Ball plans borrowings; Charter, Nextel higher; upcoming deals seen fluid

By Paul A. Harris

St. Louis, Mo., Aug. 30 - One official suggested that Prospect News might do well to conduct a roll call Friday for the bank loan market because it would discover that a considerable number of players would not be around to yell out "Present."

Ball Corp. announced Friday that it would use 100% debt financing to fund its acquisition of European beverage can manufacturer Schmalbach-Lubeca AG and Moody's Investors Service rated a $1.85 billion credit facility.

Otherwise meaningful news was hard to come by as the market wound down to the Labor Day break.

"There were a few trades on Charter and Nextel in the Street," a source told Prospect News late in Friday's session.

"Both are inching up," the source added. "Charter traded at 86½ and 86 1/8. Nextel traded at 873/4."

Another source announced that secondary market activity was "pretty quiet."

In a Friday conference call, Ball management said it would fund its announced acquisition of Schmalbach-Lubeca with 100% debt financing. Ball will pay $900 million in cash and assume approximately $16 million of debt.

In a ratings release Moody's Investors Services assigned a Ba2 rating to Ball's proposed $1.85 billion secured credit facility and a Ba3 to the $300 million senior unsecured notes.

According to Moody's, the $1.85 billion facility, denominated in U.S. dollars and available for multicurrency drawings, consists of a $500 million revolver with a $35 million Canadian dollar tranche, a $250 million term loan A, a $200 million equivalent euro term loan B, a $600 million term loan B and a $300 million C tranche. The C tranche is intended to serve as a bridge in the event that the senior unsecured bond offering does not occur. (See story on page one)

One source told Prospect News Friday that specific details on some of the deals coming into the market have been few and far between because those details likely remain in play as companies weigh costs in the capital markets.

The official used as an example Burger King Corp. which, according to a high yield source, is bringing $600 million of bonds in an LBO financing that is also roundly expected to include a substantial credit facility.

"I don't think there has been any public dissemination around the structure of the credit facility, other than what's been in the filings," the source said

"I think that has to do with things potentially moving around. I think if they can get a decent component of high yield done the bank side will continue to be fluid.

"I think we're seeing the same thing with Qwest Directories, and also with a few deals that are slated to be the fall LBO deals. The structures are still being reworked. It's a function of where there's capacity and where there's demand."

One investor told Prospect News Friday that the most interesting news emanated not from the leveraged loan market but from high yield, stating that Arcata, Calif.-based AMG Data Services had reported that a string of 11 successive outflows from the mutual funds came to a furious halt, and that record-setting $1.56 billion had flowed in.

How would such news make itself felt in the leveraged loan market? Prospect News asked.

"The loan market will be a little slow to respond," the source said. "You'll probably start to see a more positive reaction from lenders and from investors toward the end of September.

"If the deals that get launched early are run-of-the-mill and straight-down-the-fairway they will probably get fairly quickly subscribed and potentially oversubscribed."

Finally Prospect News inquired of another market source how the week of Sept. 2 would like take shape in the loan market.

"I heard there's a meeting scheduled for Tuesday but it's pretty hard to believe," the source said.

"I think it's probably going to be pretty hectic by midweek and then the real deluge is going to hit the following Monday.

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