. 2 - Stanadyne Corp. lowered pricing on its $65 million six-year second-lien, covenant light term loan (B2/B+) to Libor plus 350 basis points from Libor plus 375 basis points, according to a market source.

Pricing on the $35 million five-year asset-based revolver (B1/BB) remained unchanged at Libor plus 225 basis points.

The $100 million deal was met with strong demand from the very start, almost reaching subscription on the day of launch as investors enjoyed the "bullet proof" revolver and the "good risk reward" of the second lien, a market source previously told Prospect News.

Goldman Sachs is the sole lead bank on the deal.

Proceeds, combined with proceeds from a bond offering, will be used to help fund a leveraged buyout of the company by an affiliate of Kohlberg & Co. LLC. The LBO, which is expected to close during the third quarter, is subject to customary closing conditions.

On Monday, the company priced its $160 million 10-year senior subordinated notes at 10%. Price talk had been in the 9¾% area.

Stanadyne is a Windsor, Conn., provider of technology and services for engine components and fuel systems.

Dean Foods may go to all pro rata

Dean Foods Co. may go to an all pro rata structure due to an overwhelming amount of demand from pro rata lenders, according to a market source, although nothing definitive has actually been done at this time.

"They supposedly have $3 billion in commitments in pro rata or some ridiculous number like that. Talk is that they're going to do the whole thing pro rata and not do the B at all. I would think they would split [the B] between revolver and [the] A, but I haven't heard for sure," the market source said.

Currently, the in-market credit facility (Ba1) consists of a $750 million term loan B with an interest rate of Libor plus 175 basis points, a $1.25 billion term loan A with an interest rate of Libor plus 125 basis points and a $1 billion revolver with an interest rate of Libor plus 125 basis points.

By only doing pro rata bank debt the company would have a cheaper cost of capital. Plus, "they got the free cash flow" to allow this move, the source added.

Wachovia and Bank One - or JPMorgan - are the lead banks on the deal that will be used by the Dallas food and beverage company to refinance existing debt.

Garrett Aviation structure

The structure of Garrett Aviation Services' proposed $287 million credit facility surfaced with the deal consisting of a $60 million revolver, a $147 million term loan and an $80 million second-lien term loan, according to a market source. Price talk on the tranches is not yet available.

Lehman Brothers and Citigroup are joint lead arrangers and joint bookrunners on the deal, which is set to launch via a bank meeting Thursday, with Lehman left lead and administrative agent.

Proceeds will be used to help fund The Carlyle Group's acquisition of Garrett from General Electric Co.

Carlyle plans on combining Tempe, Ariz.-based Garrett with one of its existing portfolio companies, Piedmont Hawthorne, to create a general aviation aftermarket service provider offering a more comprehensive range of services to better serve the needs of its broad customer base, according to a Carlyle release.

The transaction is expected to close in the third quarter.

Jean Coutu closes

The Jean Coutu Group Inc. closed on its $1.7 billion credit facility (B1/BB) consisting of a $1.1 billion seven-year term loan B with an interest rate of Libor plus 225 basis points, a $350 million five-year revolver with an interest rate of Libor plus 275 basis points and a $250 million five-year term loan A with an interest rate of Libor plus 275 basis points.

Originally, the term loan B went out to lenders at Libor plus 275 basis points and then pricing was said to have been reduced to Libor plus 250 basis points before ending up at 225 over Libor.

Deutsche, National Bank of Canada and Merrill Lynch were the lead banks on the deal, with Deutsche on the left.

Proceeds from the credit facility, combined with proceeds of a $1.2 billion bond offering, were used to fund the now completed acquisition of about 1,549 Eckerd drugstores from J.C. Penney Co. Inc. for $2.375 billion.

"This is a great acquisition for us as the Eckerd drugstores fit in perfectly with our existing network. With these new drugstores, we are now in an excellent position to bring the company to higher levels of performance," said Francois J. Coutu, president and chief executive officer, in a company news release.

Jean Coutu is a Longueuil, Quebec-based drugstore chain.

Duane Reade closes

Duane Reade Inc. closed on its $155 million six-year term loan B (B1/B) that is priced with an interest rate of Libor plus 325 basis points and contains call protection of 102 in year one and 101 in year two. Originally, the tranche was priced with an interest rate of Libor plus 400 basis points and contained call protection of 103 in year one, 102 in year two and 101 in year three, but that was also modified during syndication.

Bank of America and Credit Suisse First Boston were joint lead arrangers and joint bookrunners on the term loan.

The New York drugstore chain also just closed on a $250 million asset-based revolver (B+) via Bank of America.

Proceeds from the loan, combined with proceeds from a bond deal and an equity contribution, were used to help fund the company's acquisition by an affiliate of Oak Hill Capital Partners LP. The value of the merger transaction is about $700 million, including the repayment of debt.

United Industries closes

United Industries Corp. completed its acquisition of United Pet Group Inc. for $360 million, according to a company news release.

To finance the transaction, United Industries got $235 million in term loans consisting of a $160 million term loan add-on with an interest rate of Libor plus 250 basis points (B1/B+) and a $75 million second-lien term loan (B2/B-).

Bank of America, Citigroup and JPMorgan were the lead banks on the deal, with Bank of America listed on the left.

"The UPG transaction allows us to enter a new category of business by teaming up with a successful, well-established leader in the pet supplies industry. There are many similarities between the pet supplies category today and the consumer lawn and garden and household pest control industry when we began to implement our growth strategy five years ago. The category is growing rapidly. There's great consumer interest. The retailer base is consolidating, and there are numerous opportunities to consolidate the supplier side of the industry. It's familiar ground," said Bob Caulk, chairman and chief executive officer, in a the release.

United Industries is a St. Louis manufacturer and marketer of products for the consumer lawn and garden care and household insect control markets.

Fisher Scientific closes

Fisher Scientific International Inc. completed its approximately $4 billion merger with Apogent Technologies Inc., according to a company news release.

To finance the merger, Fisher obtained a new $1.1 billion credit facility (Ba2/BBB) consisting of a $150 million term loan B with an interest rate of Libor plus 150 basis points, a $300 million delayed-draw term loan A with an interest rate of Libor plus 125 basis points, a $400 million revolver with an interest rate of Libor plus 125 basis points and a $250 million term loan A with an interest rate of Libor plus 125 basis points.

The $300 million delayed-draw term loan A was added during the first week of June. At that time, a number of other changes were made to the deal including modifications to pricing and shifts in tranche sizes. The revolver was reverse flexed from original pricing of Libor plus 150 basis points, the term loan A was increased to $250 million from an original size of $150 million and reverse flexed from Libor plus 150 basis points and the term loan B was decreased to $150 million from an original size of $250 million and reverse flexed from original pricing of Libor plus 175 basis points.

Bank of America, Deutsche Bank and Credit Suisse First Boston were the lead banks on the deal.

Under the merger agreement, Apogent shareholders received 0.56 shares of Fisher Scientific common stock for each share of Apogent common stock they owned.

Fisher is a Hampton, N.H., scientific research and laboratory products company.

Resolution Specialty closes

Resolution Specialty Materials Inc. completed its acquisition of Eastman Chemical Co.'s coatings, adhesives, specialty polymers and inks segment, according to a company news release.

In order to finance the acquisition, Resolution Specialty, a Houston-based company formed by Apollo Management LP, got a new $155 million credit facility (B+), consisting of a $30 million five-year revolver with an interest rate of Libor plus 300 basis points and a $125 million term loan B with an interest rate of Libor plus 275 basis points.

Originally, the term loan B was sized at $115 million and was priced at Libor plus 300 basis points but was modified during syndication.

JPMorgan and Bear Stearns were the lead arrangers on the deal, with JPMorgan listed on the left.

Merrill closes

Merrill Corp. closed on its $210 million credit facility (B1/B) consisting of a $50 million four-year revolver with an interest rate of Libor plus 275 basis points and a $160 million five-year term loan B with an interest rate of Libor plus 275 basis points.

Credit Suisse First Boston and Bank of America were joint lead arrangers and joint bookrunners on the deal, with CSFB left lead.

Proceeds were used to refinance existing debt, to repurchase outstanding senior discount notes and for working capital and general corporate purposes.

"The attractive pricing and terms of the new financing will save the company more than $5 million annually and provide greater operational flexibility," said John Castro, chief executive officer, in a company news release. "This reflects the improved results the company has been generating over the last year."

The transaction was substantially oversubscribed and most of the lenders from the company's existing syndicated facility became lenders under the new credit as well as a number of new bank and institutional lenders, the release added.

Merrill is a St. Paul, Minn., diversified communication and document service company.

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