National Waterworks 102 call payment expected to entice investors to repricing proposal

By Sara Rosenberg

New York, July 23 - In the present market environment, in which issuers are king as investors scramble for new paper and to hold on to existing paper, repricings of credit facilities has been a strong recent trend. One of the newest names to hit the market with this goal in mind is National Waterworks Inc., who held a bank meeting Wednesday regarding reducing the pricing on its term loan B by 125 basis points. The deal is not only expected to gain positive investor attention based on market technicals alone but also due to the payment of the 102 call protection, market sources said.

"Everyone is pretty psyched about that," one professional said about the call protection payment.

And the deal is beneficial to the company for many reasons including a reduction in the interest rate on the $250 million term loan B to Libor plus 275 basis points and the removal of the 2.5% Libor floor from the credit agreement. With Libor currently being in the 1% range, the company would save an additional 150 basis points, a second market professional explained.

The company obtained the $325 million credit facility, consisting of a $75 million six-year revolver with an interest rate of Libor plus 300 basis points and a $250 million seven-year term loan B with an interest rate of Libor plus 400 basis points, late last year in conjunction with the completion of the acquisition of US Filter Distribution Group Inc.

JPMorgan and Goldman are the lead banks on the deal for the Palm Desert, Calif. provider of water and wastewater systems.

A second example of a recently launched repricing is Crown Cork & Seal Co. Inc. Commitments are due at the end of this week for the repriced term loan B and the facility is expected to close next week, a syndicate source said. Deutsche Bank and Citigroup are the lead banks on the deal.

On July 18, Crown Cork held a conference call regarding the repricing, which if successful, would lower the interest rate on the $450 million term loan B by 125 basis points to Libor plus 300 basis points.

Another change that is being made to the Crown Cork institutional tranche is call protection at 101, which was added to the deal during this most recent syndication process.

Since the deal is basically being marketed to investors with existing commitments it was not expected to be a major blowout. However, syndication is moving along as a number of participants have recommitted and some are even looking to increase their investment, the source said.

In February 2003, the company closed on a $1.05 billion credit facility, consisting of a $550 million first lien revolver with an interest rate of Libor plus 400 basis points due Sept. 15, 2006 and a $500 million first lien term loan B due Sept. 15, 2008. The term loan B is comprised of $450 million and Euro 50 million.

The revolver and the euro portion of the term loan B will remain in place as is, the syndicate source added.

Crown Cork is a Philadelphia supplier of packaging products.

JohnsonDiversey Inc.'s repricing of its credit facility, which is expected to be completed within the next couple of days and is moving along fine despite "getting a little pushed back from Europe," a source said.

The company is attempting to reprice its entire credit facility at Libor plus 275 basis points. "The Europe guys aren't so into this. The U.S. guys don't have a choice," the source said.

Citigroup and Goldman Sachs are leading the deal.

In March 2002, JohnsonDiversey obtained an approximately $1.2 billion senior secured credit facility, consisting of a $220.25 million term loan A, a $450 million term loan B, a €221.878 term loan B, a $29.75 million term loan C and a $300 million revolver, according to a filing with the Securities and Exchange Commission.

The tranche A, tranche C and revolver were priced at Libor plus 325 basis points and the term loan B was priced at Libor plus 350 basis points.

The Sturtevant, Wis. provider of cleaning products used the facility to help fund the acquisition of DiverseyLever.

Morris Communications Corp. is seeking to reprice its term loan B to Libor plus 225 basis points, according to a market source. JPMorgan is the lead bank on the Augusta, Ga. media company's deal.

And then there's Moore Corp., which is scheduled to hold a call on Thursday for existing lenders about lowering pricing on its $500 million term loan B to Libor plus 250 basis points from Libor plus 300 basis points, according to market sources. Deutsche Bank and Citigroup are the lead banks on the deal.

Moore is a Mississauga, Ont. manager and distributor of print information.

In other primary news, Jostens Inc. reverse flexed its $525 million seven-year term loan B on Tuesday, which consists of a $475 million tranche and a $50 million delayed-draw tranche, to Libor plus 250 basis points from Libor plus 300 basis points, according to market sources.

This pricing move was anticipated by market participants as soon as the deal launched due to the overwhelming demand. In fact, one market professional had told Prospect News that he was sure it would flex down to at least Libor plus 275 basis points based on the $270 million in commitments received prior to the bank meeting.

Credit Suisse First Boston and Deutsche Bank are leading the deal, which also contains a $125 million five-year revolver with an interest rate of Libor plus 275 basis points.

Proceeds will be used to help fund the leveraged buyout of Jostens by DLJ Merchant Banking Partners III, L.P. and affiliated funds, each managed by CSFB Private Equity for cash consideration of approximately $48 per common share. Jostens is currently 88% owned by Investcorp, a global investment group, its co-investors and MidOcean Partners. The transaction is expected to close by Sept. 30, 2003.

Jostens is a Minneapolis provider of school related affinity products.

Some new details emerged on Dex Media West LLC's (QwestDex) $2.11 billion credit facility, specifically regarding the $1.06 billion pro rata portion of the deal.

It is currently expected that the pro rata will consist of a $100 million revolver and a $960 million term loan A. There is no price talk available on these tranches at this time, a source close to the deal said.

As was previously reported, the remainder of the facility is expected to consist of a $1.05 billion term loan B talked at Libor plus 300 basis points.

JPMorgan, Bank of America, Deutsche Bank, Wachovia Securities and Lehman Brothers are the lead banks on the facility, which is scheduled to launch on July 29.

Last year, Qwest reached an agreement to sell QwestDex, its yellow pages directories business, to The Carlyle Group and Welsh, Carson, Anderson & Stowe for $7.05 billion.

The buyout involves two stages. In the already completed first stage QwestDex's operations in Colorado, Iowa, Minnesota, Nebraska, New Mexico, North Dakota and South Dakota were purchased for $2.75 billion. In this second stage, operations in Arizona, Idaho, Montana, Oregon, Utah, Washington and Wyoming will be purchased for $4.3 billion.

For the acquisition of Dex Media East, approximately $1.79 billion of bank debt was syndicated, consisting of a $700 million term loan B with an interest rate of Libor plus 400 basis points, a $690 million term loan A with an interest rate of Libor plus 300 basis points and a $100 million revolver with an interest rate of Libor plus 300 basis points.

As for the secondary, Westlake Chemical Corp.'s new term loan B continued to trade on Wednesday, and in fact moved to slightly higher levels with trades taking place just north of 101, according to a trader.

The $150 million institutional tranche, which was originally offered at par and carries an interest rate of Libor plus 400 basis points, broke for trading on Tuesday just under 101, the trader added.

Westlake Chemical's credit facility (Ba2/BB), led by Bank of America, also contains a $200 million asset-based revolver.

The company is a Houston manufacturer and supplier of petrochemicals, polymers and fabricated products.

Nextel Communications Inc.'s bank paper continued to trade strongly, although basically remained at previous levels, on Wednesday, according to a trader, with the term loan D quoted at 99 7/8, and the term loan B and term loan C quoted at par to par 1/8 plus.

The paper moved up slightly on Tuesday in response to ratings upgrades by both Moody's Investors Service and Standard & Poor's.

And, late last week, the Reston, Va. wireless company's bank paper moved up by about half a point to the par level following the company's earnings release that included an upward revision of financial guidance for full-year 2003 and announcement of a $1 billion senior serial redeemable notes offering.

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