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The possibility of further weakening in the markets that Global Imaging Systems serves is a source of concern for the office technology provider's credit quality, said Paul Aran, v.p. and senior analyst at Moody's Investors Service. Global's business could also be invaded by bigger companies that normally do not serve Global's middle-market niche, but are forced to shift focus, searching for profitability in a weaker economy, Aran explained. Larger competitors may step up efforts to gain market share through more aggressive pricing. Global offers a line of digital office imaging solutions including the sale and service of copiers, fax machines and printers, along with video conferencing and other electronic presentation systems.

Goldman Sachs is reported to have won the bidding to provide a $300 million loan to The Mills Corp. for its $435 million purchase of the Del Amo Fashion Center in Torrance, Calif, according to sister publication Real Estate Finance & Investment. Goldman had a leg up as it marketed the massive property on behalf of seller Guilford Glazer. Officials at the Arlington, Va.-based real estate investment trust were in Spain for the opening of Madrid Xanadu and could not be reached while David Douglass, director of corporate communications at Mills did not return calls. Officials at Goldman also did not return calls for comment.

GSC Partners, a domestic and European investment firm with about $6 billion in capital under management, has wrapped up the fundraising for the GSC Recovery II Funds, which will invest $757 million in distressed debt. The fund is only partially invested. "There is still a sufficient amount of unallocated capital," said a source familiar with the new fund. GSC Recovery II will employ the same strategies as GSC Partners' original recovery effort that was completed in 1998. It is an opportunistic, broad-based fund that seeks fundamental value across a wide range of industries, noted the source.

Huntsman Corp. is pursuing a $250 million bond deal with all the proceeds directed to paying down the company's $450 million "B" loan, said Sean Douglas, Huntsman's treasurer. The "B" piece traded up in the 95 range last week in anticipation. Market players believe the company will also choose to increase the size of its bond offering just short of an amount to take out the entire "B" piece, but Douglas declined to comment on the possibility of a larger offering or give a ball-park coupon for the new issue.

The five-year, $150 million "B" loan for PacifiCare Health Systems was oversubscribed last week after J.P. Morgan and Morgan Stanley pitched the $300 million refinancing deal to investors with spreads of LIBOR plus 31/2% on the institutional piece and LIBOR plus 31/4% on the three-year, $150 million revolver. The rates are cheaper than those that the commercial health plan and Medicare HMO provider received for its deal in 2001. That credit was priced in the LIBOR plus 5% range after leads Morgan Stanley and Bank of America had to juice up the interest rate because of investors' concerns over management's ability to reduce cost issues.

Kevin Petrovcik is the product manager for INVESCO's bank loan and CDO group and the chair of The Loan Syndications and Trading Association's CDO group. He is responsible for the ongoing product development, structuring and marketing of new investment funds for the INVESCO group, which manages over $5 billion in bank loan and high-yield bond assets, including over 10 CDO structures. The LSTA established the CDO committee last year to identify and address specific issues relating to collateralized loan obligations and collateralized debt obligations within the syndicated loan marketplace.

As bigger M&A deal flow moves at a snail's pace these days, middle-market leveraged buyout credits are swamping the bank debt arena. Buyout firms are pushing the leverage envelope, given the improved availability of financing, said David Horing, managing director at private equity firm American Securities Capital Partners. "The market has improved and it's possible to get greater levels of debt financing than six [to 12 months ago]," he said. Recently closed middle-market LBO credits include Oreck Corp., Breed Technologies and ILC Industries, while new deals Medex and Pure Fishing are in syndication.

After surging up out of the 70s since the end of last month, Mirant Corp.'s bank debt has lost some steam. Small pieces of the company's revolvers traded in the 83-85 context last week, traders said. The bank debt ran up as high as 852/3-881/3, according to LoanX, before this recent slouch. Lenders are getting frustrated with the company's slowness in restructuring its debt maturities and the volatility of its bank debt is attributed to behind the scenes negotiations. Mirant has not completed a deal in this market where everything is getting done quickly, said one trader. The company is looking to restructure $5.3 billion of debt maturing through 2007.

An aggressive acquisition strategy and a weakened economic environment have left Neenah Foundry Company highly leveraged at 7.5 times without the cash flow necessary to service the debt, according to Moody's Investors Service. After violating covenants under its bank debt agreements and missing a $15.8 million interest payment on its senior subordinated debt due in May, the company is in negotiations with creditors to restructure its balance sheet and reduce debt. Neenah's lenders have granted the company a forbearance agreement for the violations until May 31. The credit facility includes a $28.5 million revolver and a $1.6 million term loan "A" due in September, a $112.7 million "B" piece due in Sept. 2005, and a $7.2 million acquisition loan due in June 2005. All the facilities were downgraded from Caa1 to Caa3 by Moody's, except the revolver, which is unrated. J.P. Morgan leads the company's bank debt.

School Specialty has added The Royal Bank of Scotland and Associated Bank to its roster of lenders for a newly refinanced $250 million credit and expects it might conduct available non-loan business with the new banks as it has done with existing lenders. "[RBS and Associated] were active in the Midwest marketplace and we invited them to take a look at the credit," said Mary Kabacinski, executive v.p. and cfo, explaining what prompted the syndicate additions for the Greenville, Wis.-based company.

Allegiance Telecom's bank debt held its ground in the mid-to-high 60s after the company filed for bankruptcy last week. The market for the competitive local-exchange carrier's bank debt has been quoted slightly stronger since the end of last month. "CLECs in general have been better lately," said one trader.

The $170 million "B" loan for Werner Ladder was three times oversubscribed last week, according to market players. Citigroup and J.P. Morgan are shopping the credit. Bankers did not indicate any changes to the LIBOR plus 31/4% price talk for the six-year institutional piece. "The revolver is doing fine," said one banker who would not confirm if it was fully subscribed yet. The five-year, $60 million revolver is priced around LIBOR plus 3%. Proceeds from the credit and from a sale of company stock to Leonard Green & Partners are to refinance the company's existing credit and to help redeem $150 million in common stock (LMW, 5/12). Majority shareholder Investcorp will keep a 51% stake in the company after the recapitalization plans are completed. A Citi official declined to comment, while calls to J.P. Morgan bankers and Larry Friend, Werner's v.p., cfo and treasurer, were not returned.