Lyondell-Citgo and Dole Food term loans hit the secondary at plus 101 levels

By Sara Rosenberg

New York, May 21 - Lyondell-Citgo Refining LP's $550 million credit facility and Dole Food Co. Inc.'s $175 million term loan E (BB) broke for trading on Friday, with both companies' institutional tranches reaching 101 plus levels.

Lyondell-Citgo's $450 million three-year term loan B was quoted at 101 1/8 bid, 101 3/8 offered, according to a trader.

"It was very, very active with most of the activity taking place in that context. [CSFB] probably traded $90 million of it."

However, not all market participants saw the new issue trading around actively throughout the day.

"It was like most new issues. It trades for the first hour and a half and then goes away," a second trader said.

While a third trader heard that "not much traded" as far as the new Lyondell paper was concerned.

The term loan was issued at par and is priced with an interest rate of Libor plus 250 basis points.

Lyondell's credit facility also contains a $100 million three-year revolver with an interest rate of Libor plus 250 basis points and a commitment fee of 50 basis points. The revolver was not seen trading around on Friday but was estimated to be quoted in the par region by a trader.

Credit Suisse First Boston and Bank of America are joint lead arrangers, bookrunners and co-syndication agents on the deal, with CSFB also acting as administrative agent.

Proceeds will be used to refinance existing debt.

Lyondell-Citgo Refining is a Houston refiner of heavy crude oil.

Dole breaks

Dole Food's term loan E hit the secondary on Friday and was quoted in the 101's by one trader and at 101 bid, 101½ offered by a second trader.

The tranche is priced with an interest rate of Libor plus 225 basis points.

Deutsche is the lead bank on this acquisition financing deal.

Dole is a Westlake Village, Calif., producer and marketer of fresh fruit, fresh vegetables, fresh-cut flowers and packaged foods.

Pegasus drops again

Pegasus Media & Communications Inc.'s term loan D and Pegasus Satellite Communications Inc.'s bank debt reverted back to falling on Friday after a short reprieve during market hours Thursday as investors continue to be spurred on by bankruptcy fears.

The term loan D was quoted at 96 bid, 98 offered, compared to previous levels of 98 bid, par offered, according to a trader. The tranche began the week at 101 bid, 102½ offered, declined to par bid, 101½ offered on Tuesday, and then dropped again on Wednesday to 98 bid, par offered where it remained until Friday.

The Satellite paper was quoted at 95½ bid, 96½ offered, compared to previous levels of 96 bid, 97½ offered, according to the trader. The tranche began the week at around 99, dropped to around 98 on Tuesday, and then continued its decline on Wednesday to 96 bid, 97½ offered, where it remained until Friday.

Pegasus' decline began on Tuesday following the company's 10-Q filing with the Securities and Exchange Commission. In the filing, the Bala Cynwyd, Pa., diversified media and communications company revealed that is was figuring out how to pay a $51.5 million breach-of-contract settlement to DirecTV Inc. with the main issues being how much pre-judgment interest it will have to pay and how much the bond will be if the company decides to appeal the decision.

If the company fails to pay, it could be in default under its credit facilities and its bonds. And, without waivers, Pegasus Satellite Television, Pegasus Media and/or Pegasus Satellite may have to file for protection under Chapter 11, the filing said.

Magnequench pricing surfaces

Pricing on Magnequench Inc.'s proposed $175 million senior secured 51/2-year term loan emerged with the tranche talked at Libor plus 600 basis points, according to a market source.

Bear Stearns is the sole lead bank on the deal that has been marketed primarily to hedge funds and CLOs since launching on May 10.

"It's been going well," the source said regarding syndication of the deal.

Commitments are due on May 26, and the term loan is expected to close some time in early June.

Senior leverage is 3.2x, and interest coverage is 4.3x on a pro forma basis.

Proceeds will be used to refinance existing bank and subordinated debt.

Magnequench is an Indianapolis-based supplier of high-energy, permanent magnets and is the leading producer of Neodymium magnet materials.

NEP pricing

Pricing on NEP Broadcasting LLC's term loans surfaced on Friday with the $145 million 61/2-year term loan B priced at Libor plus 325 basis points and the $45 million seven-year second lien term loan priced at Libor plus 650 basis points, according to a market source.

The $210 million credit facility, which launched on May 11, also contains a $20 million five-year revolver.

Commitments are due sometime within the next two weeks, the source added.

Wachovia is the lead bank on the deal.

Proceeds will be used help fund Apax Partners' and Spectrum Equity Investors' acquisition of NEP from Wachovia Capital Partners.

NEP is a Pittsburgh provider of outsourced media services.

Dynegy oversubscribed

Dynegy Inc.'s $600 million six-year term loan B was oversubscribed with "well over $1 billion" in orders after the syndicate decided to flex pricing higher and add call protection to the tranche, according to a market source.

The syndicate also increased pricing on the $700 million three-year revolver, which is all spoken for by investors as well, the source continued.

The term loan B and the revolver are now both priced with an interest rate of Libor plus 400 basis points, up from initial pricing of Libor plus 300 basis points. A 101 call premium for the first year was also added to the institutional tranche.

These pricing and call premium modifications were officially done during the latter half of the week, the books were expected to shut down either Thursday evening or Friday and allocations are anticipated to take place early to mid next week.

Banc of America Securities LLC, Citigroup Global Markets Inc., Credit Suisse First Boston, J.P. Morgan Securities Inc. and Lehman Brothers Inc. are all lead arrangers on the deal. Lehman and JPMorgan are joint bookrunners on the term loan B with Lehman listed on the left. Citigroup and Bank of America are joint bookrunners on the revolver with Citigroup listed on the left.

As was previously reported, the lead arrangers committed $625 million toward the revolver before the deal even launched on May 10.

The new facility is intended to replace the company's $1.1 billion revolver, which is scheduled to mature in February 2005. The increased size of the new facility will be used to repay existing higher-cost debt and for general corporate purposes.

Dynegy is a Houston energy company.

Guilford Mills wraps around par

Guilford Mills' first lien term loan was quoted at 99½ bid, par to par ½ offered in Friday's quiet secondary market, unchanged from levels seen when the paper broke Thursday afternoon, according to a trader.

The $215 million credit facility was restructured and repriced during syndication, with the first lien term loan upsized, the second lien term loan downsized, pricing increased on both tranches, call protection added to both tranches and an original issue discount added to the first lien.

The first lien term loan B is now sized at $115 million, is priced with an interest rate of Libor plus 400 basis points, contains call protection of 102 in year one and 101 in year two, and is being offered to investors at 99, according to a market source.

Originally, the first lien term loan was sized at $100 million with price talk of Libor plus 325 basis points.

The second lien term loan, which was not syndicated but was rather done through a club style execution, is now sized at $60 million, is priced with an interest rate of Libor plus 950 basis points and contains call protection of 103 in year one, 102 in year two and 101 in year three, according to the source.

Originally, the second lien term loan was sized at $75 million with price talk in the area of Libor plus 650 to 700 basis points.

The facility also contains a $40 million revolver.

Goldman Sachs is the lead bank on the deal.

Leverage through the first lien is 2x, and leverage through the second lien is 3.5x.

Proceeds will be used to help fund Cerberus Capital Management's leveraged buyout of the company. However, the actual acquisition was completed earlier this month when GMI Merger Corp., an affiliate of Cerberus, completed a cash tender offer for the outstanding shares of Guilford Mills at $19 per share.

Guilford Mills is a Greensboro, N.C., designer and manufacturer of engineered fabrics for automotive, technical and apparel applications.

Consolidated Container closes

Consolidated Container Co. LLC closed on its $265 million credit facility (B2/B-) consisting of a $220 million senior secured term loan due in 2008 with an interest rate of Libor plus 325 basis points and a $45 million senior secured revolver with an interest rate of Libor plus 375 basis points.

The deal was originally launched with the term loan B sized at $200 million, but the tranche was upsized during syndication as the company opted to decrease its note offering to $150 million from $170 million.

The decision to increase the bank deal and decrease the bond deal was due to an overall technically better loan market as compared to the current bond market.

Furthermore, pricing on the institutional tranche was lowered to Libor plus 325 basis points from initial pricing of Libor plus 350 basis points on strong market demand.

Deutsche Bank is the sole lead bank on the deal.

Proceeds, combined with proceeds from the $150 million 10¾% senior secured discount notes offering and a $45 million capital contribution, are being used to refinance existing bank debt resulting in extended maturities, lower required debt amortization levels, reduced cash interest requirements for up to three years and more capital flexibility.

"This refinancing allows the company to continue the significant improvements achieved in areas such as productivity, quality and safety. It also provides us with improved capital flexibility, which will translate into increased capability to continue to fill our new business pipeline with profitable sales opportunities," said Steve Macadam, chief executive officer, in a company news release.

"Together, we believe that the combination of our continued operating improvements and new business will allow us to continue building on the improved financial results that posted in the fourth quarter of 2003 and first quarter of 2004. We are especially pleased with the support of our lenders and equity sponsors and view the $45 million equity infusion into the company as a strong signal of confidence in the future of CCC."

Consolidated Container is an Atlanta manufacturer of rigid plastic containers.

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