CACI momentum continues on investor glee over contract clarity

By Sara Rosenberg

New York, July 9 - For the third day in a row, CACI International Inc.'s bank debt continued to climb with the paper now quoted at par ¼ bid, par ½ offered, according to a trader, who placed the bid side higher by about a quarter of a point on the day.

Since Wednesday's open, the bank debt has moved up by a little over a point as investors were pleased by Wednesday's news that the General Services Administration decided not to bar or suspend the company from contracts. CACI has been under investigation due to allegations of improper employee behavior toward prisoners in Iraq.

And, as was previously reported, some feel that the paper still has room to grow with the expectation being that it will trade back up to 101 now that uncertainty regarding government contracts has been cleared up.

CACI is an Arlington, Va., provider of IT and network solutions.

Revlon slides again

Revlon Consumers Products Corp.'s term loan continued to take a breather on Friday with quotes moving lower by about an eighth to a quarter of a point ending up at approximately 102¾ bid, 103 offered, according to market sources.

The deal busted its way into the market late Wednesday only to be meet with a scurry of activity that pushed the paper higher from its 102 1/8 bid level at break all the way to 103 5/8 bid in under 30 minutes before settling down at 103½ bid in the evening.

Since the first day of trading, however, the term loan has been slowly creeping back down with it ending the day on Thursday quoted around 102 7/8 to 103 bid, 103¼ offered, depending on which market source was asked.

"Once you see a few more trades taking place then you'll see a bunch of dealers jump all over it again," a market source said, adding that once the interest perks up again, prices may move back to their highs.

The six-year term loan (B3/B-) is sized at $800 million, is priced with an interest rate of Libor plus 600 basis points and contains call protection of 105 in year one, 103 in year two and 101 in year three.

Initially the term loan was launched as a $750 million tranche with price talk of Libor plus 600 to 625 basis points and call protection of 105 in year one, 103 in year two, 102 in year three and 101 in year four.

However, the term loan came at the low end of talk, call protection was modified and the size was increased in response to overwhelming demand that led to oversubscription of the tranche almost immediately after launch.

There is only one financial covenant under the term loan and that is a maximum senior secured leverage test, which is set at 51/2x at December 2004 and gradually reduces to 41/2x at the beginning of the first quarter of 2007.

The facility, which actually closed on Friday, according to a company news release, also contains a $160 million five-year asset-based revolving credit facility, which was left unchanged in size and pricing since launch, with an interest rate of Libor plus 250 basis points and an undrawn commitment fee of 50 basis points.

Proceeds from the term loan were used to pay in full the existing credit agreement in the amount of about $292 million and to repurchase about $298 million principal amount of the 12% senior secured notes in the initial settlement of a tender offer. An additional approximately $74 million of the proceeds were deposited into a collateral account that will be used to repurchase the remaining 12% notes that are tendered prior to the July 21 expiration and, if necessary, to redeem any notes remaining outstanding after the expiration. About $95 million of the proceeds were used to cover tender costs, accrued interest and transactional fees and expenses, including fees and expenses for the company's successful debt-for-equity exchanges consummated in March 2004, the release said.

The revolver was undrawn at closing.

On a March 2004 last-12-months basis, total debt to EBIDTA is about 7.8x.

Citigroup was the lead bank on the credit facility.

Revlon is a New York manufacturer and seller of cosmetics and skin care, fragrance and personal care products.

MedCath closes

MedCath Corp. closed on its new $200 million credit facility (B2/B+), according to a company news release. Wachovia and Bank of America were the lead banks on the deal.

The facility consists of a $100 million five-year term loan B with an interest rate of Libor plus 300 basis points, after reverse flexing from original pricing of Libor plus 350 basis points during syndication, and a $100 million five-year revolver with an interest rate of Libor plus 300 basis points.

Proceeds from the new credit facility, along with proceeds from a $150 million senior notes offering and cash on hand, were used by the Charlotte, N.C., healthcare provider to repay outstanding debt.

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