Indications point to successful managing agent meeting Thursday for Dole's $1.1 billion loan

By Sara Rosenberg

New York, Feb. 19 - Dole Food Co. Inc. is bursting into the primary bank loan market on Thursday with a top-tier managing agent bank meeting for its proposed $1.1 billion credit facility, according to a syndicate source. The retail launch of the loan is expected to possibly take place some next week, the syndicate source added.

"The early buzz has been good," the syndicate source said in regards to the deal. "There are a decent number of guys coming tomorrow. We'll see what happens."

"From what I hear there has been a lot of interest so far," a source close to the deal told Prospect News.

The facility consists of a $600 million term loan B with an interest rate of Libor plus 375 basis points, a $250 million term loan A with an interest rate of Libor plus 325 basis points and a $250 million revolver with an interest rate of Libor plus 325 basis points.

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

DHM Acquisition Co., which is wholly owned by David H. Murdock, will use the senior secured credit facilities to help fund the buyout of Dole and refinance some of Dole's debt.

The company also plans to use up to $450 million of high-yield bonds to help finance the transaction. Under the acquisition agreement, Murdock is permitted to purchase approximately 76% of Dole's outstanding common stock that he and his family do not own for $33.50 per share in cash. The per-share consideration places the total enterprise value of Dole, which includes the assumption of debt, at approximately $2.5 billion.

Dole is a Westlake Village, Calif. producer and marketer of fresh fruit, fresh vegetables and fresh-cut flowers, and markets a growing line of packaged foods.

In what many described as a quiet-toned secondary bank loan market, a few names stood out to traders, including Qwest Communications International Inc., Western Wireless Corp., Nextel Communications Inc. and Xerox Corp.

Qwest Communications' revolver shifted around throughout the day, with the bank debt moving up immediately after the company's conference call Wednesday morning and then moving back down as the afternoon progresses, to end the day unchanged with a 92 bid and a 93 offer, according to a trader.

"They released earnings. It was pretty good although the revenue line was weak," the trader said, adding that overall the news was in line with expectations so the bank debt was essentially unaffected.

On Wednesday morning, Qwest released its financial results for the fourth quarter and full-year of 2002. Fourth quarter net income was $2.7 billion or $1.61 per diluted share, compared to a net loss of $645 million or $0.39 per share in the fourth quarter of 2001. For the full year 2002, the company had a net loss of $35.9 billion (inclusive of approximately $40.9 billion of accounting related impacts) or $21.35 per share, compared with a loss of $4.8 billion, or $2.88 per share in 2001. Revenue for the fourth quarter was $3.7 billion, an 11.2% decrease from the same period last year. Revenue for full-year 2002 was $15.5 billion, a 7.5% decline from 2001 revenue of $16.7 billion.

Financial results include the impacts realized from the first stage of the sale of QwestDex, which gave the company gross proceeds of $2.75 billion, and the completion of a debt exchange offer in December, according to a news release.

"We have made significant strides in our efforts to strengthen our balance sheet and position the company for long-term competitiveness," said Oren G. Shaffer, vice chairman and chief financial officer, in the release. "We completed our debt-for-debt exchange, which allowed us to reduce debt by $1.9 billion, and we improved our working capital position by $5.1 billion for the year. Moreover, our progress in addressing our accounting and internal reviews enables the Qwest management team to place even greater focus on our core operations."

As for 2003, the company intends to continue monitoring market conditions for opportunities to reduce debt through strategic financing transactions, which may include debt-for-debt exchanges, debt-for-equity exchanges and other available financing alternatives.

Qwest is a Denver provider of local telecommunications and related services, wireless services and directory services.

Western Wireless Corp.'s bank debt was reported as trading on Wednesday unchanged in the low 80s, according to a trader. The bank debt has been trading fairly actively recently since the company released its fourth quarter and 2002 earnings news.

The company's results included EBITDA for domestic operations rising to a record $97.1 million for the quarter, an increase of 32% from the fourth quarter of 2001. Free cash flow from domestic operations for 2002 exceeded $206 million, more than doubling free cash flow from the $83 million reported for 2001.

Western Wireless is a Bellevue, Wash. provider of wireless communications services.

Nextel Communications was said to be trading "a tad better" on Wednesday with quotes in the 93½ range, according to a trader. The activity seen in this name was mainly attributed to the fact that the Reston, Va. wireless company will release fourth quarter 2002 financial results on Thursday morning.

Lastly, Xerox's bank debt was relatively active, according to one trader, with the paper trading around 963/4, basically unchanged. No specific news was seen as prompting activity in this particular name in an otherwise inactive market.

Xerox is a Stamford, Conn. document company.

In follow-up news, the sale of RCN Corp.'s New Jersey cable systems to Patriot Media and Communications LLC with Spectrum Equity Investors as equity sponsor has been completed. In connection with this sale, Patriot Media obtained a $165 million credit facility consisting of a $65 million pro rata tranche with an interest rate of Libor plus 375 basis points and a $100 million term loan B with an interest rate of Libor plus 450 basis points. Bank of New York was the lead bank on the deal.

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