Securitization People and Markets

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The $400 million, four-year "B" loan for Williams Companies that will partially refinance a $900 million, 364-day loan led by Berkshire Hathaway was increased to $500 million last week. Pricing on the new loan, led by Lehman Brothers and Bank of America, was also flexed down 25 basis points to LIBOR plus 33/4%, according to a buysider. Williams will make a $1.17 billion payment that will retire the Berkshire Hathaway line, said a Williams' spokesman. He explained that the balance of the line will be refinanced with cash on hand. He declined to comment on the pricing change and the increase.

Zimmer Holdings has received a fully underwritten $1.75 billion credit line from Credit Suisse First Boston, J.P. Morgan and Bank of America to back the $3.2 billion bid for orthopedic device maker Centerpulse. Zimmer's bid is higher than an agreed offer from Britain's Smith & Nephew for $2.5 billion and now Zurich, Switzerland-based Centerpulse's shareholders can review both transactions, said a source. Zimmer's offer is comprised of $1.2 billion in cash and $2 billion in stock.

CIT Business Credit, a unit of the CIT Group that provides asset-based financing, is looking to provide $1 billion in exit financing to companies that are seeking to emerge from bankruptcy this year, according to LMW sister publication Corporate Financing Week. CIT is also looking to grow its distressed mergers and acquisition and leverage buyout financing capabilities to compensate for an expected decline in demand for debtor-in-possession financing in the second half of the year, said Mitchell Drucker, senior v.p. at CIT Business Credit. The firm is eyeing companies like WorldCom, Federal-Mogul, ANC Rental Corp., the bankrupt owner of Alamo Rent A Car and National Car Rental, and United Airlines as prospective clients, he said, noting that the firm is not yet in discussions with these companies.

CIT Business Credit, a unit of the CIT Group that provides asset-based financing, is looking to provide $1 billion in exit financing to companies that are seeking to emerge from bankruptcy this year, according to LMW sister publication Corporate Financing Week. CIT is also looking to grow its distressed mergers and acquisition and leverage buyout financing capabilities to compensate for an expected decline in demand for debtor-in-possession financing in the second half of the year, said Mitchell Drucker, senior v.p. at CIT Business Credit. The firm is eyeing companies like WorldCom, Federal-Mogul, ANC Rental Corp., the bankrupt owner of Alamo Rent A Car and National Car Rental, and United Airlines as prospective clients, he said, noting that the firm is not yet in discussions with these companies.

Regal Entertainment Group's $315 million term loan "D" was heavily oversubscribed, only days after launching into syndication last Tuesday. One buysider said the deal had $900 million in commitments by the end of last week and that pricing had been flexed downwards 25 basis points to LIBOR plus 21/2%. The deal is part of a recapitalization that will provide investors in its 2002 reorganization a special dividend of between $600-625 million without selling stock. Colorado billionaire Philip Anschutz owns about 77% percent of Regal's voting stock. Knoxville, Tennessee-based Regal also indicated it is selling $200 million in convertible notes and could sell up to $40 million more after heavy demand.

Massey Energy Company held a bank meeting last Wednesday in New York to launch syndication of a $450 million credit facility that will refinance existing debt. Citigroup, UBS Warburg and PNC Bank are the lead arrangers for the Richmond, Va.-based coal company, according to bankers familiar with the situation. Massey extended one of its existing revolvers last November for a year, as difficult market conditions prevented the company from completing a refinancing earlier, said Katharine Kenny, director of investor relations. The credit lines, led by PNC and Citi, were set to expire this November and so Massey did not want to wait any longer, she added.

Financial sponsors are increasingly turning to the loan and bond markets to take dividends through recapitalizations as traditional routes for realizing equity returns remain limited. A liquid high-yield market is making recaps more attractive and feasible than trying to cash out in a spotty equity market, bankers and investors said, and limited partners are pushing for returns. "For many private equity firms there is a heightened awareness that limited partner investors are looking for a return on capital and a recapitalization is a means in which to achieve that objective," stated Michael Wong, a v.p. at Leonard Green & Partners.

BondWeek is the leading news publication for fixed-income professionals, covering new deals, structures, asset-backed securities, industry and market activity.