Fleming to bring $950 million credit facility to market; Herbalife holds bank meeting

By Sara Rosenberg

New York, May 16 - News of Fleming Companies Inc.'s plans to obtain a new $950 million credit facility hit the primary bank loan market Thursday, according to a syndicate source. Deutsche Bank is lead bank on the deal. Other primary activity Thursday included Herbalife International Inc.'s bank meeting.

Fleming's loan consists of a $600 million revolver and a $350 million term loan. The interest rate on the revolver is based on a usage grid and can range from Libor plus 175 basis points to Libor plus 200 basis points. The term has an interest rate of Libor plus 225 basis points. Proceeds will be used towards refinancing existing debt and towards the acquisition of Core-Mark and Head Distributing.

Fleming is hoping to improve its leverage position through the debt refinancings, including the reduction of debt-to-EBITDA ratios, according to a filing with the Securities and Exchange Commission.

At the end of first quarter 2002, the company's net debt was $1.89 billion, an increase of $100 million from the same period last year. The EBITDA to interest expense ratio improved to 3.02 compared to 2.92 at year-end and 2.63 at the end of first quarter 2001

The Lewisville, Tex. supplier of consumer package goods to retailers originally entered into its senior secured credit facility in July 1997. The loan consists of a $600 million revolver, which matures on July 25, 2003, and a term loan, which matures on July 25, 2004. The term loan initially had a size of $250 million but through amortization payments, the term had been reduced to $119 million at Dec. 29, 2001, according to a filing with the Securities and Exchange Commission. There was an outstanding balance of $200 million under the revolver and $53 million of letters of credit at Dec. 31, 2001.

In other primary news, Herbalife International Inc. held a bank meeting for its new $190 million credit facility Thursday. UBS Warburg is sole lead on the deal.

The loan consists of a $25 million five-year revolver with an interest rate of Libor plus 375 basis points and a $165 million six-year term loan B with an interest rate of Libor plus 400 basis points, according to a syndicate source. Proceeds will be used to help finance the leveraged buyout by Whitney & Co. LLC and Golden Gate Capital Inc.

Herbalife, headquartered in Los Angeles, Calif., is a network marketing company that sells weight management products, nutritional supplements and personal care products.

Secondary players saw Adelphia Communications Corp. bank loan paper starting to stabilize during trading hours Thursday, according to a trader. The Adelphia Century loan traded in the low 80s during in the earlier part of the day and then jumped up to the high 80s during the latter part of the day, the trader said.

But, Adelphia could go down again tomorrow if the company is delisted, the trader warned, or another Rigas resigns, he joked.

On Thursday, Timothy Rigas resigned from his position as Adelphia's executive vice president, chief financial officer, chief accounting officer and treasurer. The company's CFO responsibilities will be handled on an interim basis by a special committee and outside financial advisors, according to a company press release. On Wednesday, John Rigas, father of Timothy Rigas, Adelphia founder, chairman, president and chief executive officer announced his resignation. Erland Kailbourne has succeeded him as chairman and interim CEO, a company press release said.

A hearing was held Thursday to decide whether or not Adelphia would be delisted from the Nasdaq due to the delay in filing the annual report. Trading on Adelphia was halted until a request for additional information is satisfied.

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