Sunny Delight loan put on hold as some softness in business spurs reevaluations

By Sara Rosenberg

New York, July 16 - Cincinnati-based Sunny Delight Beverages Co.'s proposed $250 million credit facility, which was going to be used to help fund J.W. Childs Associates LP's acquisition of the Sunny Delight and Punica juice-based drink businesses from Procter & Gamble Co., has been "put on hold for now" as UBS and J.W. Childs are reassessing the transaction, according to a market source.

"Sunny Delight has experienced softness in certain markets," the source said. "As a result UBS is working with J.W. Childs to understand the reasons and implications."

Further details on the transaction will be posted when the process has been completed, the source added.

The credit facility, after being reworked a bit during syndication, consisted of a $40 million revolver with an interest rate of Libor plus 250 basis points (Ba3/BB-), a $175 million term loan talked at Libor plus 300 basis points (Ba3/BB-), a $35 million second lien term loan talked at Libor plus 550 basis points (B1/B), with call protection of 102 in year one and 101 in year two, and a $75 million U.S. dollar equivalent euro tranche talked at Libor plus 325 basis points (Ba3/BB-).

On Friday, Standard & Poor's withdrew its BB- first lien bank loan rating and B second lien bank loan rating "because these financing transactions were never completed", an S&P release said.

Levi trades in high 106's

Levi Strauss & Co.'s bank debt traded a little bit on Friday in the high 106 area, with the paper still said to be strong since Tuesday's positive earnings news and Dockers sale update, according to a trader.

For the second quarter, net sales were $959 million compared to $932 million for the second quarter of 2003, gross profit was $413 million compared to $393 million in the same period last year, operating income was $77 million compared to $63 million last year and net income was $6 million compared to a net loss of $42 million for the second quarter of 2003.

As of May 30, total debt, less cash, was $1.96 billion compared to $2.11 billion at the end of fiscal year 2003. As of July 11, the company had available liquidity of approximately $552 million, consisting of approximately $287 million in highly liquid short-term investments and $265 million in net available borrowing capacity under its revolver.

Also on Tuesday, Levi revealed that it would soon begin the process of seeking consents for amendments from its senior secured term loan and asset-backed revolver lenders that would allow for the Dockers sale, provided that the application of sale proceeds results in a reduction in the company's net debt of at least 30%.

Levi is a San Francisco clothing company.

WilTel reduces revolver size

WilTel Communications Group Inc.'s reworked its proposed credit facility, reducing the overall size to $385 million from $410 million as the company opted to decrease the size of its revolver ahead of Tuesday's launch, according to a syndicate document.

The deal now consists of a $25 million five-year revolver with a commitment fee of 50 basis points and a $360 million six-year term loan B, the document said.

Previously, it was expected that the deal would contain a $50 million five-year revolver.

Credit Suisse First Boston is the sole lead arranger and sole bookrunner on the refinancing deal.

On Friday, Moody's Investors Service assigned a rating of B3 to WilTel's credit facility with a stable outlook.

The rating reflects the company's high and growing business risk given eroding business fundamentals for the long-haul carrier industry, offset somewhat by comparatively moderate financial risk and very good near-term liquidity, Moody's said.

The rating also reflects the highly competitive market in which WilTel operates, its relatively short post-bankruptcy operating history and continued supply and demand imbalances for the foreseeable future, Moody's added.

WilTel is a Tulsa, Okla., telecommunications provider to enterprises, carriers and the federal government.

Atlas Pipeline closes

Atlas Pipeline Partners LP completed its acquisition of Spectrum Field Services Inc., a privately owned natural gas gathering and processing company headquartered in Tulsa, Okla., for total consideration of $140 million plus transaction costs, according to a company news release.

To fund the acquisition, Atlas Pipeline got a new $135 million credit facility consisting of a $35 million four-year revolver with an interest rate of Libor plus 325 basis points and a $100 million five-year term loan B with an interest rate of Libor plus 400 basis points.

Wachovia and Key Bank were the lead banks on the Moon Township, Pa., oil and gas pipeline's deal.

A portion of the credit facility will be replaced by proceeds from the company's recent offering led by Lehman Brothers of 2.1 million common units which priced at $34.76 on July 14, the release added.

Morris Publishing closes

Morris Publishing Group LLC closed on its new $250 million of term loans consisting of a $100 million term loan A with an interest rate of Libor plus 150 basis points and a $150 million term loan C with an interest rate of Libor plus 175 basis points.

JPMorgan was the lead bank on the Augusta, Ga., newspaper company's deal.

Proceeds from the term loans were used to replace the $225 million term loan B, which was priced at Libor plus 225 basis points.

Furthermore, under the amended credit agreement, the company reduced its revolver to $150 million from $175 million, according to a company news release.

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