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Reworked Cov-Lite Berry Breaks Above Par

05 Apr 2007

The $1.2 billion covenant-lite term loan "B" for Berry Plastics broke for trading last Monday around par 1/8-3/8 and traded up to par 1/2-7/8, according to a dealer.

The $1.2 billion covenant-lite term loan "B" for Berry Plastics broke for trading last Monday around par 1/8-3/8 and traded up to par 1/2-7/8, according to a dealer. The deal originally hit the market March 14 as a $400 million asset-based revolver priced at LIBOR plus 1 1/4% and a $1.16 billion term loan "B" priced at LIBOR plus 1 3/4%. It was reworked during syndication into a six-year, $400 million revolver and the eight-year, $1.2 billion term loan. Both tranches are priced at LIBOR plus 2%. Jeff Thompson, executive v.p. and general counsel, declined to comment on the credit.

The loan is being used by Apollo Management to join two of its plastic packaging portfolio companies, Berry Plastics Corp. and Covalence Specialty Materials Corp., into a new company to be called Berry Plastics Group (CIN, 3/19). Thompson explained the merger will allow Berry to enter the realm of flexible plastic packaging, which is Covalence's focus. Berry's CEO, Ira Boots, and Chief Operating Officer, Brent Beeler, will continue in their roles, while the former CEO of Covalence, Kip Smith, will stay on as executive director of both companies. Further management changes are still being worked out, Thompson said.

The credit refinances a $675 million existing "B" term loan for Berry and a term loan "C" and second priority floating rate loan Covalence has in place. Credit Suisse and Deutsche Bank were the joint lead arrangers on the term loan and Bank of America and Goldman Sachs were the lead arrangers on the ABL. Citigroup, JPMorgan and Lehman Brothers are also involved in the financing.

Apollo hit up Credit Suisse and Citi in August for an $875 million credit to back its buyout of Berry's parent company BPC Holdings (CIN, 8/7). The deal comprised a six-year, $200 million revolver and the refinanced $675 million term loan. Both tranches were priced at LIBOR plus 2%.

05 Apr 2007