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Two seasoned leveraged finance players have left their posts at General Electric Capital Corp. and U.S. Bancorp to serve the ultra-low end of the middle-market with a new leveraged buyout fund. Richard Buckanavage, formerly a managing director for sales and market intelligence in the loan syndication group at GE and Timothy Hassler, a former v.p. of capital markets at U.S. Bancorp, have co-founded the new Westport, Conn.-based fund Patriot Capital Funding.

Investors devoured at least $1 billion of the $1.5 billion institutional loan for Allied Waste Industries by the time last Wednesday's retail bank meeting was held. Pricing tightened from LIBOR plus 31/2% to LIBOR plus 31/4% ahead of the launch because of the strong reception, a banker stated. The coupon still beats the existing term debt's LIBOR plus 23/4-3% spreads. More investors were expected to jump into the loan last week as LMW went to press, and another market player suggested that pricing could be flexed down further. The "B" piece is joining a $1.5 billion revolver that had been filled out ahead of the retail launch and priced at LIBOR plus 3% (LMW, 4/7). J.P. Morgan and Citigroup are leading the $3 billion refinancing credit, with UBS Warburg, Credit Suisse First Boston and Deutsche Bank also serving as top tier agents. Bankers on the deal either declined to comment or did not return calls.

Creditors to Hayes Lemmerz International reached a compromise that will allow the company to go forward with its reorganization. Bank debt holders wanting more value coming out of bankruptcy did not consent to the company's previous plan of reorganization, leading senior noteholders to threaten litigation, and sending creditors back to the table (LMW, 4/7). The bank debt traded in the 82-83 1/2 context after the new plan was announced up from the 80 1/2-81 range where it was moving two weeks ago.

InSight Health Services has added a new $50 million, three-year delayed-draw term loan that the company intends to use as an acquisition line. The company recently tapped some of the new facility to fund its purchase of 13 diagnostic imaging centers from the Comprehensive Medical Imaging subsidiaries of Cardinal Health. Acquisitions are one of the pillars of the company's three-part growth strategy, noted Kent Tuholsky, InSight treasurer. Internal growth and the development of de novo centers, or new operations, make up the other two pillars, he said. Tuholsky declined to comment on how much of the loan has been used.

The $200 million "B" piece financing Kmart's exit from bankruptcy picked up a $30 million ticket from Eaton Vance ahead of the retail launch. Whitehall Business Credit and one other shop also were named as participants last week. One source said LongAcre Capital Partners was the third ticket holder, but an official at LongAcre denied this. A banker familiar with the deal would not cite the size of the two additional tickets, but he said that more investors were getting close to signing on late last week. GE Commercial Finance, Bank of America and Fleet Retail Finance are shopping the loan along with a $1.8 billion revolver in order to facilitate the mass merchandising retailer's "fast-track" plans to emerge from bankruptcy by April 30.

Murry Stegelmann, a managing director and head of the bank loan group at General Electric Capital Corp., is set to leave the firm in the next few weeks to start a distressed debt fund based in Norwalk, Conn. Stegelmann is dipping his toes into the pool of distressed funds that have formed in droves in recent years, responding to the market's downturn and the resulting influx of distressed paper. Stegelmann declined to comment.

Tesoro Petroleum's new bank deal was trading in the 100 3/8 101 context after the credit broke into the secondary market last week. With a non-call provision in the first year and 103 call protection for the second, one trader thought that the bank debt would be trading at more of a premium. A dealer commented that Tesoro "is not out of the woods yet." He said although the new deal has a decent interest rate and call protection, the old deal traded in the mid 90s before the refinancing got underway.

Tesoro Petroleum Corp.'s $800 million credit, which broke into the secondary market last week, still has high leverage despite reductions in the size of the line. The company downsized the line from $1.275 billion, keeping on track with its goal of debt reduction, but the acquisition of three refineries in the last 18 months has still left Tesoro with a substantial debt load, explained Bryan Caviness, director at Fitch Ratings. Fitch has assigned the senior secured credit a BB- rating with a negative outlook, reflecting the company's high leverage and ongoing volatility in the global crude market and U.S. refining sector.

UBS Warburg's $130 million deal backing the leveraged buyout for ILC Industries by Behrman Capital is now full after investors were offered higher pricing and a juicier up-front fee. A banker familiar with the credit said it will fund this week and was done with a combination of middle-market lenders and institutional investors. Additionally, The Blackstone Group is said to have signed up for an increased mezzanine piece, with a coupon north of 161/2%. But, a banker said the yield is in the low teens.

James Bolin, a portfolio manager and secretary of Appaloosa Management, has left the firm to join Citadel Investment Group in Chicago. An official at Appaloosa confirmed he left last month, but could not comment further, referring calls to Ron Goldstein, v.p. and cfo. Goldstein did not return calls by press time. Bolin has joined Brad Couri's group at Citadel, according to a source, who added that Bolin would concentrate on distressed debt. Bolin and Couri also did not return calls.

AUSTRALASIA Australia

PT Bank Mandiri aims to launch its $200m five year deal today (Friday) instead of next week, on the back of surprisingly strong investor demand. The background of the Iraq war, the continuing spread of severe acute respiratory syndrome (Sars) in Asia and the upcoming Easter holiday proved to be no hindrance to the state owned Indonesian bank, and the transaction attracted a strong order book.