Securitization People and Markets

Lehman Brothers will be shopping Rent-A-Center's $600 million refinancing deal this week after it secured the role as joint-lead arranger with incumbent lead J.P. Morgan. A banker said Lehman is on the left running the deal, while J.P. Morgan is on the right. Lehman got the top spot because of its knowledge of the rent-to-own store chain on the equity side, said Robert Davis, v.p. of finance, cfo and treasurer. "They understand the company from that perspective," he said, adding that Lehman got a package deal to lead all of the company's debt and equity recapitalization plans, which include the credit facility, tender offers for shares and a notes offering. The banker added that Lehman's pitch for a Dutch Auction secured the package deal for the firm. The company intends to buy up to 2.2 million shares pursuant to a modified Dutch Auction and it is also in an agreement to buy additional shares from Apollo Investment Fund IV and Apollo Overseas Partners IV.

The $200 million refinancing credit for Central Garden & Pet Co. was nearly three times oversubscribed late last week, with lead arrangers CIBC World Markets, SunTrust Bank and Bank of America considering a reverse price flex for the $100 million "B" loan. The six-year institutional piece, is priced at LIBOR plus 3%, and would probably tighten to LIBOR plus 23/4%, said a banker familiar with the deal. There is also a five-year, $100 million revolver priced at LIBOR plus 21/4%. The facility also includes a $75 million accordion feature, subject to the lenders and specified covenants. A CIBC official declined to comment, while B of A and SunTrust bankers did not return calls.

FleetBoston Financial and CIBC World Markets filled out half of a $140 million "B" loan for Affinity Group after the bank meeting last Wednesday. A banker familiar with the refinancing credit said General Electric Capital Corp. came in at the agent level, but a GE spokesman could not confirm that. Pricing on the institutional loan is LIBOR plus 4% with an up-front fee of 25 basis points, the banker added. There is a five-year, $35 million revolver priced at LIBOR plus 31/2% also included in the BB-/Ba3-rated deal.

Credit Suisse First Boston pitched a five-year, $75 million add-on "B" piece for real estate services company CB Richard Ellis last Thursday. A banker familiar with the deal said some commitments were obtained after the meeting, but he would not specify the level of subscription. The fully underwritten loan backs the company's $415 million all-cash acquisition of New York-based Insignia Financial Group. CSFB is shopping the B+/B1-rated deal with a LIBOR plus 41/4% coupon, which is the same rate as the original $185 million institutional piece. The loan will join the Los Angeles-based company's CSFB-led amended and restated credit, originally put in place in 2001. The entire deal now includes a $90 million revolver, a $50 million "A" loan and a $260 million "B" piece. The pro rata is priced in the LIBOR plus 31/4-33/4% range.

About $450 million in institutional tickets rolled in for Rite Aid Corp.'s $1.15 billion "B" piece after last Wednesday's bank meeting. Citigroup and J.P. Morgan lead the company's $2 billion refinancing package. A banker familiar with the deal said about $200 million was committed by buysiders ahead of the meeting and then another $250 million was committed afterwards by the "B" investors. About $1 billion has been committed by pro rata players who will take portions of the "B" loan and the $850 million revolver, the banker added. Both tranches are priced at LIBOR plus 33/4%. An official at Citi and a J.P. Morgan spokesman declined to comment.

Wachovia Securities and Lehman Brothers are teaming up to launch syndication of a $200 million deal that backs the buyout of Johnson & Johnson's JELCO intravenous catheter business by medical device manufacturer Medex and One Equity Partners--the private equity arm of Bank One. The credit, scheduled to hit the market tomorrow, includes a six-year, $175 million "B" loan and a five-year, $25 million revolver.

CIBC World Markets pitched an add-on $48 million "B" loan last Tuesday for petroleum transporter The Kenan Advantage Group to back two acquisitions for the Canton, Ohio-based company. A banker familiar with the deal could not offer details about the acquisitions, but he said the four-year add-on piece is priced at LIBOR plus 4%, in line with the existing $45 million "B" loan. The existing credit was executed in April 2001 and also includes a five-year, $15 million revolver and a $45 million "A" loan priced at LIBOR plus 31/2%. First Union National Bank, LaSalle Bank and Key Bank are also agents on the credit.

Credit Suisse First Boston and Merrill Lynch were scheduled to launch syndication last Friday for a $100 million refinancing deal for Jafra Cosmetics International. The five-year credit includes a $40 million revolver and a $60 million "A" loan. Pricing for the deal could not be confirmed by press time, but the current facility is priced at LIBOR plus 25/8% and includes a $65 million revolver and a $25 million "A" piece. J.P. Morgan is the syndication agent on the existing deal, but Merrill is taking the role in the new credit. The company's Mexican division is also issuing $175 million in notes due 2011 alongside the B1-rated credit. CSFB and Merrill bankers did not return calls.

Bank lenders were being rolled into Kmart's $200 million "B" piece that was originally set aside for institutional players after buyside commitments left the tranche short last week. GE Commercial Finance, Bank of America and Fleet Retail Finance were allocating the $2 billion exit facility to mostly agent round lenders. A banker familiar with the deal would not comment on the level of institutional "B" loan commitments, but he noted that the credit was not like a normal leveraged deal because pricing for the term loan and the $1.8 billion revolver were the same at LIBOR plus 31/2%. The term loan was implemented for the "B" player's benefit, he said.