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Investors Force Concessions On Aggressive Repricings

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Several repricings have been reworked over the past week after major gripes from lenders, who are becoming more organized in their opposition to aggressive moves by borrowers.

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Several repricings have been reworked over the past week after major gripes from lenders, who are becoming more organized in their opposition to aggressive moves by borrowers. The repricing for Rockwood Specialties Group closed last week after the company reduced its request to LIBOR plus 2 1/4% with a step-down to LIBOR plus 2% when leverage falls below four times. The deal also includes soft call of 101 that was thrown in a day after the deal launched. The company originally went after a 1/2% reduction with Goldman Sachs, Credit Suisse First Boston and UBS leading the credit. Rockwood is a Kohlberg Kravis Roberts & Co. portfolio company.

CSFB is following a similar formula for Jostens Intermediate Holding Corp., which went back out to investors last week and halved its requested reduction. The company is now looking to price the credit at LIBOR plus 2 1/4% with a step down to LIBOR plus 2% if leverage falls below 4.25 times. The deal originally went out with 101 soft call. The "B" loan is currently priced at LIBOR plus 2 1/2% and the company was asking for a cut to LIBOR plus 2% with a step down to LIBOR plus 1 3/4%. "We'll probably okay the reworked credit," one portfolio manager noted. Jostens returned quickly to market after putting the bank loan in place Oct. 4 to back a recap of Jostens, Von Hoffman Corp. and Arcade Marketing by KKR and DLJ Merchant Banking Partners (LMW, 9/13).

The Citigroup-led repricing for PanAmSat is also being reworked, while a repricing for U.S. Oncology was pulled after investors reportedly would only agree to a 1/4 % cut.

The fourth quarter has seen the largest volume and number of refinancings ever, with the month of November being the most active, according to Standard & Poor's Leveraged Commentary & Data. Almost 50% of the refinancings in November sought to cut the spread by 1/2 %. "It's hard to imagine anything else getting repriced after this," one portfolio manager noted. But one banker said repricings are still getting done, even if arguments are getting more hostile. "You have to be more conservative," he said, noting that investors are certainly more organized.

A U.S. Oncology spokesman and officials from Welsh, Carson, Anderson & Stowe, which owns the cancer care company, did not return calls. CSFB and UBS bankers and spokesmen for KKR and Rockwood declined comment. Goldman bankers and a Citi spokeswoman did not return calls. A Jostens spokesman and Michael Ingelese, PanAmSat's cfo, did not return calls.

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