Nellson Neutraceutical's bank debt has softened with the $285 million first-lien loan trading around 95-96 and the $75 million second lien quoted at 87. Comparisons are now being made by traders between Nellson, an Irwindale, Calif.-based maker of dietary bars and supplements, and Atkins Nutritionals, which also traded last week at historically low levels. Atkins' $215 million first lien changed hands around 69 while the $78.5 million second lien was purchased at 17. "Same story as Atkins. It's a fad," a dealer charged.
"It's been offered below par for a while," one trader said of Nellson, which was bought by Fremont Partners in October 2002 with $160 million of financing and $155 million in equity. Since then the company has completed a $100 million add-on financing that was used to repurchase shares and acquire Montreal-based Bariatrix Products International (LMW, 2/20) UBS and Goldman Sachs lead the credit, which also comprises a $25 million revolver. Nellson's first lien and second lien are priced at LIBOR plus 3% and LIBOR plus 5 1/2%, respectively. The revolver is priced at LIBOR plus 4%. Officials at Nellson declined comment. Fremont officials did not return calls.
Atkins has also plummeted and there is now a fragmented lender group. Some lenders want sponsors Parthenon Capital and GS Capital Partners to contribute more equity, while one lender was pushing for a sale. Support for a sale is said to be rising in the lending group. Atkins' first and second-lien tranches are priced at LIBOR plus 3 1/4% and LIBOR plus 5 3/4%. The financing also includes a $25 million revolver, which is priced at LIBOR plus 3 1/2%. An Atkins spokesman has in the past declined to comment on the company's bank debt.