New World Pasta joins compatriots on the sideline as new credit facility is pulled

By Sara Rosenberg

New York, July 30 - In keeping with the recent trend, another new deal - New World Pasta Co. - was pulled from the primary bank loan market due to current market conditions, according to market sources.

With this decision, New World Pasta joins such names as Graham Packaging Corp., Cinemark Inc., Casella Waste Systems Inc. and Constar International Inc. as yet another postponed offering.

The Harrisburg, Pa. dry pasta maker's $230 million (B1) loan consisted of a $200 million seven-year term loan B with an interest rate of Libor plus 325 basis points and a $30 million five-year revolver with an interest rate of Libor plus 325 basis points. Proceeds were going to be used to refinance existing debt including the repayment of a term C bridge loan that was provided by Joseph Littlejohn & Levy.

"The arrangers contemplated changes to the transaction, including flexing up," a market professional said. "But, under current market conditions, the issuer (New World Pasta) and the sponsor (Joseph Littlejohn & Levy) decided it was not the best time to do a refinancing."

Morgan Stanley was the lead bank on the deal. The syndicate was not immediately available to confirm that the deal was tabled.

In addition to deals being pulled, the bank loan market has watched as arrangers have flexed up prices on new issues due to investor hesitancy. Market talk is that Otis Spunkmeyer Inc.'s $120 million 6½ year term loan B may be the next name added to the growing list with an upward flex of 25 basis points to Libor plus 375 basis points.

"It's a small deal. In this market you want to build as much momentum as you can so they may tack on the 25 basis points," the market professional said. "They're offering an upfront fee of 25 basis points, which will help get the deal done."

Proceeds from the San Leandro, Calif. cookie company's loan will help fund the leveraged buyout by Code Hennessy & Simmons.

Merrill Lynch and JPMorgan Chase Bank are the lead banks on the deal.

As for the secondary, the overall market tone is starting to feel a little bit better due to the improvement in the equity and high yield markets, according to market sources.

"Our guys are usually followers," the market professional said. "So if equities and high yield continue to improve, the loan market will likely follow suit."

At close on Tuesday, the Dow Jones Industrial Average was down 31.80 at 8680, the S&P 500 was up 3.82 at 902.78 and the New York Stock Exchange was up 21.09 at 4824.83.

However, "it takes a little longer for our market to catch up," a fund manager said. "For example, Charter Communications Inc. bank debt stayed down even though the stock went up on Monday following rumors of Paul Allen taking the shares private. Allied Waste Industries Inc. has also stayed down at around 94/95 even though the equity market seems comfortable with it."

In primary activity Tuesday, Wynn Las Vegas, a subsidiary of the Las Vegas, Nev. gaming company Wynn Resorts Ltd., launched its new $1 billion senior secured credit facility, which will be used to help finance development and construction of Le Reve, a luxury hotel and casino resort in Las Vegas, Nev., and to meet pre-opening expenses and debt service obligations.

The loan consists of a $250 million delayed-draw senior secured term loan with an interest rate of Libor plus 425 basis points and a $750 million senior secured revolver with an interest rate of Libor plus 400 basis points, the syndicate source said. There is an undrawn fee on the revolver of 200 basis points and an undrawn fee on the term loan of 250 basis points, market sources said.

Deutsche Bank will act as sole administrative agent, joint advisor, joint bookrunner and joint lead arranger. Bank of America will act as sole syndication agent, joint advisor, joint bookrunner and joint lead arranger. Bear Stearns will act as documentation agent, joint advisor, joint bookrunner and arranger, according to a filing with the Securities and Exchange Commission.

The syndicate was not immediately available to comment on the bank meeting.

In other news, Domino's Inc. closed on its new $465 million senior credit facility, according to a filing with the Securities and Exchange Commission. The loan consists of a $365 million six-year term loan B with an interest rate of Libor plus 250 basis points and a $100 million five-year revolver with an interest rate of Libor plus 225 basis points. Amortization of the term loan is $3.65 million per year during the first five years with equal quarterly payments totaling $346.75 million in the final year. The Ann Arbor, Mich. pizza company's existing credit facility was paid in full and cancelled upon closing of the loan, the filing said. JPMorgan Chase was the lead bank on the deal.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.