J.P. Morgan last week handed out allocations on the $100 million add-on for Interstate Bakeries. The deal backs the buyback of 7.5 million shares of the company from Tower Holding Company, a subsidiary of Nestlé. The new credit is a term loan "C" and is priced at LIBOR plus 2%, said an investor, expressing dissatisfaction with the lack of an up-front fee and the skinny spread. The food sector is pretty hot, as demonstrated by thin pricing and the mass of demand, he added. National Dairy Holdings (NDH) "B" term loan has been well oversubscribed and is being flexed downwards 1/4% from 23/ 4% over LIBOR, he added. Wachovia Bank leads the $300 million NDH credit. Final allocations could not be ascertained.
The $125 million Interstate "B" loan, completed last summer is priced at LIBOR plus 21/ 4%, but has been trading at 101, the buysider noted, pointing out recent demand on the credit. The buysider added that a fund will not venture into a deal if pricing goes below 2% over LIBOR for leveraged loans. Express Scripts tried to push the envelope to LIBOR plus 13/ 4%, he noted, but this was rejected, even for a hot health care deal. Frank Coffey, senior v.p. and cfo, of Interstate did not return calls.