Bell Sports oversubscribed; Rent-A-Center down on changed guidance; Charter, Reliant up on technicals

By Sara Rosenberg

New York, Sept. 9 - Bell Sports Corp.'s newly launched bank loan deal is off to a phenomenal start with the institutional portion multiply oversubscribed at tighter price talk within hours of the bank meeting. And, a fourth bank opted to sign up and commit to an agent role for this transaction.

Meanwhile, in secondary activity, Rent-A-Center Inc.'s bank debt weakened on lowered guidance, Charter Communications Inc.'s bank debt strengthened on market technicals and Reliant Energy Inc. traded actively at higher levels.

Bell Sports' $110 million term loan, which is being offered at par, is now talked at Libor plus 275 to 300 basis points, compared to original price talk of Libor plus 300 basis points prior to launch, according to a market source.

Furthermore, this term loan tranche is "two to three times" oversubscribed at the tighter pricing level, the source said.

Goldman Sachs and Wachovia are joint leads on the deal, with Goldman listed on the left. Antares committed as a co-documentation agent on the facility, joining UBS which was already known to be involved as an agent on the deal.

Bell Sports' $160 million credit facility (B1/BB-) also contains a $50 million revolver talked at Libor plus 275 basis points. The revolver is being offered at 99 for a $10 million commitment.

Proceeds from the loan, combined with proceeds from a proposed $150 million bond deal, will be used to help fund Fenway Partners Inc.'s acquisition of Bell Sports.

Under the acquisition agreement, Fenway will purchase Bell Sports from an investor group including GarMark Partners LP, Wachovia Investors Inc. and Chartwell Investors, for about $240 million. The transaction will merge Bell Sports and Riddell Sports Group, which Fenway purchased in June 2003.

Bell Sports is an Irving, Texas, marketer of helmets and accessories for bicycling and other action sports. Riddell is a Chicago provider of football helmets and other branded sporting goods, equipment reconditioning services and sports collectibles.

Rent-A-Center lower

Rent-A-Center's bank debt was quoted at par ¼ bid, par ¾ offered, according to market sources, down about half a point to a point on the day on the heels of the company's late Wednesday announcement that it revised third quarter and fiscal year 2004 earnings guidance.

The Plano, Texas, rent-to-own operator now expects diluted earnings per share of $0.47 to $0.48 for the third quarter ending Sept. 30, compared to previous guidance of $0.58 to $0.60, and $2.30 to $2.33 for fiscal year 2004, compared to previous guidance of $2.62 to $2.70.

"We are adjusting our guidance due to slower consumer demand in light of our belief that our target market has been particularly hard hit by higher fuel prices," said Mark E. Speese, chairman and chief executive officer, in a company news release. "While we remain confident in our proven business model and believe that this is a short-term situation, we are taking steps to reduce the impact of the higher fuel costs by fine-tuning our marketing and promotional initiatives."

Charter stronger

Charter's term loan B bank debt traded at "99¼ plus" on Thursday, up about an eighth of a point, according to a trader, for no specific reason other than market technicals.

"It's a liquid name. A lot of guys are back. Nothing has broken for trading. Guys are looking to buy something," another trader explained.

Charter is a St. Louis-based broadband communications company.

Reliant active

Reliant's bank debt traded quite a bit during market hours with the term loan quoted at par ¼ bid, par ¾ offered and the revolver quoted at 98½ bid, 99¼ offered, according to a trader.

Both the term loan and revolver were stronger by about a quarter of a point on the day but there was no public news seen pushing the Houston energy company's paper higher, the trader added.

Jostens should be smooth sailing

Syndication of Jostens IH Corp.'s $1.27 billion credit facility (B1/B+) is expected to go "extremely well," according to a market source, although just how much interest the deal had already received after launch on Thursday was unavailable prior to press time.

The facility consists of an $870 million seven-year term loan B talked at Libor plus 275 basis points, a $150 million six-year term loan A talked at Libor plus 250 basis points and a $250 million five-year revolver talked at Libor plus 250 basis points with a 50 basis point commitment fee.

Credit Suisse First Boston is the sole lead arranger and bookrunner on the deal. Deutsche Bank and Bank of America are involved in the deal in agent roles as well.

Proceeds from the credit facility will be used to help fund Kohlberg Kravis Roberts & Co.'s $2.2 billion combination of Jostens Inc., Von Hoffman Corp. and Arcade Marketing into one large company.

KKR will acquire Von Hoffmann and Arcade from DLJ Merchant Banking Partners and Von Hoffmann and Arcade will contribute to Jostens Holdings in exchange for stock of Jostens Holdings, which will then be recapitalized. Upon completion of these transactions, KKR and DLJ Merchant Banking will each own a 45% stake of Jostens Holdings, which will be renamed. The remaining 10% stake will be held by the management team as well as a small group of existing minority investors in Jostens.

The transaction is expected to close this fall and is subject to customary closing conditions.

Jostens is a Minneapolis provider of yearbooks, class rings and graduation products. Von Hoffman is a St. Louis printer of educational textbooks and supplemental materials and direct marketing print services. Arcade is a New York printer and manufacturer of sampling products for the fragrance, cosmetics, consumer products, and food and beverage industries.

Knoll launches

Syndication of Knoll Inc.'s proposed $500 million senior secured credit facility (BB-), which also kicked off Thursday, is progressing "good so far," according to a market source.

The facility consists of a $75 million revolver and a $425 million term loan, with both tranches talked at Libor plus 250 basis points. The term loan is being offered to investors at par.

UBS Securities LLC and Goldman Sachs are the lead banks on the deal, with UBS listed on the left.

Proceeds will be used to refinance existing debt and to fund a modest dividend to existing shareholders.

Knoll is an East Greenville, Pa., designer and manufacturer of branded office furniture products and textiles.

Professional Paint hesitancy

Some investors are skeptical on Professional Paint Inc.'s recently launched $181 million deal syndicating successfully at current pricing levels as senior leverage appears to be a little high for the proposed spread, according to a fund manager.

The credit facility went out to lenders on Wednesday with both the $25 million revolver and the $156 million term loan talked at Libor plus 325 basis points. The term loan is being offered at par.

"It sounds to me like people aren't all that interested in it so it will probably go slow and then they will have to raise pricing," the fund manager said. "It's a smaller company. Senior leverage is just over 3½ times. Pricing probably needs to be adjusted accordingly."

Merrill Lynch Capital is the lead bank on the deal that will be used to help fund Cosorcio Comex's acquisition of Professional Paint from The Jordan Co.

Professional Paint is a Denver-based manufacturer and distributor of architectural paints and coatings.

DS Waters amendment

Market talk is that DS Waters of America LP will be approaching lenders about an amendment to its credit facility, with some anticipating that a lender call may happen as early as Friday, according to a market source.

Details on the amendment and confirmation of timing were unavailable prior to press time, but it is known that JPMorgan will be leading the amendment process.

DS Waters is an Atlanta home and office water delivery service.

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