EaglePicher's new deal sees strong interest ahead of launch in paper hungry market

By Sara Rosenberg

New York, July 16 - EaglePicher Inc.'s $275 million credit facility, which is slated to launch Thursday, has already seen very strong investor interest in the short amount of time since the deal was first posted on Tuesday night, according to a syndicate source.

"The company has been around for a while. The market is really hot now. It's pretty brisk. There's appetite for it. Not surprising given the market and the pricing. We're happy with it," the syndicate source said.

The facility consists of a $125 million five-year revolver with an interest rate of Libor plus 350 basis points and a $150 million six-year term loan B with an interest rate of Libor plus 400 basis points, the source said.

ABN Amro is the lead arranger on the deal, with UBS participating in the deal as well.

The new facility would replace the company's existing credit facility, which consists of an original term loan of $75 million, as amended, and a $220 million revolver.

In addition to the credit facility, the company is also planning $220 million of high-yield bonds to take out existing senior subordinated debt due in 2008.

"They're basically pushing maturities out," the source added.

Senior leverage is 1.9 times and total leverage is four times.

Ratings for the credit facility are expected at B2 from Moody's Investors Service and B+ from Standard & Poor's.

EaglePicher is a Phoenix manufacturer and marketer of products for space, defense, automotive, filtration, pharmaceutical, environmental and commercial applications.

Market talk is that Rockwood Specialties Group Inc.'s $335 million seven-year term loan B may be reverse flexed to Libor plus 350 basis points from Libor plus 375 basis points, according to a market professional.

The $100 million six-year revolver and the $100 million six-year term loan A are expected to remain at Libor plus 350 basis points, the source added.

JPMorgan, Merrill Lynch and Goldman Sachs are leading the facility.

The Princeton, N.J. chemical company is seeking this new credit facility as part of a recapitalization plan that also includes the issuance of $375 million senior subordinated notes due 2011 and a $25 million equity infusion from Kohlberg Kravis Roberts & Co. This new capital structure of bank debt, bonds and equity will replace the existing capital structure, which consists of only bank and bond debt.

The company is currently working on a recapitalization since the present market environment is receptive to high yield deals, which will give Rockwood more flexibility and breathing room in terms of covenants.

Closing on both the credit facility and the bond offering is expected to occur around July 23.

With talk that Rockwood may flex, expectations have increased that a deal like Oriental Trading Co. Inc. will see lower rates.

"Rockwood operates in a difficult sector. Specialty chemicals is a very cyclical business. Some people wouldn't even touch it if it were 500 over. If it saw that much demand then Oriental Trading, which created this nice little niche market, has to flex down, probably to 300 over," the professional explained.

Oriental Trading's credit facility has been expected to reverse flex since day one based on the overwhelming demand the deal received. In fact, the $250 million six-year term loan B was oversubscribed before the bank meeting and the $40 million six-year revolver was pretty much spoken for by the lead arrangers and a few other banks.

The term loan B is currently talked at Libor plus 350 basis points and the revolver is talked at Libor plus 300 basis points.

Credit Suisse First Boston and BNP Paribas are leading the deal.

The Omaha, Neb. direct marketer of novelties and toys is obtaining the facility as part of a recapitalization effort.

TransDigm Holding Co.'s credit facility was restructured, lowering the overall size and reducing interest rates, while the company's bond offering that priced Tuesday was increased in size by $100 million, according to market sources.

The facility (B1/B+) now consists of a $295 million seven-year term loan B with an interest rate of Libor plus 300 basis points and a step-down to Libor plus 275 basis points under certain conditions, and an $80 million six-year revolver.

Previously, the facility was expected to consist of a $360 million seven-year term loan B talked at Libor plus 375 basis points and an $80 million revolver talked at Libor plus 350 basis points.

The revolver is now expected to be undrawn at closing as opposed to having $35 million drawn, sources added.

Credit Suisse First Boston and Bank of America are the lead arrangers, and GECC and UBS are co-documentation agents on the deal.

Proceeds will be used to help fund the leveraged buyout of TransDigm by an affiliate of Warburg Pincus and senior members of management from Odyssey Investment Partners LLC

TransDigm is a Richmond Heights, Ohio supplier of proprietary aerospace components.

Wabash National Corp.'s previously announced deal is probably going to launch in the beginning of August, a syndicate source revealed on Wednesday. Fleet Capital has been selected to lead and fully underwrite the proposed $250 million credit facility, which will consist of a three-year asset based revolver and term loan.

"We don't know what the details are at this stage of the game. This is something that came about very quickly. We're still working on final terms. Pricing, tranching is to be determined," the syndicate source added.

The new facility, which is subject to Fleet Bank credit approval and Wabash board approval, will be used to replace existing indebtedness.

Closing on the Lafayette, Ind. truck trailer and intermodal equipment company's loan is expected to occur during the third quarter.

As for the secondary, Charter Communications Inc.'s bank debt continued to soften on Wednesday in a relatively quiet market with the term loan B trading at 941/2, off a point from the previous trading level.

"It was 941/2, 95¼ then it traded at 941/2," a trader said. "They're talking about downgrading them. S&P is talking about cutting them," the trader said in explanation of the lower levels. Other reasons given for the softening were possible investor caution and the lack of retail bids forcing sellers to meet Street levels.

On Tuesday, the term loan B traded around 951/2, marginally down from 95½ bid, 96¼ offered on Monday.

On Thursday, Standard & Poor's downgraded Charter Communications Inc.'s corporate credit rating to CC from CCC+ and convertibles bonds to C from CCC-. The ratings remain on CreditWatch negative.

S&P left unchanged Charter Communications Holdings LLC's senior unsecured debt at CCC-, CC VI Operating Co. LLC's senior secured debt at CCC+, CC VIII Operating LLC's senior secured debt at B-, Charter Communications Operating LLC's senior secured debt at B, Renaissance Media Capital Corp.'s senior unsecured debt at CCC- and Avalon Cable Holdings LLC's senior unsecured debt at CCC- and continued the CreditWatch negative.

The St. Louis cable company's bank paper moved to the 95½ bid, 96¼ offered level last Friday, up about a point in response to the company's announcement that it will attempt to access the capital markets to sell approximately $1.7 billion principal amount of new senior notes.

Proceeds will be used to repay up to approximately $500 million of indebtedness under one or more of the company's subsidiaries' credit facilities and to fund the cash tender offers for a portion of the company's convertible senior notes and a portion of Charter Communications Holdings, LLC's senior notes and senior discount notes. The tender offers are intended to reduce Charter's consolidated debt and extend the maturities of its outstanding indebtedness.

In follow-up news, DaVita Inc. completed the amendment of its senior credit facility, which included adding new lenders, lowering interest rates and increasing outstanding borrowings by $200 million. Credit Suisse First Boston was the lead bank on the deal.

The interest rate on the existing term loan B and the new $200 million term loan C was changed to Libor plus 250 basis points, with further reductions to Libor plus 225 basis points under certain circumstances. Previously, the existing term loan B carried an interest rate of Libor plus 300 basis points.

The interest rates and outstanding borrowings of the term loan A and revolver remain unchanged, with the tranches bearing interest at Libor plus 225 basis points. As of July 16, there was $149 million outstanding.

Furthermore, under the amendment, certain covenants were modified and the weighted average maturity of the senior credit facilities was extended to 4.9 years from 4.4 years.

Proceeds from the $200 million term loan C will be used by the Torrance, Calif. dialysis services company to partially redeem its 7% convertible subordinated notes due 2009.

DaVita obtained the $1.115 billion credit facility in March 2002, which originally consisted of a $150 million term loan A, a $115 million revolver and an $850 million term loan B.

Calpine Corp. closed on its latest transactions that included a $750 million second-priority term loan with an interest rate of Libor plus 575 basis points, a $500 million first-priority senior secured credit facility and $2.55 billion of second-priority senior secured notes.

The $750 million second-priority term loan and the $2.55 billion notes offering were led Goldman Sachs. Proceeds will be used to repay existing indebtedness, including approximately $950 million outstanding under the company's term loan, which was to mature in May 2004, borrowings outstanding under the company's working capital revolvers and outstanding public indebtedness. To date, the company has purchased approximately $708 million face value of outstanding senior notes at a cost of approximately $608 million using net proceeds from the offering.

The new $500 million first-priority senior secured credit facility consists of a $300 million working capital revolver due July 15, 2005 with an interest rate of Libor plus 400 basis points and a $200 million four-year term loan with an interest rate of Libor plus 350 basis points.

The Bank of Nova Scotia is the administrative agent and was a lead arranger for the first-priority facility.

Initially, the San Jose, Calif. power company plans to use approximately $225 million of the revolver to replace existing letters of credit. Approximately $130 million of proceeds from the term loan will be used to cash collateralize existing letters of credit, with the balance being used for general corporate purposes.

"This financing, combined with our recently completed $3.3 billion offering of term loan and second-priority secured notes, further demonstrates the value of Calpine's power generation and natural gas assets and the strength of our business model," stated Bob Kelly, chief financial officer, in a news release. "We are encouraged by the market's favorable response to our refinancings and appreciate the support and commitment of our bank group, led by The Bank of Nova Scotia. Calpine continues to advance our 2003 finance program, with several additional financing opportunities under way."

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