Accuride, Del Lab, Wyle Lab and Intelsat all met with interest; Koch reworks amendment; SFBC breaks

By Sara Rosenberg

New York, Jan. 6 - On a relatively busy day for the primary, deals' appear to be catching investor interest - including Accuride Corp., which has already gotten some early commitments, Del Laboratories Inc., which was well attended and got positive feedback, Wyle Laboratories Inc., whose business and price talk seemed to impress and Intelsat Ltd., whose small amount of bank debt compared to overall debt leaves investors feeling well protected.

In other loan news, Koch Cellulose LLC revised its amendment proposal, removing the change to the restricted payment covenant, making it more like a straightforward repricing. And, SFBC International Inc. broke for trading.

Accuride's Thursday bank meeting was said by a market source to have gone "fantastically" with good attendance and overall enthusiasm over the company's proposed acquisition of Transportation Technologies Industries Inc.

"It's a good fit," the source said about the acquisition. It has "a lot of the same customers but different lines of business. [There are] a lot of synergies in terms of sales and marketing and [the] amount of business they can offer customers."

Accuride is an Evansville, Ind., manufacturer and supplier of wheels for heavy/medium trucks and trailers. And, Transportation Technologies is a Chicago manufacturer of truck components for the heavy and medium-duty trucking industry.

The $740 million credit facility consists of a $125 million five-year revolver with price talk of Libor plus 250 basis points and a $615 million seven-year term loan B with price talk of Libor plus 250 basis points.

The term loan B is being offered at par. Upfront fees on the revolver are 150 basis points for a $30 million commitment and 125 basis points for a $15 million commitment.

Commitments are due by Jan. 21.

Citigroup Global Markets Inc. and Lehman Brothers Inc. are joint lead arrangers on the deal, with Citigroup the left lead, and UBS Securities LLC is documentation agent.

Proceeds from the facility will be used to refinance both Accuride's and Transportation Technologies' senior bank debt and Transportation Technologies' subordinated debt.

Upon completion of the merger, which is expected to occur this month, Accuride stockholders will own 65% of the common stock of the combined entity while Transportation Technologies' stockholders will own 35% of the common stock.

Del Labs well attended

Del Laboratories' newly launched $260 million senior secured credit facility is off to a good start as the Thursday morning bank meeting saw "surprisingly great attendance" - surprising only because a handful of other deals launched on the same day and the rainy New York weather could have potentially deterred attendance - and investors seemed pleased with the company's strong attributes, a market source told Prospect News.

"Seventy five percent of their sales come from products they have number one market shares. They're a pretty low cost producer. [They have] steady margins. And, their management team has been doing this for a long time," the source said, pointing out that all these factors combined should cause the deal to go well.

By mid-afternoon, there were no early commitments in from investors, other than those from the lead banks. However, this seems to have been a result of the bank book being posted Thursday morning leaving investors little to no time to go through it prior to launch, rather than a reflection of interest, the source explained.

The facility consists of a $210 million 61/2-year term loan B with price talk of Libor plus 275 basis points and a $50 million six-year revolver with price talk of Libor plus 250 basis points. Pricing on the revolver is determined by a leverage-based grid.

The term loan is being offered to investors at par, and the revolver is paying an upfront fee of 75 basis points for $7.5 million commitments.

A commitment deadline has been set for Jan. 14.

JPMorgan and Bear Stearns are joint lead arrangers and joint bookrunners on the deal. JPMorgan Chase Bank is administrative agent, Bear Stearns Corporate Lending Inc. is syndication agent and Deutsche Bank is documentation agent.

Proceeds from the term loan will be used to help fund the acquisition of Del Laboratories by DLI Holding Corp., a company owned by affiliates of Kelso & Co., in a cash transaction valued at $385 million and a total transaction value of about $465 million, including the assumption of about $80 million of debt.

The company will also use proceeds from a $150 million senior subordinated unsecured notes offering and equity to finance the transaction.

Originally, Church & Dwight Co. Inc. was expected to participate in the acquisition of Del. However, in December, Church & Dwight pulled out of the deal and Kelso agreed to contribute an additional $30 million to DLI to replace the equity contribution previously committed by Church & Dwight.

Proceeds from the revolver will be used to fund continuing operations and other general corporate purposes.

Del Laboratories is a Uniondale, N.Y., manufacturer, marketer and distributor of cosmetics and proprietary over-the-counter pharmaceuticals.

Wyle price talk attractive

Wyle Laboratories' $180 million credit facility, which also launched Thursday, is expected to go well as investors seem pleased with the price talk on the $100 million first-lien six-year term loan B (B+) compared to leverage and the overall business.

"Nice 3¼ spread on the first lien. Leverage is 3x through the first lien. Not all that bad so it should go fine," a fund manager said.

"The business seems pretty solid. [It has] got similar business to Titan and CACI. The business they are acquiring [the Aeronautics Services business of General Dynamics Advanced Information Systems Inc.] used to be part of Veridian and I think some of the guys that are looking at this used to lend to Veridian so they probably have a comfort level with it. They know how the business works and how the contracts work. General Dynamics is only selling it because of a conflict of interest with another business they own.

"It sounded like there were plenty of questions from the audience. As long as you get questions and people are interested, I think that's a good sign," the fund manager added.

In addition to the term loan B, Wyle's facility also contains a $30 million five-year revolver talked at Libor plus 325 basis points (B+) and a $50 million 61/2-year second-lien term loan talked at Libor plus 650 basis points (B-).

Both the first- and the second-lien term loans are being offered to investors at par.

Wachovia and Credit Suisse First Boston are the lead banks on the deal.

Wyle Laboratories is an El Segundo, Calif., provider of testing, research and engineering services to commercial, industrial and government customers.

Intelsat should blow out

Intelsat's $350 million term 61/2-year term loan B talked at Libor plus 225 basis points is expected to be "an absolute blow out shortly" as investors are pleased with the business, the free cash flow dynamics, and most importantly, the amount of senior secured debt in the capital structure, according to a market source.

"Commitments were already in before the meeting. There's only $350 million of funded bank debt. Senior secured debt to EBITDA is 0.5. The intent was to leave the existing bonds in place and they have a carve out as to how much bank debt the company has. That's why there's $2.55 billion in bonds and only $350 million funded bank debt," the source said.

"There are good speakers on the management team. They did a pretty good job," the source continued.

The fact the company had to delay its bank meeting at the end of November due to a failure in the Americas-7 satellite, which under the terms of the purchase agreement with Zeus Holdings Ltd. - the reason which the debt is being obtained in the first place -allows Zeus to cancel the acquisition, barely came up at the meeting, according to the source.

"It's all about cash flow and that wasn't so significant. There wasn't a lot of concern. Not the thrust of the Q&A at all," the source said.

Intelsat's $650 million credit facility also contains a $300 million six-year revolver talked at Libor plus 200 basis points, with a 37.5 basis point commitment fee.

The term loan is being offered at par, and a revolver commitment of $15 million gets 125 basis points.

Commitments are due Jan. 19.

Deutsche Bank, Credit Suisse First Boston and Lehman Brothers are the lead banks on the credit facility, with Deutsche listed on the left.

Zeus, a company formed by a consortium of funds advised by Apax Partners, Apollo Management, Madison Dearborn Partners and Permira, originally agreed to acquire Intelsat, a Pembroke, Bermuda-based satellite communications company, in a transaction valued at about $5 billion, including about $2 billion of existing net debt.

Koch revises amendment

Koch Cellulose posted a change to its amendment proposal on Thursday, basically taking away the amendment to the restricted payments, dividend covenant, with the hope being that lenders will now approve the deal.

"Originally, [they wanted] 100% of 2004 excess cash flow could go out to dividends. It was then revised to 75%. Now it's just the existing terms of the credit agreement. They took away that piece of the amendment," a market source said.

So now, the company is basically just looking to lower the pricing grid on its $300 million term loan B and $74 million letter-of-credit facility by 25 basis points across the board - same pricing changes as were initially proposed.

Upon successful completion of the repricing, the term loan B and the letter-of-credit facility would have an initial interest rate of Libor plus 200 basis points, with a step down to Libor plus 175 basis points if leverage falls below 21/2x.

The deal includes 101 soft call protection.

"Point of contention was a combination of everything," the source said. "[But], a majority of the people didn't like the dividend so [they] just took that away and this should get it there."

Consents are due Wednesday.

Citigroup and Deutsche Bank are the lead banks on the deal, with Citigroup the left lead.

Koch Cellulose is a Brunswick, Ga., manufacturer and seller of wood pulp.

SFBC breaks

SFBC International's $160 million senior secured credit facility (B2/B+) freed up for trading, with the $120 million six-year term loan quoted in the 101 area, according to a trader.

The term loan is priced with an interest rate of Libor plus 300 basis points.

The deal, which actually closed in December, also contains a $40 million five-year revolver with an interest rate of Libor plus 275 basis points.

UBS Securities was the sole lead bank on the deal.

Approximately $125 million of the new credit facility was drawn down to help fund the acquisition of PharmaNet Inc., a private international drug development company based in Princeton, N.J., for about $248.6 million in cash.

The company also used about $134 million of cash from its balance sheet to fund the acquisition.

SFBC is a Miami provider of specialized drug development services to pharmaceutical, biotechnology and generic drug companies.

Gate Gourmet active

Gate Gourmet Inc.'s bank debt traded around 97 and ended the day at 96½ bid, 98 offered, with a lot of dealers who were previously uninvolved in the name now quoting the paper, according to a market source. Surprisingly, the paper was pretty much unchanged even though the company's interest payment was due, and although nothing definitive was heard late in the day, lenders were not expecting the payment to be made.

"The group is taking appropriate actions in anticipation of the payments not being made," the source said. "Various things have been discussed. I can't really say anything on it. Nothing has been ruled out but nothing has been finalized."

Just what those options might entail is still unclear, but the company may need to completely amend and restate its credit facility, get an equity infusion, or worst-case scenario, be forced into Chapter 11, a source previously explained.

A call for bank lenders - not held by the company - should take place some time early next week to discuss the situation, the source said, adding that originally the call was expected to occur on Friday but notices have not gone out yet so it probably won't happen until after the weekend.

There was a call for mezzanine lenders earlier this week "but I'm not a part of that group so I don't know what was discussed," the source added.

In December, the company approached lenders asking to defer loan amortization payments due Dec. 31 - although the company technically had until Thursday to make the payment - until April 1, 2005 and waive financial covenants for Dec. 31 due to liquidity concerns. The company had also asked mezzanine lenders to defer interest payments.

However, lenders did not sign off on the waiver, which means if the company did indeed miss the payment deadline then it has defaulted on its credit facility.

Gate Gourmet is a Zurich, Switzerland-based airline catering company.

John Henry closes

Bear Stearns Merchant Banking completed its acquisition of The John Henry Co., according to a company news release.

To help fund the leveraged buyout, John Henry got a new $110 million credit facility consisting of a $25 million six-year revolver with an interest rate of Libor plus 350 basis points, a $70 million six-year term loan A with an interest rate of Libor plus 350 basis points and a $15 million 61/2-year second-lien term loan.

Wachovia was the lead bank on the Lansing, Mich., diversified specialty packaging and printing company's deal.

Rocky Shoes & Boots closes

Rocky Shoes & Boots Inc. closed on $148 million credit facilities from GMAC Commercial Finance LLC and American Capital Strategies Ltd., according to a company news release.

Proceeds were used to fund the acquisition of EJ Footwear Group for $89.5 million in cash and 484,261 shares of Rocky common stock, and replace its existing revolving credit facility.

Rocky Shoes & Boots is a Nelsonville, Ohio, footwear, branded apparel and accessories company.

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