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Too much debt and weak cash flows could cook up into loan defaults for quick-service and family restaurant companies, according to sector analysts. "The entire industry, whether fast food, family-style, or casual, has been hurt by the economy [and] unemployment," said Jerry Hirschberg, a Standard & Poor's analyst. "Fast food and family dining has been hurt more than anyone else," he added.

Wachovia Securities is scheduled to launch syndication today of a $250 million refinancing credit for Tredegar Corp. The deal includes a five-year, $175 million revolver and a $75 million "A" loan, both priced at LIBOR plus 11/4%. In April, the Richmond, Va.-based company extended its $100 million, 364-day credit for one more year, but the company said in a filing that this extension was only an interim step taken until longer term financing was put in place by Sept. 30. This credit, also led by Wachovia, is priced in the LIBOR plus 11/4-15/8% range. Additionally, the company has a term loan with $225 million outstanding as of last June. This loan is priced in the LIBOR plus 1/2- 1% range.

Credit Suisse First Boston and Lehman Brothers are getting the ball rolling on a $2.3 billion exit and recapitalization financing package for bankrupt NRG Energy. A banker said the deal would most likely emerge at the end of this year or in the first quarter of 2004, depending on when reorganization approvals materialize. The financing commitment from CSFB and Lehman will expire at the end of the year, but can be extended through March 2004 if the company pays an extension fee. The company hopes to emerge on or before Dec.15.

Mirant Corp.'s bank debt was quoted higher last week with some market participants attributing the rise to news that the bankrupt power company has filed a motion with the bankruptcy court to reject an out-of-market agreement to purchase power from electricity distribution company Pepco. Mirant is also seeking to renegotiate the terms of two out-of-market agreements to sell power to Pepco. Traders said the '03 was being quoted at 45-46, the '04 at 451/2-47 and the '05 at 68-70, with these prices up about four points from pre-Labor Day ranges. No trades could be determined.

VCA Antech has refinanced $166.4 million in bank debt through lead banks Goldman Sachs and Wells Fargo, chopping pricing and increasing possible acquisition funding. The Los Angeles-based veterinary healthcare network approached the banks primarily to arrange better pricing, said Tomas Fuller, VCA's cfo. "[Given our] solid performance and the improved bank market, we saw the opportunity to get one more pricing adjustment," said Fuller. Last September, VCA refinanced $143.1 million of total outstanding "A" and "B" term loan debt with a "C" tranche, scoring a 63 basis point reduction in the interest rate.

Citigroup relaunched syndication of the $390 million credit for Quintiles Transnational Corp. last week, increasing pricing and lengthening the tenor of the originally proposed deal, according to a banker. The credit, which was originally pitched in June and met cold investor reception, backs the company's $1.7 billion buyout by Pharma Services Holding (LMW, 6/23). Pricing on the seven-year, $315 million "B" loan is at LIBOR plus 33/4%, 50 basis points higher than when the deal launched in June, the banker explained. One year has also been added to the tenor. The deal's five-year, $75 million revolver is now priced at LIBOR plus 31/4%. It was originally shopped at LIBOR plus 3% with a four-year tenor, he said. The facility is still being offered at par, the banker noted. A Citi banker did not return calls.

ShopKo Stores amended and restated its $450 million credit facility for four years and lowered its interest rate by 50 basis points, stated John Pindred, v.p. and treasurer. He explained that the company opted for an amended and restated credit agreement, rather than going with the one-year extension option that applied to the previous credit. "We needed to make a decision," he said. The Green Bay, Wis.-based company decided to accept proposals from members of its previous bank group and ultimately chose to continue its partnership with previous lead Fleet Retail Group, Pindred said. "The economics were the most compelling," he said of Fleet's proposal. "They've been a good partner," he added.

Simmons Co.'s credit rating has been put on watch with negative implications by Standard & Poor's after the mattress company notified the Securities and Exchange Commission of its intention to seek a buyer. "The reason the company was placed on credit watch negative [at BB-] is that while I have no info on the buyer, it's likely it will be a private equity investor that would then re-leverage the company," explained Martin Kounitz, an S&P analyst. According to Kounitz, changes in the rating "would depend on who the acquirer is and what they are going to do with the business. What will the pro forma capitalization look like? No one knows until someone has signed a definitive agreement."

Australia

Foster's Group, the Australian brewer, moved a step closer to the IPO of its pub, hotel and gaming businesses this week when the company announced it had secured sub-underwriters for the offering. Assuming everything falls into place, the prospectus could be released next week.

Indonesian gas transmission firm Perusahaan Gas Negara (PGN) held out against Treasury volatility and fragile international investor sentiment towards the country to price its postponed $150m 10 year put seven debut deal yesterday (Thursday).

Korea Development Bank stole the limelight in Asia this week by issuing a blow-out $750m 10 year global bond on Wednesday. And, pressing its advantage, it surprised the market the next day with a lightning launch of its Eu500m five year Eurobond.