Wrigley tightens OID, adds call protection; Bellisio floats talk; Calpine rises with earnings

By Sara Rosenberg

New York, Aug. 11 - Wrigley Co. reduced the original issue discount on its term loan B and added soft call protection to the tranche, and Bellisio Foods Inc. started circulating price talk on its first-lien credit facility debt as the deal is getting ready to launch on Tuesday.

Over in the secondary market, Calpine Corp.'s term loan headed higher after the company released financial results that were viewed favorably by the market.

Wrigley lowered the original issue discount on its well oversubscribed $3.6 billion term loan B on Monday - a move that has been expected by lenders for quite some time now based on how strong a reception the loan received - and soft call protection was added to the loan as well, according to a market source.

The term loan B is now being sold to investors at an original issue discount of 99, reduced from initial talk of 97, and there is now 101 soft call protection for one year, the source said.

The spread on the term loan B is Libor plus 350 basis points and there is a 3% Libor floor. Just this past Friday, the spread was reverse flexed from initial talk of Libor plus 375 bps.

Recommitments were due from lenders on Monday and allocations are expected to go out later this week, a second source added.

Initially, based on filings with the Securities and Exchange Commission, it was thought that the B loan would be sized at $4.45 billion, but it was reduced prior to launch to account for a bond issue being left in place.

And, back in May, when the structure on the deal first emerged, sources heard rumors that the term loan B was expected around the Libor plus 400 bps context, but nothing official had been announced at that time.

Wrigley's $4.85 billion credit facility also includes a $250 million revolver and a $1 billion term loan A, with both of these tranches priced in line with original talk at Libor plus 325 bps.

Goldman Sachs is the lead arranger on the deal, and Barclays, GE Capital, Rabobank and Sumitomo have signed on as co-arrangers.

Proceeds will be used to help fund the merger of Wm. Wrigley Jr. Co. and Mars Inc., and to provide for ongoing working capital and general corporate purposes.

Mars will pay $80 cash for each share of Wrigley common stock and class B common stock in a transaction valued at about $23 billion.

As part of the merger, Mars received a separate debt commitment from JPMorgan, Bank of America, BNP Paribas, Citigroup, Deutsche Bank, Lloyds TSB Bank and RBS Securities that provides for a $12 billion senior unsecured credit facility consisting of a $1.5 billion revolver, an $8.5 billion term loan and a $2 billion bridge loan, according to SEC filings. This facility is expected to be investment grade.

Proceeds from the Mars facility will be used to finance the $11.6 billion equity contribution from Mars, the repayment or refinancing of certain Mars debt and for general corporate purposes.

Also, Berkshire Hathaway has agreed to provide $4.4 billion in subordinated debt financing to the surviving corporation in the merger and to invest $2.1 billion in equity securities.

A special meeting for Wrigley's stockholders to vote on the merger agreement is scheduled for Sept. 25.

Regulatory approvals for the transaction have already been received from the European Commission, and from U.S., Canadian and Australian regulators.

Mars and Wrigley are hoping to complete the merger as quickly as possible following receipt of stockholder approval.

Confections company Wrigley Co. will be operated as a separate, stand-alone subsidiary of Mars, keeping its headquarters in Chicago. Mars is a McLean Va.-based producer of confectionery, food and petcare products.

Bellisio price talk emerges

Bellisio Foods revealed price talk on the first-lien debt under its proposed credit facility in preparation for the Tuesday bank meeting that will kick off syndication on the deal, according to a market source.

The $30 million revolver is being talked at Libor plus 425 basis points and the $130 million first-lien term loan is being talked at Libor plus 450 bps, the source said.

Both the revolver and the first-lien term loan are going to be offered to investors at an original issue discount of 99, the source continued.

There is no Libor floor on the deal.

Bellisio Foods' $195 million credit facility also includes a $35 million second-lien term loan, with price talk on this tranche currently unavailable.

GE Capital and NatCity are the lead banks on the deal that will be used to refinance existing debt.

Bellisio Foods is a Minneapolis-based frozen food manufacturer.

Calpine up on numbers

Moving to trading news, Calpine's term loan gained some ground on Monday after the company posted "pretty good" earnings for the second quarter and the first half of this year, according to a trader.

The term loan was quoted at 92¾ bid, 93¼ offered, up from Friday's levels of 92¼ bid, 92¾ offered, the trader said.

For the second quarter, the company reported net income of $197 million, or $0.41 per share, compared to a net loss of $500 million, or $1.04 per share, in the same period last year.

Operating revenues for the quarter were $2.828 billion, up 37% from $2.06 billion in 2007 primarily as a result of an increase in the company's average realized electric price.

Consolidated commodity margin for the quarter was $785 million, up 47% from $535 million in the 2007 second quarter.

And, Adjusted EBITDA for the quarter was $474 million, up 45% from $326 million in the prior year period.

"I am encouraged by our ability to demonstrate continued progress during the second quarter, as we remain focused on excellence in our core operations," said Zamir Rauf, interim chief financial officer, in a news release.

"For the second quarter in a row, we have delivered considerable improvements in commodity margin and adjusted EBITDA over the prior-year period. I am confident that the Calpine team will continue to deliver clean and reliable energy to our customers over the course of 2008, while at the same time delivering value to our shareholders," Rauf added in the release.

For the six months ended June 30, the company had a net loss of $17 million, or $0.04 per share, compared to a net loss of $959 million, or $2.00 per share, in the comparable period in 2007.

Operating revenues for the six months were $4.779 billion, up 28% from $3.722 billion last year.

Consolidated commodity margin for the six-month period was $1.271 billion, up 33% from $957 million in the first six months of 2007.

And, adjusted EBITDA for the six months was $768 million, up 33% from $576 million in the same period last year.

Also on Monday, Calpine announced that it has appointed Jack A. Fusco as president and chief executive officer.

Fusco replaces Robert P. May, who served as the company's chief executive officer since December 2005 and earlier this year announced his intention to retire when his successor was in place.

Calpine is a San Jose, Calif.-based power company.

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