Caribbean Restaurants' $260 million credit facility pulled from primary on buyout news

By Sara Rosenberg

New York, May 3 - Caribbean Restaurants LLC's proposed $260 million credit facility, which launched in March and has already been seen trading in the secondary, is being pulled from the market now that the company announced that it will be acquired by Castle Harlan Inc. from Oak Hill Capital Partners for $340 million, according to a market source.

"The deal had never closed so it just goes away," the source said about the $260 million credit facility.

"All trades unwind if the deal never happens," the source added regarding what would happen in terms of the secondary bank loan market.

The $260 million credit facility consisted of a $150 million five-year term loan (B2/B+) with an interest rate of Libor plus 300 basis points, an $80 million six-year second lien term loan (B3/B-) with an interest rate of Libor plus 650 basis points and a $30 million five-year revolver (B2/B+) with an interest rate of Libor plus 300 basis points and a commitment fee of 50 basis points.

Originally at launch, the deal was comprised of a $125 million term loan with an interest rate of Libor plus 300 basis points, a $107 million second lien term loan with an interest rate of Libor plus 500 basis points and a $30 million revolver with an interest rate of Libor plus 300 basis points. However, during syndication the deal was revised to increase the term loan size, decrease the second lien term loan size and increase pricing on the second lien term loan.

Proceeds were supposed to be used for a dividend recapitalization.

Credit Suisse First Boston and Wachovia were the joint lead arrangers and bookrunners on the deal, with CSFB acting as administrative agent and Wachovia acting as syndication agent.

As to whether these banks will be leading a new deal for the company as part of the LBO, that "remains to be seen," the market source said. "The answer is probably yes but I don't have any details to share."

Under the acquisition agreement, current management of Caribbean Restaurants, an operator of Burger Kings in Puerto Rico, would remain in place and would continue to hold an equity stake in the company.

"Caribbean Restaurants is a stellar performer that has been able to deliver strong cash flows even during economic downturns," said David Pittaway, senior managing director at Castle Harlan, in a company news release announcing the acquisition. "The company has a seasoned and highly effective management team, including founder and CEO Luis Arenas, and substantial growth potential."

Regal to break

Regal Cinemas Corp.'s $1.75 billion credit facility (Ba3/BB-) is expected to break for trading either late afternoon on Tuesday or on Wednesday, according to a trader. Previously, some market participants had expected the deal to break on Monday afternoon.

The facility consists of a $1.65 billion 61/2-year term loan B with an interest rate of Libor plus 275 basis points and a $100 million five-year revolver with an interest rate of Libor plus 275 basis points.

The term loan B was upsized by $400 million during syndication since the company opted to cancel its proposed $400 million subordinated notes offering on strong interest from the institutional loan market.

Credit Suisse First Boston is the sole lead arranger and bookrunner on the deal.

Proceeds from the credit facility will be used to refinance existing debt and to fund the tender offer and consent solicitation for all of the company's $350 million aggregate principal amount of 9 3/8% senior subordinated notes due 2012. In addition about $930 million of the proceeds, together with available cash, will be distributed to parent company Regal Entertainment Group, which plans to use about $710 million to pay an extraordinary dividend of about $5.00 per share to its holders of class A and class B common stock, with the balance set aside for general corporate purposes, including potential acquisitions.

Regal Entertainment Group is a Centennial, Colo., theaters circuit.

Holmes size shifts

The Holmes Group Inc. restructured its credit facility, increasing the first lien term loan (B1/B) to $250 million from $240 million, increasing the five-year revolver (B1/B) to $90 million from $75 million and decreasing the seven-year second lien term loan (B3/CCC+) to $85 million from $105 million. With these tranche changes, the company has increased its overall credit facility size to $425 million from $420 million.

The deal launched with the revolver priced with an interest rate of Libor plus 325 basis points and a 50 basis points commitment fee, the first lien term loan priced with an interest rate of Libor plus 325 basis points and the second lien term loan priced with an interest rate of Libor plus 700 basis points.

Last week, there was talk that the second lien term loan would flex up to Libor plus 750 basis points with an upfront fee of 50 basis points added since the tranche was said to be syndicating pretty slowly. By comparison, the first lien term loan was said to have more than $400 million in commitments on the books.

General Electric Capital Corp. and Credit Suisse First Boston are joint lead arrangers and bookrunners on the deal, with GECC acting as administrative agent and CSFB acting as syndication agent.

Proceeds will be used to refinance the company's existing bank debt and fund a tender offer for its $100.1 million principal amount of 9 7/8% senior subordinated notes due 2007. The tender offer, which was set to expire on April 27 and was then extended to May 4, has now been extended to May 5.

The Milford, Mass., consumer products company previously said it is refinancing its debt to take advantage of "current market opportunities" ahead of the expiration of its existing credit facility starting in January 2005.

Capital Environmental closes

Capital Environmental Resource Inc., through its wholly owned subsidiary Waste Services Inc., closed on its $160 million credit facility (B1/B+) consisting of a $100 million term loan with an interest rate of Libor plus 325 basis points and a $60 million revolver with an interest rate of Libor plus 325 basis points.

Lehman Brothers was the lead bank on the deal, which was primarily syndicated to banks.

Proceeds from the term loan, a $160 million 9½% senior subordinated notes offering and a private placement of 13.4 million shares of common stock with 1.34 million warrants raising $53.6 million, are being used to repay the company's existing senior credit facility, to complete the previously announced acquisition of Florida Recycling Services and to finance the purchase of the remaining assets of Allied Waste in Northern and Central Florida that are subject to final consent, according to a company news release.

The Burlington, Ont., solid waste services company's revolver was undrawn at closing.

"We are pleased to complete the acquisition of Florida Recycling Services as it will greatly expand our collection operations in Central Florida and provide significant new internalized waste volumes into our JED Landfill. The financings that have been completed provide the company with a new capital structure with significantly more flexibility and liquidity to continue to pursue our growth plans," said David Sutherland-Yoest, chairman and chief executive officer, in the release.

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