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J.P. Morgan and Deutsche Bank are preparing to market a $1.6 billion bank deal that will consolidate and refinance the combined debt of Riverwood Holdings and Graphic Packaging, which are set to merge. The overall debt of the two packaging companies will be $2.2 billion, and investors are expecting a hefty "B" loan to liven up the market.

The Alcentra Group, the leveraged loan asset management shop formed last year through the acquisition of Imperial Credit Asset Management (ICAM) in the U.S. and then Barclays Capital Asset Management in Europe, is on the road with a new collateralized loan obligation called Pacifica II. The $300 million deal will consist mainly of U.S. leveraged loans with the underwriting role split between Credit Suisse First Boston and TD Securities. A source said the use of two lead underwriters is not that unusual considering the current markets. Furthermore, even though spreads are rising on the AAA liabilities, the underlying spreads are "pretty healthy." Pricing on the notes is scheduled for sometime within the next three months, the source added.

Despite a heavy focus on HealthSouth Corp. last week, none of its bank debt changed hands in the secondary market. Traders quoted the paper in the 80s when net-backs due to unfunded commitments are taken into account, and in the mid-60s when only the net-backs from letters of credit were included. One dealer speculated that the paper could ultimately be worth about 55 cents on the dollar. Last week, the company's banks blocked the $350 million in maturity payments due on HealthSouth's 31/4% convertible notes and a $17 million interest payment due on its 103/4% notes. He said that about 25% of the company's $1.25 billion revolver is estimated to be funded with another 6% being allocated to letters of credit. A spokesman for the company declined comment.

AES Corp. bank debt got a slight boost from the news that the company has reached agreements to conduct three asset sales that will produce about $327 million in proceeds. The company's "B" piece was quoted in the 97 3/4 98 1/2 context, up from the 96 1/2 97 1/2 range after the news. AES will apply 80% of the proceeds from these latest asset sales to its senior bank and bond debt on a pro rata basis, explained Ahmed Pasha, AES' investor relations spokesperson.

Aurora Foods was a touch stronger last week as market players anticipated positive news at the company's bank meeting last Tuesday. The bank debt was quoted last Monday in the 92-93 1/2 context up from the 91-92 range. The details of the bank meeting could not be determined, but the bank debt held its levels after the meeting. Traders did say that pending asset sales were not discussed. Aurora Foods has been working toward the divestiture of its frozen foods businesses and has stated that a sale is expected in the near future.

PNC Bank and National City Bank kicked off syndication of a $175 million refinancing credit last Thursday for carbon compound and forest products producer Koppers. The deal includes a four-year, $100 million borrowing-base revolver and a four-year, $75 million "A" loan. Donald Davis, v.p. and cfo of Koppers, said the meeting was well attended, declining to discuss specific pricing details. But, he noted that the rates are comparable to Koppers' existing facility.

BlackRock Financial Management is returning to the CDO market with Magnetite V, a $300 million leveraged-loan backed collateralized debt obligation. Bank of America is the lead underwriter, as BlackRock, the asset management arm of PNC Bank, seeks to complete another deal in the Magnetite series. BlackRock has funded a series of five leveraged finance CDOs, including two market value collateralized bond obligations (CBOs), two cash flow high-yield CBOs and one CLO, which together totaled $2.6 billion.

Bob Votteler, v.p. and treasurer of Central Parking, is relieved that the company's $350 million credit is finally closed after some ill-timed company news last month almost jeopardized the deal's completion. "I couldn't begin to tell you how happy I am that it's done," Votteler told LMW. He explained that "sort of a perfect storm" hit the parking facility company at the time the credit was cruising en route to a done deal. A reported invoicing error that reduced earnings, the resignation of CFO Hiram Cox and a related stock decline all caused ticket-holding lenders to second guess the credit (LMW, 2/24).

Los Angeles-based asset management firm Centre Pacific has shelved plans for a high-yield collateralized loan obligation (CLO) and is instead seeking to complete a synthetic investment-grade transaction. This will be the first time Centre Pacific has managed an investment-grade structured deal, but the conditions for issuing high-yield CLOs are not opportune, said David Gold, managing director of Centre Pacific. "Issuing the notes/equity is the difficult task in the current environment. Synthetic investment grade issuance is rapid and more certain today," he said. Centre Pacific will be looking for a lead bank in order to execute a transaction in the second quarter, he stated.

Credit Suisse First Boston was set to cut off commitments on a drive by $580 million facility for utility company Aquila last Friday after it oversubscribed more than three times one day after launch. The proceeds are for certain obligations and will refinance the company's debt maturing on April 11. The deal includes two "B" loans-- a one-year, $150 million piece and a three-year, $430 million loan. The one-year loan is callable at par and starts pricing at LIBOR plus 4%. The rate steps up 200 basis points every 90 days, according to a banker familiar with the deal. The three-year piece is priced at LIBOR plus 53/4% and is secured by first mortgage bonds against the Michigan and Nebraska utilities with a first lien on the Canadian utilities. The larger loan also has a second lien on IPP assets and it must, in best efforts, further collateralize with first mortgage bonds on the U.S. assets, the banker added. Once this is completed to a predetermined ratio, the rate will step down to LIBOR plus 5% on the piece. He said the company did not collateralize with the U.S. first mortgage bonds right away because of delays in regulatory approval. "This is a mechanism for collateral substitution," he explained. The three-year piece may be called at Treasuries plus 50. There is also a 3% LIBOR floor on both loans.

Credit Suisse First Boston and Deutsche Bank closed out AmeriPath's $290 million credit last week. A banker familiar with the situation said no further changes were made to the deal after some tweaks to the bond and bank debt occurred earlier this month (LMW, 3/17). The deal includes a $225 million "B" loan priced at LIBOR plus 41/2% with an original issue discount of 1%. There is also a $65 million revolver priced at LIBOR plus 31/2%. The credit backs plans by Amy Acquisition Corp., a Welsh, Carson, Anderson & Stowe company, to acquire the cancer diagnostics provider for $839.4 million, which includes AmeriPath's 2002 debt and about $65.1 million in contingent obligations. The B+/B1-rated credit accompanies a $275 million bond deal that also backs the transaction.

Fleet Capital has amended Dixie Group's senior credit line, reducing its size from $150 million to $128.3 million but increasing the amount the company can access. Gary Harmon, Dixie's cfo, said the amendment was done in order to increase the term loan by $4.5 million and allow for an additional $10 million availability under the revolver's borrowing base. The closing of the refinanced facility also involved a bank shuffle with Foothill Capital stepping into the group, which continues to include Congress Financial and La Salle Business Credit. General Electric Capital Corp. and Transamerica Business Capital are no longer part of the Fleet-led deal.