Cedar Fair, Smurfit break; Dean Foods slides on numbers; Graham moves with IPO revision

By Sara Rosenberg

New York, Feb. 10 - Cedar Fair LP and Smurfit Stone Container Corp. saw their credit facilities allocate and free up for trading during Wednesday's market hours, and both companies' term loans were quoted slightly higher than the discount price at which they were sold during syndication.

Also in trading, Dean Foods Co.'s term loan B headed lower following the release of disappointing quarterly results, and Graham Packaging Co. Inc.'s term loans softened as the company announced that it expects its initial public offering to price lower than previously outlined and, as a result, less bank debt will be repaid.

In other news, U.S. TelePacific closed down the book on its in market credit facility ahead of schedule as the transaction was comfortably oversubscribed.

Cedar Fair frees to trade

Cedar Fair's credit facility hit the secondary market on Wednesday, with the term loan B quoted a little above its original issue discount price, according to a market source.

Specifically, the $1.2 billion six-year term loan B was quoted at 99¾ bid, par offered on the break and then it edged up to 99 7/8 bid, par 1/8 offered, the trader said.

Pricing on the term loan is Libor plus 375 basis points with a 1.5% Libor floor. New lenders to the loan were offered the paper at an original issue discount of 991/2, and lenders who extended their term loan B commitments during the company's previous amend and extend transaction got 50 bps for rolling over their commitments and waiving the 101 call protection.

During syndication, the term loan B was upsized from $1 billion as the company downsized its bond offering to $500 million from $700 million.

Cedar Fair getting revolver

Cedar Fair's $1.45 billion senior secured credit facility (Ba3/BB-) also includes a $250 million five-year revolver priced at Libor plus 375 bps with a 1.5% Libor floor.

Bank of America, JPMorgan, Barclays Capital, UBS and KeyBanc Capital Markets are the lead banks on the deal that will be used, along with notes and up to $765 million in equity, to fund Apollo Global Management's acquisition of the company for $11.50 in cash per limited partnership unit. The transaction is valued at about $2.4 billion, including the refinancing of outstanding debt.

Initially, the company was planning to do an amend and extend with an incremental loan, but it then changed to a whole new deal with new documentation and new debt tranches since market conditions were favorable.

Under the original proposal, the company was asking to extend its existing $250 million revolver and non-extended term loan debt to 2014 from 2012 with pricing of Libor plus 400 bps with no Libor floor. The amended term loan would have been sized at $1 billion, including $100 million of incremental debt.

Cedar Fair is a Sandusky, Ohio-based amusement-resort operator.

Smurfit-Stone breaks

Also freeing up for trading on Wednesday was Smurfit-Stone's $1.2 billion six-year term loan (B2), with levels seen by one trader at par bid, par ½ offered on the open and then moving down to 99¼ bid, 99¾ offered.

A second source said he saw the loan quoted at 99 3/8 bid, 99 7/8 offered, adding that it "should trade up in two days time though cause CLOs will look to pick this up in the secondary."

Pricing on the term loan is Libor plus 475 bps with a 2% Libor floor and 101 soft call protection for two years, and it was sold to investors at an original issue discount of 99.

During syndication, pricing on the term loan was reverse flexed from Libor plus 500 bps, the discount tightened from 981/2, and a 50 bps ticking fee was added to the tranche.

The term loan does not include any maintenance covenants. However, there is a debt incurrence test of 2.0 times interest coverage.

JPMorgan, Deutsche Bank and Bank of America are the lead banks on the deal.

Smurfit-Stone funding exit

Proceeds from Smurfit-Stone's term loan, along with a new $650 million four-year asset-based revolver, will be used for exit financing.

Through the company's plan of reorganization, debt will be reduced by $2.9 billion. Pre-petition secured lenders will be repaid in full and there will be an equity distribution to about $3 billion face value of unsecured obligations.

The company's pro forma capital structure as of March 31 is expected to include 2.5 times total debt and 2.3 times net debt. By comparison, the company's current structure as of Dec. 31 included 8.0 times total debt and 6.5 times net debt.

Smurfit-Stone is a Chicago-based manufacturer of paperboard and paper-based packaging.

Dean Foods softens

Dean Foods' term loan B weakened in trading after the company announced fourth-quarter earnings results that fell short of expectations, according to traders.

The term loan B was quoted by one trader at 95¾ bid, 96½ offered, down from Tuesday's levels of 96 1/8 bid, 96 5/8 offered, and by a second trader at 95¾ bid, 96¾ offered, down from 96 bid, 97 offered.

For the fourth quarter of 2009, Dean Foods reported net income of $50 million, or $0.27 per diluted share, compared to net income of $66 million, or $0.42 per diluted share, in the previous year.

Adjusted net income for the quarter was $58 million, or $0.31 per diluted share, compared to adjusted net income of $71 million, or $0.46 per diluted share, in the fourth quarter of 2008.

Net sales for the quarter were $3 billion, versus $3.1 billion in the prior year.

And operating income for the quarter was $136 million, compared to $184 million in the fourth quarter of 2008.

Dean Foods cash flow declines

Also on Wednesday, Dean Foods said that net cash provided by continuing operations for the 12 months ended Dec. 31 totaled $659 million, down from $719 million at the end of 2008.

Free cash flow provided by operations totaled $391 million for the year, compared to $462 million in the previous year.

"The fourth quarter was a challenging finish to an otherwise highly successful year for Dean Foods," said Gregg Engles, chairman and chief executive officer, in a news release.

"2009 operating profits, in total, and for each of our business segments, were the highest in our history. Full year adjusted operating income grew 10% in 2009, on top of the 7% growth we reported in 2008.

"However, while our 2009 results demonstrate a strong step forward for the business, our fourth-quarter performance was below our expectations. As the year came to a close, several of our businesses fell short of expectations," Engles added.

Dean Foods reduces debt

Dean Foods' total debt outstanding as of Dec. 31 was approximately $4.2 billion, net of $48 million in cash on hand, a decrease of $269 million from the prior year.

The company's funded debt to EBITDA ratio was 4.16 times as of the end of the fourth quarter.

Dean Foods said in its release that it plans to continue to focus on reducing its overall leverage.

The target is to bring the leverage ratio to be below 4.0 times by the end of 2010 and to be approaching a goal of 3.5 times funded debt to EBITDA by mid-year 2011.

Dean Foods provides outlook

In addition to earnings, Dean Foods released its outlook for 2010, including adjusted diluted earnings per share of between $1.54 and $1.64.

"Looking ahead at our expectations for 2010, the first quarter presents a challenging overlap," said Jack Callahan, chief financial officer, in the release.

"The first quarter of 2009 was the strongest overall performance in our company's history and benefited from a lower share count before the equity offering in the second quarter of 2009. With this in mind, and reflecting the current market-driven challenges we face, we are forecasting first quarter adjusted diluted earnings to be between $0.25 and $0.30 per share.

"As we look at the balance of the year, however, the overlaps and commodity forecasts become much less daunting, and we expect to be back to posting strong quarterly year over year growth by the back half of the year," Callahan added.

Dean Foods is a Dallas-based food and beverage company.

Graham Packaging dips on IPO update

Graham Packaging's term loan debt came under some pressure in trading after the company lowered the anticipated price range on its initial public offering, traders told Prospect News.

The term loan B was quoted by one trader at 98½ bid, 99¼ offered, down only on the bidside from 98¾ bid, 99¼ offered, and the term loan C was quoted by the same trader at par ½ bid, 101 offered, down from par ¾ bid, 101¼ offered.

A second trader, meanwhile, had the term loan B quoted at 98½ bid, down from 98 5/8 bid on Tuesday.

Under the company's new plan, it will sell around 16.7 million shares of common stock at an expected price in the range of $10 to $11 per share, according to an S-1/A filed with the Securities and Exchange Commission on Wednesday. The offering is expected to generate net proceeds of $157.8 million, assuming an initial public offering price of $10.50 per share.

By comparison, the company had previously been expecting to sell around 16.7 million shares and other selling stockholders were planning on offering about 6.7 million shares of stock, at an expected price range of $14 to $16 per share. The company was anticipating net proceeds of about $228.1 million, assuming a price of $15 per share.

Graham Packaging repaying less debt

Graham Packaging plans to use $122 million of the net proceeds from its initial public offering to repay term loan borrowings, as opposed to $192.3 million under the previous plan.

On a pro forma basis, after giving effect to the use of the net proceeds of the stock offering, the outstanding amounts of term loan B would be $590.9 million, as opposed to $579 million under the original plan, and of term loan C would be $1.0734 billion, as opposed to $1.016 billion previously.

The trader explained that Graham Packaging's term loan B levels only widened on the news since the paydown wasn't affected that much, but being that the term loan C repayment will see a bigger hit, that tranche moved lower.

Remaining proceeds from the IPO will be used to make a one-time payment of $26.3 million to Blackstone and $8.8 million to the Graham family in connection with the termination of a monitoring agreement and to reimburse Blackstone for paying certain expenses.

Graham Packaging is a York, Pa.-based designer, manufacturer and seller of customized blow molded plastic containers.

U.S. TelePacific revises deadline

Over on the new deal front, U.S. TelePacific moved up the commitment deadline on its $385 million credit facility (B2/CCC+), closing the book at the end of business on Tuesday as opposed to on Thursday as was initially planned, according to a market source.

The facility consists of a $360 million 51/2-year first-lien term loan talked at Libor plus 750 bps, with a 2% Libor floor, an original issue discount of 98 and 101 soft call protection for one year, and a $25 million revolver.

As of last week, there was already about $450 million in orders towards the term loan, and talk is that the book grew a little bigger since then, making the deal nicely oversubscribed, the source said.

U.S. TelePacific refinancing debt

Proceeds from U.S. TelePacific's credit facility, which launched with a bank meeting on Jan. 28, will be used to refinance existing bank debt and add some cash to the balance sheet.

The facility was originally scheduled to launch on Jan. 27, but that meeting was delayed by one day after Standard & Poor's came out with surprise ratings of CCC+ on the credit facility and B- pro forma corporate family.

At the time of the launch, a source told Prospect News that pricing looked to be a bit more generous than he expected, which might have been a way to solve any ratings problem.

Credit Suisse, Deutsche Bank and Bank of America are the lead banks on the deal.

U.S. TelePacific is a Los Angeles-based competitive local exchange carrier.

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