Supervalu up with numbers; Tribune X better following call; CDW block sells; Local Insight widens OID

By Sara Rosenberg

New York, April 17 - Supervalu Inc.'s term loan headed higher on Thursday after the company announced record earnings results, Tribune Co.'s term loan X was better on the heels of a conference call, and LCDX 10 continued to strengthen.

In other news, a big block of CDW Corp. term loan B debt was sold by Lehman Brothers, Local Insight Regatta Holdings Inc. increased the original issue discount on its term loan, Kinetic Concepts Inc. came out with price talk and detailed new tranche sizes as it launched its credit facility on Thursday morning, and Consolidated Precision Products made some changes to its credit facility, including increasing pricing and original issue discounts.

Supervalu's term loan gained some ground during market hours on the heels of the release of fourth quarter and full year fiscal 2008 financials, according to traders.

One trader had the term loan quoted at 98 bid, 99 offered, up from 97½ bid, 98¼ offered on Wednesday, while a second trader had the term loan quoted at 98 bid, 98 5/8 offered, up from 97¾ bid, 98½ offered on Wednesday.

For the fourth quarter, the company reported net sales of $10.4 billion, compared to $10.3 billion last year, net earnings of $156 million, up 30% versus $120 million last year, and diluted earnings per share of $0.73, an increase of 28% compared to $0.57 last year.

Fourth quarter fiscal 2008 results included after-tax charges for one-time acquisition-related costs of $9 million and fourth-quarter fiscal 2007 results included after-tax charges for one-time acquisition-related costs of $11 million.

Fourth quarter diluted earnings per share increased 5% to $0.77 from $0.73 last year when adjusting for one-time acquisition-related costs in both years and non-cash charges of $23 million after-tax, or $0.11 per diluted share, in fiscal 2007 related to the sale of Scott's Food and Pharmacy.

For fiscal 2008, the company reported net sales of $44 billion, up 18% compared to $37.4 billion last year, net earnings of $593 million, an increase of 31% versus $452 million last year, and diluted earnings per share of $2.76, up 19% compared to $2.32 last year.

Fiscal 2008 results included after-tax charges for one-time acquisition-related costs of $45 million and fiscal 2007 results included after-tax charges for one-time acquisition-related costs of $40 million.

Full year diluted earnings per share increased 13% to $2.97 from $2.64 last year when adjusting for one-time acquisition-related costs in both years and non-cash charges of $23 million after-tax or $0.12 per diluted share in fiscal 2007 related to the sale of Scott's Food and Pharmacy.

"In fiscal 2008, we achieved many important milestones, including record net sales and earnings, $40 million in pretax synergies and a second year of double-digit diluted earnings per share growth following our transformational acquisition," said Jeff Noddle, chairman and chief executive officer, in a news release.

"Looking to fiscal 2009, we remain focused on our integration initiatives, including the implementation of key merchandising programs and the continued roll-out of our Premium, Fresh and Healthy remodel program. We are confident the steps we are taking in fiscal 2009 position us well to maximize the future potential of the company," Noddle continued in the release.

For fiscal 2009, the company affirmed its earnings guidance range of $3.06 to $3.22 per diluted share on a GAAP basis and $3.10 to $3.25 on an adjusted basis when excluding one-time acquisition-related costs. Net sales are estimated to be about $45 to $45.5 billion, including an approximate benefit of $800 million from the 53rd week in the fiscal year.

The company also revealed on Thursday that at the end of fiscal 2008, total debt to capital was 60%, down from 64%, at fiscal 2007 year-end.

"Our strong cash flow management has enabled us to significantly reduce debt, beating our goal of $400 million by June 2008. In fact, since the acquisition we have achieved $698 million in debt reduction, due in part to lower cash tax payments related to the Albertsons transaction. We are again committing to an additional $400 million reduction for fiscal 2009," Noddle added in the release.

Suerpvalu is an Eden Prairie, Minn., supermarket operator.

Tribune term X moves higher

Tribune's term loan X was stronger on Thursday following a lender conference call that was held to discuss progress at the company since going private last year and to provide an update on business trends in early 2008, according to a trader.

The term loan X was quoted at 92 bid, 93 offered, up about a point from previous levels, the trader said.

The company's term loan B, however, was unchanged at 67½ bid, 68½ offered, the trader continued.

The reason for the positive momentum in the term loan X was because during the call, Tribune management said that they are considering selling more assets and investors expect that any asset sale proceeds would be used to pay down the term loan X debt, the trader added.

Tribune is a Chicago-based media company.

LCDX rally continues

LCDX 10 was once again higher in trading on "more general happiness with where the markets are," according to a trader.

The index was quoted at 98.50 bid, 98.65 offered, up from 98.10 bid, 98.30 offered on Wednesday, the trader said.

Cash in general, on the hand, was pretty much unchanged to maybe up an eighth of a point, the trader added.

Chunk of CDW term B sells

Lehman Brothers sold a $400 million block of CDW term loan B debt on Thursday, according to a market source.

The block of term loan B was sold at a discount of 83.

Pricing on the term loan B is Libor plus 300 basis points.

CDW's $2.2 billion term loan B (B2/BB-) funded in October 2007. It was then launched to investors in early January, but by late January the deal was pulled from syndication because of unfavorable market conditions.

Proceeds were used to help back the leveraged buyout of the company by Madison Dearborn Partners LLC and Providence Equity Partners Inc. for $87.75 in cash per share. The transaction was valued at $7.3 billion.

CDW is a Vernon Hills, Ill., provider of technology products and services to business, government and education customers.

Local Insight ups OID

On the new deal front, Local Insight raised the original issue discount on its $335 million seven-year term loan to 90 from the originally proposed level of 94, according to a market source.

Pricing on the term loan was left unchanged at Libor plus 400 bps, with a 3.75% Libor floor for life, the source added.

The company's $365 million senior secured credit facility (BB-) also includes a $30 million six-year revolver.

JPMorgan, Lehman, Wachovia and Merrill Lynch are the bookrunners on the deal, with JPMorgan and Lehman the joint lead arrangers.

Proceeds will be used to refinance existing debt and to help fund the acquisition of Berry Co.'s independent line of business from L.M. Berry and Co., a subsidiary of AT&T Inc.

Senior leverage is 3.5 times and total leverage is 5.5 times.

Local Insight is an Englewood, Colo., publisher of print and online directories.

Kinetic Concepts details emerge

Kinetic Concepts held a bank meeting on Thursday to kick off syndication on its credit facility, and in connection with the launch, official price talk and revised tranche sizes were announced, according to a market source.

The deal was presented to lenders as a $300 million five-year revolver, an $800 million five-year term loan A and a $200 million six-year term loan B, with all tranches talked at Libor plus 325 bps, with a 3.25% Libor floor, the source said.

The term loan B is being offered to investors at an original issue discount of 98, while upfront fees on the revolver and the term loan A vary based on commitment size, the source said.

The revolver has a 50 bps commitment fee.

Originally, the term loan A was expected to be sized at $1 billion and the term loan B was expected to be sized at $600 million, but they were reduced as a result of the company's recent pricing of a $600 million convertible senior notes offering.

When the convertible deal was first announced on Tuesday, sources said that the amount of term loan debt would downsized to most likely a total of $1 billion from $1.6 billion, but the breakdown of the term loan A and term loan B sizes was still to be determined.

In addition, based on a commitment letter filed with the Securities and Exchange Commission, it was expected that the term loan B would carry pricing of Libor plus 350 bps and be offered at a discount of 95, but that was when the tranche was larger. The commitment letter had revolver and term loan A pricing at Libor plus 325 bps.

Financial covenants under the credit facility include a maximum leverage ratio and a minimum fixed-charge coverage ratio.

Bank of America and JPMorgan are the joint lead arrangers and joint bookrunners on the now $1.3 billion, down from $1.9 billion, senior secured deal (BBB-), with Bank of America the administrative agent and JPMorgan the syndication agent.

Proceeds will be used to help fund the acquisition of LifeCell Corp. Under the purchase agreement, Kinetic will commence a cash tender offer to acquire all outstanding shares of LifeCell's common stock at a price of $51 per share. The transaction is valued at $1.7 billion in cash.

Pro forma 2007, total debt to EBITDA is 3.0 times.

The company expects to rapidly pay down debt. In fact, leverage is anticipated to be below 1.0 times in 2010.

Based on existing operations, the combined companies are expected to generate revenue of about $2 billion in 2008.

The transaction is expected to close in the first half of 2008, subject to the tender of at least a majority of the fully diluted LifeCell shares, completion and funding financing, and the satisfaction of regulatory and other customary conditions.

Commitments towards the credit facility are due on May 1 and closing is targeted for May 19.

Kinetic is a San Antonio-based medical technology company. LifeCell is a Branchburg, N.J.-based provider of biological products for soft tissue repair.

Consolidated Precision sweetens terms

Consolidated Precision Products revised its $157 million credit facility, flexing pricing higher on the entire deal and widening original issue discounts, according to a market source.

The $20 million revolver and $137 million term loan are now both priced at Libor plus 475 bps, up from original talk at launch of Libor plus 450 bps, and the debt is now being sold to investors at a discount of 98 as opposed to at 981/2, the source said.

Prior to the actual bank meeting, guidance on the deal was heard to be Libor plus 425 bps to 450 bps, but at the launch, price talk was announced at the wide end of that initial guidance.

GE Capital and the Bank of Ireland are the lead banks on the deal that will be used to help fund the acquisition of the company by Arlington Capital.

Other financing will come from $59 million of mezzanine debt provided by Audax.

Leverage through the credit facility is 3.39 times and total leverage is 4.85 times. The company has $180 million of sales and $40 million of EBITDA.

Consolidated Precision Products is a manufacturer of highly engineered, complex metal components and assemblies supplying the commercial aerospace, military and defense markets.

Venture Transport readies allocations

Venture Transport Logistics LLC's credit facility is expected to wrap at current terms and allocations are hoped to go out either late this week or sometime next week, according to a market source.

The facility consists of a $140 million term loan B and a $50 million revolver, with both tranches priced at Libor plus 500 bps, with a 3.25% Libor floor and an original issue discount of 98.

At the start of this week, changes were made to the deal including downsizing the term loan B by $10 million from $150 million, increasing amortization and increasing the excess cash flow sweep.

Amortization on the term loan B was revised starting in 2009 to 5% per annum with a bullet at maturity in 2014, from the originally proposed 1% per annum. Amortization in 2008 is 0.5%.

And, the excess cash flow sweep was increased to 75% from 50%, with step-downs to be determined.

GE Capital and CIT are the lead banks on the $190 million deal that will be used to help fund the acquisition of Ace Transport Inc. and refinance existing debt.

In order to make up for the lost funds from the term loan B downsizing, Venture Transport's owner, Welsh, Carson, Anderson & Stowe, is contributing an additional $10 million of equity to the deal.

In total, Welsh Carson is providing $45 million of subordinated holdco notes and $100 million of new preferred equity.

With the additional equity contribution, the equity and Welsh Carson held holdco notes increased to 53.7% from 52.1% of the capital structure.

The reduction in the term loan B size effectively provided advance amortization of 7% and reduced leverage to 2.8 times senior/total through the opco, and 3.7 times through the holdco notes.

By comparison, under the original structure, senior leverage was 3.0 times and leverage through the holdco notes was 3.9 times.

Venture Transport is a Lafayette, La.-based provider of expedited land transportation and logistics services.

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