Targus holds bank meeting; Delphi DIP firms at wide end; Refco holds in while Kodak, Primedia ease

By Paul A. Harris

St. Louis, Oct. 25 - A quiet session in the bank loan market saw Targus Group International Inc. hold a bank meeting for its $205 million credit facility.

Elsewhere sources said that Delphi Corp.'s $2 billion DIP facility was firming at the wide end of the Libor plus 250 to 275 basis points price talk.

And despite the news that J.C. Flowers & Co. withdrew its bid for part of Refco, Inc.'s operations, the loan paper held in, while the recently priced bank debt of Eastman Kodak Co. and Primedia Inc. slipped.

Cautious move forward

A buy-side source told Prospect News on Tuesday that the theme of the week in the bank loan market is: "A cautious move forward.

"Spreads are not tightening," the investor said. "They are kind of holding in there unchanged."

The buy-sider also said that marketing periods for first-time issuers and off-the-run names have lately become extended.

"Deals are not getting oversubscribed in two days," the source said, adding that it is not unusual to hear that a book takes two weeks to fill.

As examples, the investor pointed to Sorenson Communications' $585 million credit facility, and Eastman Kodak Co.'s $2.7 billion senior secured bank facility, the latter of which the source described as having taken a long time from start to finish.

The exceptions, said the investor, include such deals as Alpha Natural Resources' $500 million facility and Isle of Capri Black Hawk's $225 million facility, both of which were "blowouts."

"With marketing periods stretching out the next thing to look for is coupons widening out," the investor commented.

Later in the session a trader more or less concurred with that color, adding that anything that has come at a spread of less than 200 basis points to Libor "has definitely weakened."

Bank meeting for Targus

An informed source told Prospect News that the bank meeting was held Tuesday for Targus Group's $205 million credit facility via Goldman Sachs and UBS.

The LBO deal from the Anaheim, Calif., supplier of mobile computing cases and accessories is comprised of a $40 million revolver and a $165 million term loan.

Meanwhile the company's junk bond deal is shaping up as a $150 million offering of eight-year senior subordinated notes (B3/CCC+) expected to launch in the next two weeks, with the same banks in the lead.

Delphi DIP at wide end of initial talk

Elsewhere in the primary market, sources told Prospect News that bankrupt Delphi Corp.'s $2 billion debtor-in-possession financing facility was firming at 275 basis points, the wide end of the initial 250 to 275 basis points price talk.

JP Morgan and Citigroup are leading the Troy, Mich., parts-maker's deal, which is comprised of a $1.75 billion revolver and a $250 million term loan.

A buy-side source commented that the loan is primarily a revolving credit, and revolvers are just not as price efficient.

Refco holds in

A trader said that during Tuesday's quiet secondary market session Refco remained the focus of the market.

The trader said that in the wake of J.C. Flowers & Co. withdrawing its $768 million bid for the company, a consortium of investors lead by Merrill Lynch has apparently drawn a bead on the futures brokerage division of Refco, which is embroiled in a financial scandal.

The trader said that the Refco bank debt remains in the mid-90s.

Another trader said that Refco paper was flat on the day.

Kodak, Primedia ease

A trader saw recently priced bank debt of above-mentioned Kodak and Primedia ease on Tuesday.

Although deals continue to break above par, the trader commented, both companies' paper was seen to weaken on recent news.

Kodak continues to smart from Standard & Poor's downgrade of the company's corporate credit and secured bank loan ratings to B+ from BB-, last week, the trader said, spotting Kodak's term loan B hovering around par.

"That syndication was heavy to begin with," the source added.

Primedia's $400 million term loan, meanwhile, slipped on news that the company will split its enthusiast magazines and consumer guides businesses into two separate publicly traded entities, and that Kelly Conlin, Primedia's chief executive officer for the past two years, has left the company.

"Nobody really knows what they are going to do with the proceeds, so that kind of dropped it to par," the trader said.

"There are no real bids on it."

Cablevision pulls financing

The Dolan Family has withdrawn its proposal to take Cablevision private, canceling its proposed $4.25 billion bond deal at the holding company level and its $2.8 billion credit facility at the operating company level.

In a Monday letter to the Cablevision board of directors, Charles and James Dolan recommended that the board declare a $3 billion special dividend in cash payable pro rata to all shareholders.

The Dolans stated that, "despite good faith negotiations over the past four months, it has become clear that we will be unable to reach agreement with the Special Transaction Committee on the terms of our proposal."

The Dolans also noted that during this period there has been a decline in communications sector valuations and an increased competitive environment.

Bank of America and Merrill Lynch had been leading the bank financing for the Bethpage, N.Y.-based telecom and cable business.

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