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UBS has priced the notes for Prudential Capital Group's $349 million Dryden 4 collateralized loan obligation. The triple-A notes priced at LIBOR plus 54 basis points and the triple-B tranche priced at LIBOR plus 285 basis points, according to a source. The deal was initially slated to be $300 million.

AES Corp. has rolled the alphabet tranches of a previously restructured credit into a $700 million term loan, taking advantage of the market environment to cinch a cheaper interest rate. "The key benefit [of tapping the loan market at this time] was the liquidity in the market and the lower interest rates," explained Ahmed Pasha, a manager of investor relations for AES. The company also completed a $250 million revolver. Both tranches are priced at LIBOR plus 4%, a sizeable cut from the company's former facility, which carried a spread of 61/2% over LIBOR across all tranches. Citigroup is the lead on the company's new deal and led the old credit.

Moody's Investors Service has assigned Associated Materials' new debt package the same rating as the company's existing loan, despite the slightly increasing leverage. The company is adding to its term loan by $113.5 million and its revolver by $30 million to back its acquisition of Gentek Holdings for $118 million in cash. Currently, Associated Materials has a $40 million revolver, $76.5 million outstanding on its "B" loan and $165 million of 93/4% senior subordinated notes. With the increased debt for the Gentek transaction, Moody's expects that total leverage will rise to 4.2 times from 3.75 times. But Moody's anticipates that the company will use its free cash flow, which has been solidly positive since 2000, to pay down the bank lines. UBS and Credit Suisse First Boston are shopping the deal (see story, page 3).

Buckeye Technologies was able to get loosened financial covenants for its credit facility agreement through the end of the deal's term in response to economic conditions that prevented the company from meeting the deal's original terms, explained Gayle Powelson, senior v.p. and cfo. Covenants related to debt-to-EBITDA and other performance targets were softened so that the Memphis, Tenn.-based company could be in compliance with the credit agreement, she said. Pricing on the $215 million revolver did not change, Powelson noted, stating that the spread is based on a grid tied to leverage, presently set at LIBOR plus 33/4%. The manufacturer and marketer of specialty cellulose and absorbent products has $207.5 million drawn on the facility as of June 30.

Citigroup has priced the notes for a TCW collateralized loan obligation that is comprised entirely of pro rata loans. The $500 million TCW Pro Rata I will synthetically invest in an actively managed reference portfolio of 75-100 revolver and "A" term loans. The deal is said to be the first of its type to exclusively invest in the pro rata, which has in recent years been shunned by banks and institutional investors due to poor returns and the complication of funding revolvers (LMW, 2/3).

Duane Reade has completed its first ever asset-based credit facility for $200 million. The largest drug-store chain in the New York metropolitan area decided to switch from a cash-flow deal to an asset-based structure in order to gain more flexibility and better pricing, said John Henry, senior v.p. and cfo. Henry said the company considered both cash-flow and asset-based alternatives early on in the refinancing process, but found the cash-flow rates and syndication requirements less appealing this time around. "[The new credit was] easier to syndicate because there are fewer banks involved," he added.

Energy names weakened in the secondary loan market last week under pressure from Calpine Corp.'s new $750 million CCFC1 credit. AES Corp.'s recently completed deal traded off into the 983/4 991/2 context and Allegheny Energy's second-lien loan traded down into the 92- 94 range from the 95-96 context where it was moving last month. "The market ran way too far ahead of itself," noted one trader

Federal bank regulators are preparing to set banks straight on the issue of linking commercial loans to investment-banking business, or loan tying. There is a growing conviction at the Federal Reserve and the Office of the Comptroller that guidance to the nation's biggest banks is needed, a Fed spokesman confirmed last week, and it is now a question of how quickly it will happen. The core issue is just what Section 106 of the Bank Holding Company Act will let banks do. Outside sources were predicting that the guidance will hone in on where that line is to be drawn in future. The banks point out that at present, Section 106 does not ban tying if it is voluntarily entered into. And they argue the law says only if banks exact some "condition or requirement" for getting the loan (beyond routine banking services such as deposits) is tying illegal.

GEO Specialty Chemicals is waiting on approval from its senior lenders for a loan commitment that would help it avoid defaulting on a senior notes payment. Deutsche Bank and Citigroup lead GEO's existing $125 million credit, which includes a $105 million term loan priced at LIBOR plus 6%. GEO was in violation of credit facility covenants as of last June 30 and it missed an interest payment on its notes on Aug. 1. Now, the company is looking for approval of a new loan, which has been committed, so it can make the interest payment within a 30-day grace period. If GEO does not make the payment--$6.1 million--within the grace period, it will be in an event of default under a governing indenture.

The Official Committee of Unsecured Creditors to Exide Technologies has filed a motion to stay the proceedings on the company's plan of reorganization and disclosure statement. But levels for the loan only softened to the 59-611/3 context, according to LoanX. Mid July, the levels had risen to the 63-64 range following the filing of the company's plan of reorganization (LMW, 7/21). The bulk of the equity of a reorganized Exide is slated to go to bank debt holders.

San Jose, Calif.-based Calpine has incorporated a spark-spread hedge into a $750 million power plant refinancing package, a feature that ensures debt interest will be paid even if generation margins deteriorate for the gas-fired generation portfolio, according to sister publication Power, Finance & Risk. Bankers said the power plant financing is likely the first of its type to strip out commodity price risk through the use of a spark-spread floor.

Market players were aghast last week over talk about Del Monte Foods' plan to refinance its $1.245 billion credit without shelling out the call protection premiums attached to the deal. The credit's $750 million "B" loan has call protection 102 in the first year of maturity and call protection 101 in the second year. But an investor explained that the new term loan could be fashioned as an identical "C" loan and the paydown of the "B" piece will be classified as a mandatory pre-payment, as opposed to a non-mandatory prepayment that would trip call protection fees. "If they have a non-mandatory prepayment, they pay two points and if they have a mandatory payment they pay par," he explained. A Del Monte spokeswoman said the company is considering its refinancing alternatives but it has not made a final decision yet. She declined to comment further.