Brand Services sets August meeting, Veterinary Centers reprices, Nextel firm

By Paul A. Harris

St. Louis, Mo., Aug. 27 - Although sources prefaced their comments with customary disclaimers having to do with "the dead markets of late August" on Tuesday, Prospect News heard reports of activity in both the primary and secondary markets.

Brand Services, Inc. has a bank meeting set for Wednesday for a new facility via Credit Suisse First Boston, according to one market source.

Also Veterinary Centers of America Inc. was heard to have reigned in the pricing of its term loan by 75 basis points.

Meanwhile Nextel's paper was heard to firm as investors are said to be experiencing some degree of comfort with the company's paper.

And although Standard & Poor's lowered its corporate credit rating on Qwest Communications International Inc. by two notches, one secondary market source told Prospect News that while the bonds appeared to descend the bank loans did not necessarily follow suit.

The bank meeting is set for Wednesday on a new credit facility from Brand Services, Inc., according to a market source who identified Credit Suisse First Boston and the lead arranger.

According to an Aug. 12 press release from the St. Louis-based scaffolding company, J.P. Morgan Partners is set to acquire Brand Services from DLJ Merchant Banking for approximately $500 million in a transaction scheduled to close in the fall.

One market source expressed surprise that Brand would have a bank meeting prior to Labor Day but allowed that if such were the case it might be an effective strategy.

"Maybe they want to try to scoot something in," the source said, adding that it may be better to "get a bank meeting off the ground than waiting for the deluge that we're going to see next week and the week after.

"I know it's in the hopper," the source continued. "JPMorgan Partners won the property. It's coming out of the DLJ Merchant Bank, so it's trading from one sponsor to another."

None of the sources who spoke to Prospect News on Tuesday had heard pricing, size or maturity on Brand's new paper.

Meanwhile Tuesday Veterinary Centers of America Inc. was heard to tighten the interest rate on its term loan.

In Sept. 2000, the company entered into a $300 million senior secured credit facility that included a $50 million revolver as well as senior term A and B notes. The revolver and term A mature in September 2006.

Goldman Sachs was the sole lead arranger of the bank loan and Wells Fargo was the administrative agent.

Veterinary Centers' parent, Leonard Green & Partners LP portfolio company VCA Antech, Inc., sold an initial public offering of company stock in November 2001.

"It was pretty attractively priced at one point," a market source comment on the Veterinary Centers loan. "I think getting the IPO off and refinancing the capital structure the way they did - taking out some of the more expensive mezzanine debt - they were finally able to bring in pricing on the bank debt. And the term loans are down by 75 basis points.

Aftermarket sources reported some trading activity on Tuesday.

"Nextel is 86-87, which is pretty good," a trader said. "Charter is 85-86. Allied is 971/2-981/2. Those are the three on-the-run names that are higher," the trader added attributing the moves to "technicals."

Another market source also noted firming in Nextel's paper. "Last week it was up a few points and it continues to be fairly strongly bid. Today it was 84½ bid for the term D. So in general it is stronger.

"They reported a fairly healthy quarter about a month ago," the source added. "Since then it's had a healthy upward trend. There hasn't been any additional news but I think that this is something that people feel safe with."

One market source mentioned being somewhat surprised at the lack of activity in Adelphia's loans and anticipated that eventually some activity would be seen.

"RCN sold their Princeton Cable Systems for $3,100 a sub which will give a boost to Adelphia," the source commented, adding that it would likely take time for the market to digest the implications of the sale.

"Then it will tighten up."

With S&P's Tuesday announcement that it lowered its corporate credit rating on Qwest Communications to B- from B+ the company's bonds dropped, according to one source, however the loans demonstrated little if any movement.

"It was sort of expected," one source commented on Qwest's two-notch downgrade. "The fact that the rating was lowered was perhaps a fait accompli. You knew the agencies were going to take it down. I think they sort of deserved it."

Finally one market official commented Tuesday that the post-Labor Day bank loan market will likely be one that will be populated by discreet investors.

"The accounts are pretty well invested so they're going to be selective in both new issue and secondary," the official said. "There is going to be a lot of portfolio tweaking I think. It's going to be pretty mixed in terms of what people are looking to do. They'll be selective. They won't be aggressive.

"But the market has settled into these levels, so I think people are pretty comfortable.

"I think we should see a fair amount of trading coming up in the fall."

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