American Safety shuffles tranche sizes, modifies pricing; Emmis past performance entices commitments

By Sara Rosenberg

New York, April 16 - American Safety Razor Co.'s credit facility went through some tranche size shifts and pricing adjustments on Friday. Meanwhile, Emmis Communications Corp.'s launch went well as investors showed their willingness to commit to a known credit that has performed well in the past.

American Safety Razor upsized its seven-year first lien term loan (B2/B) to $160 million from an original size of $150 million. Furthermore, pricing on the tranche was reduced to Libor plus 325 basis points from Libor plus 350 basis points, according to a buyside source.

The 71/2-year second lien term loan (B3/CCC+) was downsized to $40 million from an original size of $50 million, thereby leaving the total size of the credit facility unchanged at $225 million. Furthermore, pricing on the tranche was increased to Libor plus 700 basis points from Libor plus 650 basis points, the source added. There is call protection of 102 in year one and 101 in year two on the second lien tranche.

The $25 million five-year revolver (B2/B) priced with an interest rate of Libor plus 350 basis points, was left unchanged.

The first lien term loan was reported as being basically oversubscribed this past Tuesday as a number of commitments flew into the books after what seemed like a sluggish start when the deal first launched in the beginning of the month. At that time, the second lien term loan was said to be pretty much done as well.

UBS is the lead bank on the deal.

Proceeds will be used to refinance existing debt.

Following completion of the transaction, first lien leverage will be 3.2 times and total leverage will be 4.3 times.

American Safety Razor, a J.W. Childs Associates LP portfolio company, is a Verona, Va., manufacturer of personal care consumer products primarily consisting of shaving razors and blades.

Emmis history appealing

Emmis Communications' newly launched $1 billion deal received "lots of orders" by late Friday as some investors did not take much time to think about participating being that they know the credit and its ability to trade high in the secondary.

The facility consists of a $650 million term loan B with price talk of Libor plus 200 basis points and a $350 million revolver priced with an interest rate of Libor plus 200 basis points.

"Existing was at [Libor plus] 225 and traded at 101 plus," the source explained, adding that not only was the bank debt's previous performance a factor, but the company operates in a "good sector" and the deal itself is rated relatively well at Ba1.

Bank of America, Goldman Sachs, Deutsche Bank and Credit Suisse First Boston are the lead banks on the deal.

Proceeds will be used to refinance the company's existing credit facility.

Emmis is an Indianapolis diversified media company.

NTL sets launch date

NTL Cable is now planning on holding a bank meeting on Thursday for its $250 to $300 million credit facility, according to an informed source. Previously, the deal was slated for the April 19 week but no specific timing had been nailed down.

Although the size of the deal is still fluid, it is believed that the entire piece will be made up of "just a term loan," the source added, which is expected to carry an interest rate in the area of Libor plus 300 basis points.

The term loan is being carved out of the company's newly closed £2.425 billion senior credit facility that consists of a £1.275 billion tranche A loan bearing interest of Libor plus 225 basis points, a £900 million equivalent tranche B loan bearing interest at Libor plus 275 basis points and a £250 million revolver bearing interest at Libor plus 225 basis points.

Credit Suisse First Boston, Goldman Sachs & Co., Deutsche Bank, and Morgan Stanley are the lead banks on the deal.

Proceeds from the credit facility, combined with proceeds from a bond offering, were used to repay in full the existing senior credit facility, most of which had been due 2005, as well as to redeem the outstanding Triangle debentures due 2007 and the Diamond Holdings notes due 2008 in May 2004.

NTL Cable is a New York City-based cable television company.

Adesa structure may firm

No decision had been made on Adesa Inc.' proposed term loan B on Friday, as was previously expected to occur, as one last straggler came in, even though it was a day past the commitment deadline, and the company was still mulling over its options, according to a market source.

It is possible that the $150 million term loan B won't be distributed to institutional investors. The B loan is not expected to disappear from the credit facility structure but rather appears to have been spoken for by a lot of pro rata guys who have already committed to the tranche. However, there may be some slight size shifting.

"Hopefully the decision will be made Monday or Tuesday, confirming the structure, confirming what they'll do to the B and allocating," the source said.

The $350 million of pro rata bank debt that launched via a bank meeting toward the end of March was already oversubscribed by the end of the launch day mostly on strong interest from relationship banks. It was at that time that the company started considering not launching its $150 million term loan B but rather just settling with an all pro rata credit facility.

The $150 million term loan B was not launched at the pro rata bank meeting primarily because institutional tranches are usually launched closer to the bond deal and the bond deal isn't expected to hit the high-yield market until May, a source previously explained.

The pro rata portion of the facility consists of a $150 million five-year revolver with an interest rate of Libor plus 225 basis points and a $200 million five-year term loan A with an interest rate of Libor plus 225 basis points.

Upfront fees on the allocated amount are 62.5 basis points for a $50 million commitment, 50 basis points for a $35 million commitment and 37.5 basis points for a $25 million commitment.

The $150 million six-year term loan B is priced with an interest rate of Libor plus 250 basis points.

UBS and Merrill Lynch are the joint lead arrangers on the deal, with UBS listed on the left.

Security for the credit facility is expected to be a lien on some of the assets.

Proceeds from the loan combined with proceeds from a $150 million senior subordinated notes offering and an initial public offering of Adesa's common stock will be used to help support Adesa's spin-off from Allete Inc.

More specifically, Adesa will replace and repay its existing credit facility, pay a $100 million dividend to Allete, repay $200.2 million of outstanding debt owed to unaffiliated third parties and repay all outstanding intercompany debt owed to Allete and its subsidiaries, which totaled $136.1 million as of Dec. 31, 2003.

The IPO is expected to be completed in the second quarter of 2004. After the IPO, Allete will own at least 80% of the equity of Adesa. The company anticipates completing the subsequent spin-off within four months of the IPO, according to an Allete news release.

Adesa is a Carmel, Ind., operator of used vehicle and auto salvage auctions.

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