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Dole Deal Set To Hit Market Amid Brewing New Year Pipeline

05 Jan 2003

Lenders looking for a fresh start in 2003 are chirping about a busy pipeline for the first two months of the year, and investors are setting their sights on the $1.6 billion deal for Dole Food Company coming next month. Deutsche Bank, Scotia Capital and Bank of America are leading the deal, one in a lineup that is set to take the field after clearing the holiday season. The credit will back Dole's $2.5 billion buyout agreement with David Murdock, Dole chairman and ceo, and will also refinance some of Dole's existing debt. Investors that have been looking for paper are waiting for the credit. "It's a big liquid deal and they have been in the high-yield market for some time," one investor stated, adding that it is collateralized by real estate. A B of A official declined to comment, while Deutsche Bank and Scotia Capital bankers did not return calls. Murdock and other officials at Dole did not return calls.

Additional Dole financing is slated to include up to $1.15 billion in senior secured credit facilities, with up to $850 million in term loans, as well as $300 million in revolving credits that will be drawn at closing. Up to $450 million of new debt securities will also be put in place.

Bankers and lenders alike are hoping to start 2003 with a bang. "We're hearing a good January," said a banker regarding the pipeline for other credits. Mark London, managing director and co-head of U.S. leveraged finance at ABN AMRO, added, "January is looking moderately busy for us. We see it picking up from November and December." ABN is set to launch its CSX Lines buyout credit this month, as well as another credit on which London could not offer further details (see story, page 3).

Consolidation within some sectors has prompted the relative loan deal surge, said John Finan, head of U.S. loans syndication at ABN. "There's definitely a lot of activity with the sponsors," another banker added. A different lender concurred, "We've got 10 deals hitting in two weeks and three are acquisition related." Juicy M&A deals for TRW Automotive, Houghton-Mifflin, Hollywood Casinos, Ameripath and Weider Publications are emerging in initial or retail launch within coming weeks (see page 3).

Bankers did acknowledge the loan market's moodiness. "Volume is lumpy," London said, confirming recent ebb and flow deal trends, such as the three, sandwiched directories deals from last quarter that pumped up M&A loan volume figures. "That was an awful lot of paper to come to market, which was a good thing," Finan added, noting that how it is absorbed is an important part of the picture.

05 Jan 2003