Delphi ups spread, adds call protection; Eddie Bauer may flex up by 50 basis points

By Sara Rosenberg

New York, June 2 - Delphi Corp. increased price talk on its term loan and added call premiums to the tranche, sweetening the deal for investors who may have had a hard time with sector issues, light pricing - as some had called it - and a just 'OK' collateral package.

In other primary news, talk is that Eddie Bauer Holdings Inc. may have to increase pricing on its term loan by 50 basis points to get the deal fully syndicated.

Delphi flexed price talk higher on its $750 million term loan, moving it to Libor plus 650 to 700 basis points from original price talk at launch of Libor plus 550 basis points, according to a market source.

Furthermore, call protection provisions were added to the tranche, which is now non-callable for one year and then callable at 102 in year two and at 101 in year three, the source added.

The term loan is still being offered to investors at a discount of 991/2.

No changes were made to the amended and upsized $2 billion revolver, which contains grid-based pricing and an initial interest rate talked at Libor plus 450 basis points. The company's existing revolver that is being amended is sized at $1.5 billion.

The deal has been labeled one to watch since news of it first hit the market, especially given the recent outpouring of negative news in the auto sector- such as General Motors Corp. and Ford Motor Co. being downgraded to junk status, and Collins & Aikman Corp. filing for Chapter 11 bankruptcy protection because of liquidity problems.

Investors were a little concerned over Delphi's collateral package, paying close attention to whether they're covered in a worse-case scenario. Some were wary of the fact that the company is trying to raise $750 million in term debt because its needs liquidity and that the deal is secured by GM receivables and inventory - given GM's downgrade and liquidity issues.

In addition some had thought that the original price talk level on the term loan was too light - a concern that the syndicate obviously addressed with its recent change in spread talk.

Proceeds from the new credit facility will be used to refinance the company's existing credit facility that totals $3 billion.

JPMorgan and Citigroup are joint lead arrangers on the $2.75 billion credit facility (B1/BB-/BB-), with JPMorgan the left lead.

Delphi is a Troy, Mich., supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology to vehicle manufacturers.

Eddie Bauer flex expected

Market rumor is that Eddie Bauer's proposed $300 million six-year term loan will have to see pricing move up to Libor plus 300 basis points - from the Libor plus 250 basis points price talk that the tranche was originally launched with - in order for enough investors to get on board to fully circle the deal, according to a market source.

"It's still at 250 but speculation is that it will go to 300," the source added.

JPMorgan and GE Capital are joint lead arrangers and joint bookrunners on the deal, with JPMorgan the left lead. GE is also acting as syndication agent and Credit Suisse First Boston as documentation agent.

Proceeds will be used to support Spiegel Inc.'s plan of reorganization upon exiting from Chapter 11 bankruptcy protection. Following emergence, Spiegel will establish Eddie Bauer Holdings as the new parent company.

Eddie Bauer has already gotten a $150 million working capital asset-based revolving credit facility as part of its exit financing package. This revolver is being provided by existing debtor-in-possession lenders and is already a done deal. Essentially the company's DIP is being converted into the new revolver.

Eddie Bauer is a Redmond, Wash., provider of casual wear clothing, accessories and home furnishings.

URS price talk surfaces

Pricing on URS Corp.'s $650 million credit facility surfaced with both the $300 million six-year revolver and a $350 million six-year term loan talked at Libor plus 125 basis points, according to a syndicate document. The revolver contains a commitment fee of 25 basis points.

Credit Suisse First Boston and Wells Fargo are joint lead arrangers on the deal that launched via a bank meeting Wednesday.

Proceeds will be used to repay amounts outstanding under the existing $675 million credit facility and, thereafter, borrowings may be used for working capital and general corporate purposes.

URS also began a tender offer on Wednesday for its $130 million 11½% senior notes due 2009.

This tender offer will be funded with proceeds from a proposed public offering of 3.69 million shares of common stock, together with available cash and borrowings under the new credit facility, if necessary.

The credit facility is expected to close around July 1.

URS is a San Francisco-based engineering design services firm.

William Carter sets launch

The William Carter Co. has scheduled a bank meeting for Tuesday to launch its proposed $625 million credit facility, according to a syndicate document. The deal was already known to be launching next week, but a specific day was unavailable.

Banc of America Securities LLC and Credit Suisse First Boston are the lead banks on the deal.

The facility consists of a $500 million seven-year term loan and a $125 million six-year revolver, with interest rates on the tranches expected to be anywhere from Libor plus 175 basis points to Libor plus 200 basis points depending on credit ratings. The revolver contains a 50 basis point commitment fee.

Proceeds from the credit facility will be used to fund the acquisition of OshKosh B'Gosh Inc. and refinance existing Carter debt. OshKosh has no debt outstanding.

Currently, Carter has about $50 million outstanding under its existing senior credit facility that will be refinanced through this new deal.

Under the acquisition agreement, Carter will pay $26.00 per share in cash for each share of OshKosh common stock outstanding for total consideration of about $312 million.

The acquisition, which is subject to regulatory review and other terms and conditions, is expected to close in the third quarter.

At closing leverage will be a little over 3x trailing 12 months EBITDA, interest coverage will be over 4x and the debt to capitalization ratio will be around 55%.

Carter is an Atlanta-based marketer of children's apparel for ages newborn to six years. OshKosh is an Oshkosh, Wis.-based marketer of children's apparel and accessories.

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