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The $440 million credit backing Kohlberg Kravis Roberts & Co. and Trimaran Capital Partners' $610 million acquisition of International Transmission Co. (ITC) from DTE Energy scored with investors because of its straightforward and stable business, according to Dean Kehler, a managing partner at Trimaran. The six-year credit blew out after launch, resulting in an increased "B" loan. Kehler said while other utilities are struggling, DTE and ITC are stable regulated entities. "DTE is actually one of the healthiest utilities in the United States," Kehler said, explaining that the company was not financially strapped and it did not need to divest ITC.

Bill Hughes, a managing director in Deutsche Bank's senior debt capital markets group, left the bank for Lehman Brothers last week. Hughes managed deals in the telecommunications and energy sectors while at Deutsche Bank and is believed to be focusing on the same sectors at Lehman. Hughes will be reporting to Steve Sterling, a managing director at Lehman. A Deutsche Bank spokesman confirmed Hughes' departure, noting the firm is looking at internal and external replacements, while a Lehman spokeswoman did not return calls. Hughes could not be reached by press time.

Lenders representing more than one-third the outstanding bank debt claims of Hayes Lemmerz International were holding out on approving the company's current plan of reorganization last week, still looking for more recovery as LMW went to press. Across the table from the banks, senior note holders are threatening to take legal action that could impair lenders' recovery. "The banks who oppose the plan of reorganization may not have realized the weakness of their position," said one senior noteholder. "The unsecured creditors may well initiate litigation to attack the liens in Europe." Lenders seemed unfazed. "Frankly, I think they're bluffing," one lender said.

An auction of $54 million worth of NRG Energy's $2 billion credit facility held by its finance company was said to have gone off in the 27 1/2 to 28 1/2 context a week ago last Friday. The buyer and seller of the piece could not be determined. Traders said if the market for the finance company's bank debt rises into the 30s, there will be many more lenders looking to unload. Two weeks ago, the paper rallied from the low 20s after NRG's parent company, Xcel Energy, announced an agreement with NRG creditors that would give NRG a larger than expected payout (LMW, 3/31).

Pricing on the four-year, $400 million "B" loan for International Steel Group (ISG) is likely to be in the LIBOR plus 31/2% to 33/4% range after the credit received split ratings of Ba2/BB+ from Moody's Investors Service and Standard & Poor's (see story, page 7). Pricing on the two-year bullet $300 million "A" loan is expected to be in the LIBOR plus 3% to 31/2% range, while the $300 million three-year revolver will price at LIBOR plus 23/4%, said a banker. Retail syndication will kick off on Wednesday, he added. Goldman Sachs, UBS Warburg and CIT Group lead the $1 billion asset-based bank facility, which backs the $1.5 billion acquisition of Bethlehem Steel. CIT is collateral agent and will monitor the borrowing base and run all the metrics, explained the banker.

International Steel Group's (ISG) new collective bargaining agreement with the United Steelworkers of America allows the company to reduce labor costs through staff cuts and to shed its legacy liability for pension and healthcare plans. According to Steven Oman, senior v.p. at Moody's Investors Service, this provides sizeable cost and productivity benefits. Low leverage and margin enhancement opportunities contribute to the Ba2 rating on ISG's $1 billion senior secured credit facility, which in addition to private equity financing from WL Ross & Co., funds the acquisition of Bethlehem Steel Corp's assets.

Wachovia Bank has taken over the lead role from Fifth Third Bank to refinance and increase the bank debt of Latrobe, Pa.-based Le Nature's. Wachovia is providing a $200 million bank facility for the beverage producer. The new line comprises a $40 million revolver, a $125 million "A" loan and a $35 million capital expenditure facility, with pricing set at LIBOR plus 41/2%. The refinancing replaces existing debt and expands the facility, said John Higbee, cfo at Le Nature's. Higbee declined to disclose the size or pricing of the previous loan, but he said, "We're adding to our plants all the time."

The bank debt for Wyndham International regained ground as the company got a step closer to completing an amendment that will push out the maturity of the company's increasing rate loan (IRL) to align it with the 2006 expiration on its "B" loan. Market players said both pieces of paper were trading stronger after the company's bank meeting early last week with the "B" loan moving up about two points to the 74 1/2 75 1/2 context. Furthermore, the IRL, which used to trade at about a five-to-six point premium to the "B" piece, is now quoted in the 76 1/2 77 1/2 range. If the amendment gets approved the "B" and IRL essentially become the same piece of paper, one trader said, explaining the convergence between the two pieces.

Broadwing has amended its $1.8 billion credit line, completing a critical element of its recapitalization plan and providing the telecom-service company with the liquidity necessary to meet obligations until 2006. Broadwing amended the credit led by Bank of America and Salomon Smith Barney primarily to extend debt maturities. The renegotiated deal came at a cost though--an increase in pricing and a $220 million reduction in loan size. "We have what we need now," said Tom Osha, chief of staff at Broadwing. "Without the amendment we would have run into a liquidity issue late in the fourth quarter of this year."

The acquisition credit for Carlyle Management Group's acquisition of Breed Technologies on behalf of Key Automotive Group is still presenting a tough sell, as investors eye auto-sector deals with caution. Merrill Lynch Capital and Citibank have already altered pricing and the structure of the credit, carving a $50 million, six-year silent lien "C" loan out of the senior debt and pricing it at LIBOR plus 10%. The $210 million "B" is priced at LIBOR plus 41/2% and the $100 million revolver is priced at LIBOR plus 4%. Michele Kovatchis, the banker at Merrill working on the deal and a Citibank spokeswoman declined comment. Prior to the changes the credit consisted of a $110 million revolver and a $250 million "B" piece.

St. Marys Cement recently tweaked its five-year $300 million term loan to allow the company to transfer certain shares to a newly formed company to allow for tax savings. While St. Marys Cement has received approval from the Canadian Tax Authority for the transfers, it needed to amend its facility so the transfers would not be restricted under the terms of its credit agreement because the facility is secured by all the stock in the company's group. It was an amendment that the company needed to receive to complete its tax reorganization, commented Mike Pengelly, St. Marys Cement cfo.

Bank of America held a bank meeting last week for Stewart Enterprises to increase its "B" level debt by $50 million for the redemption of its Remarketable Or Redeemable Securities (ROARS). The Metairie, La.-based funeral home and cemetery operator is expected to redeem the $99.9 million outstanding ROARS in May and the company wants to have the additional "B" debt rather than use its revolver exclusively, according to Martin de Laureal, v.p. of investor relations for Stewart. The company has availability under its $175 million revolver to fund the ROARS redemption, but by tapping the "B" market the company will enhance its liquidity after the transaction and will still have $70 million on the revolver rather than $20 million, he noted.