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Southern Power, the newly launched non-regulated generation subsidiary of Southern Co., is seeking to round up $1.5 billion in the form of a non-recourse bank deal to back expansion, according to Chris Kysar, director of capital markets and leasing at Southern Co. Kysar told Power Finance & Risk, an LMW sister publication, that Southern Power plans to build plants in Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina and Tennessee.

Michael Salshutz, a former Institutional Investor-ranked second-team analyst in the chemical industry with Credit Suisse First Boston, has joined Deutsche Bank Securities in the same capacity, according to a senior junk official at Deutsche Bank. Salshutz, who had been with CSFB for several years prior to its recent merger with Donaldson, Lufkin & Jenrette, will report to high-yield research co-heads David Bitterman and Andrew Van Houten and be based in New York.

Houston-based Greka Energy Corp. increased its five-year credit facility with GMAC and completed a new revolving credit line with Bank of Texas to replace an existing credit line the company had with Canadian Imperial Bank of Commerce. Jim Blackman, director of investor relations, said the company opted for a facility with Bank of Texas rather than refinance with CIBC because the new bank was willing to increase the facility level from $7 million to $16 million and provide less restrictive covenants allowing the company to pursue an acquisition plan this year. "We needed more money to make strategic acquisitions," said Blackman, explaining that the company is eyeing properties in Louisiana for future drilling opportunities. "Bank of Texas is also willing to provide more funding if we prove up the reserves," he added.

Bankers said pricing on the Fairpoint Communications deal has risen 50 basis points on both the "B" and "C" tranches to attract players as Deutsche Bank and Bank of America have been struggling to get the credit through syndication. Market chatter is that the $150 million add-on deal is not getting a lot of attention as more attractive deals for Williams Communications and Level 3 Communications are rumored to be having syndication trouble of their own in the face of a recent flood of telecom deals. Calls to banks and the company were not returned by press time.

First Union is in the market with a $200 million credit facility for Dairy Farmers of America, Inc. The 364-day facility replaces the company's existing $175 million, 364-day credit. In addition to the 364-day, the company will amend its $175 million, three-year revolver. Jerry Boss, cfo, said the company needed to increase the credit by $25 million for use as a commercial paper backstop and for other general corporate purposes. "We wanted to add more liquidity," said Boss.

The pro rata piece of Merrill Lynch's $900 million credit backing industrial packager Grief Brother's acquisition of Huhtamaki Van Leer traded up after the deal closed recently, providing a glimmer of hope for credits in what has been a brutal pro rata market. "The pro rata traded inside the fees," said a participant banker, noting that the deal carried commitment fees of 5/8% and 1/2% on commitments of $25 million and $15 million, respectively. The credit's $400 million term "B" blew out quickly after the February launch as 60 accounts clamored to get a piece of the BB/Ba3 credit, which traded around 1001/2 after close.

Sole underwriter J.P. Morgan Chase held a bank meeting last Thursday to launch syndication of a $1.05 billion deal for Alliant Techsystems. The credit comprises a six-year, $250 million revolving credit and a six-year, $300 million term loan "A," both priced at LIBOR plus 23/4 %, and an eight-year, $500 million term loan "B" priced at LIBOR plus 31/4 %. Alliant Techsystems is a Hopkins, Minn.-based producer of gun powder, smart bombs, and rocket propulsion systems.

J.P. Morgan Chase is in the market with a $105 million credit for food and beverage company Mafco Worldwide Corp. for acquisition financing. Todd Slotkin, cfo, declined to comment on details regarding the facility and acquisition plans. Credit Suisse First Boston will act as administrative agent and BNP Paribas has signed on as documentation agent. The deal comprises a $15 million revolving credit and a $90 million term loan "B," both priced at LIBOR plus 31/2 %.

A $1.3 billion asset sale has reportedly pushed up levels for J.C. Penney Funding Corp.'s bank debt to the mid-90s in two trades last week, dealers said. It could not be determined by how much levels have risen. "Buyers like the liquidity of the company, while sellers are getting out of the retail name," a trader noted. The company is selling its direct marketing business to Aegon, a Dutch insurance company. J.C. Penney, based in Plano, Texas, is in the retail and distribution business.

Market players are eagerly awaiting this week's launch of the Credit Suisse First Boston- and Morgan Stanley Dean Witter-led $820 million credit backing the leveraged buyout of energy equipment provider Dresser Equipment, sponsored by Odyssey Partners and First Reserve Corp. "This will definitely blow out," said one banker who has seen the deal, pointing to the $455 million term "B" as a tranche institutional buyers will be jumping on. Bankers said the scarcity of well-structured, strong credits bodes well for Dresser. "It's expected to rate BB- and it's an industrial. This thing is right in the zone," said another banker. Market sources said Dresser will quickly avert attention away from telecom credits as the market has become more bullish on the energy sector.

A $5 million piece of Emmis Communications' bank debt traded up this week to par on the heels of the company's announcement that it will come to market with a $200 million bond deal. Dealers attributed the trade to the bond deal, which would be subordinate to the bank debt and make paper more attractive. Dealers observed initial appetite for the paper early last week following the announcement. "The paper should trade up. We have seen a few retailers sniffing on it today," a trader observed. Another market player predicts the paper will trade up to the 100 3/8 range. "There has been some weakness in the company," he said, giving his take on why the bond deal was done. He noted that the company will make only $160 million in proceeds from the bond deal. Still, another market player says Emmis is still viewed as a strong credit. "Clearly, most investors are watching the fundamentals in the broadcasting industry closely, but most feel that the loan offers good value at par," he said.

The $175 billion California Public Employees Retirement System, is considering a dedicated allocation to domestic junk bonds, and could begin searching for as many as five high-yield bond managers to handle an initial $1 billion. According to market sources, this is the first time in nearly a decade that the West Coast behemoth is entering the junk market. Curtis Ishii, investment officer for global fixed-income, says the fund's investment officials have drawn up a recommendation to begin searching for junk bond managers, and sent it to the plan's board for approval at its meeting today.