Golden State Foods term B reaches oversubscription on flood of commitments from existing lenders

By Sara Rosenberg

New York, Feb. 3 - As of Tuesday morning, Golden State Foods $135 million seven-year term loan B was "well oversubscribed after commitments rolled in yesterday" leading some to believe that the deal "will definitely be a blowout" since more commitments are still on their way, a source close to the deal told Prospect News.

The $195 million credit facility, which launched last Wednesday to existing lenders only, also contains a $30 million five-year revolver and a $30 million five-year term loan A.

Both pro rata tranches as well as the institutional tranche are priced with an interest rate of Libor plus 250 basis points.

It took a couple of days since the bank meeting for the term loan B to reach oversubscription since potential lenders who had already essentially committed to the deal were asked to recommit once Moody's Investors Service announced its B1 rating for the credit facility this past Friday, according to the source.

Moody's said the rating reflects Golden State's very high leverage for the rating level, weak balance sheet, and limited free cash flow available for debt reduction pro forma for the proposed transaction.

The ratings, however, also reflect Golden State's long-term relationship with key customer McDonald's Corp. (senior unsecured A2) and its historically stable operating performance and cash flows.

SunTrust is the lead bank on the deal.

Proceeds will be used to help support the company's leveraged buyout. The Yucaipa Cos. LLC currently own 50% of Golden State Foods. The remaining half is owned by Wetterau Associates and management. Under this transaction, Wetterau and management are buying out Yucaipa's ownership, the source explained.

Golden State Foods is an Irvine, Calif., food processor and distributor.

D&E Communications launches

D&E Communications Inc. held a bank meeting Tuesday morning for a proposed $225 million credit facility, according to a market source. SunTrust and CoBank are the co-lead arrangers on the deal.

The facility consists of a $25 million 71/2-year revolver with price talk of Libor plus 250 basis points, a $50 million 71/2-year term loan A with price talk of Libor plus 250 basis points and a $150 million eight-year term loan B with price talk of Libor plus 275 basis points, according to the source.

Proceeds will be used to refinance existing debt.

Closing on the deal is targeted for the end of February.

D&E is an Ephrata, Pa., provider of integrated communications services.

Also, Cebridge Connections launched a $325 million credit facility via Goldman Sachs on Tuesday, consisting of a $225 million second lien term loan, a $75 million term loan B and a $25 million revolver.

Cebridge is a St. Louis provider of cable television, Internet access and home security services.

Secondary softer

The secondary bank loan market was "fairly active" but, generally speaking, softer by about a quarter of a point on Tuesday in reaction to some volatility in the bond market, a trader said.

For example, Charter Communications Inc.'s bank paper was quoted at 98¼ bid, 98½ offered by late afternoon, down about a quarter of a point from previous levels, the trader said.

Charter is a St. Louis cable company.

Nextel Communications Inc., a Reston, Va., wireless provider, was seen trading at 101 1/8, according to the trader, who said that "a few days ago it traded as high as 1011/2". On Monday, the paper was quoted at 101 1/8 bid, 101 3/8 offered by a different trader who placed previous levels at 101 3/8 bid, 101 5/8 offered.

Lastly, Adelphia Communications Corp.'s TCI bank debt was seen trading at 983/4, also about a quarter of a point lower on the day when compared to the previous bid level of 99, the trader said.

Adelphia is a Greenwood Village, Colo., cable television company.

However, there were some exceptions to the general market softness, including Calpine Corp.'s second-lien loan, which moved up by about a quarter to a half a point on Tuesday, according to a few traders.

The paper was seen at 98½ bid, 99 offered, traders said.

"It came back a little today after falling off last week on market technicals," one trader remarked.

Calpine is a San Jose, Calif., power company.

© 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.