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Citigroup was scheduled to launch syndication last Thursday of a $200 million credit backing Cross Country Healthcare's $104 million cash acquisition of nurse staffing business Med-Staff. The credit for the healthcare-staffing company includes a six-year, $125 million "B" loan priced at LIBOR plus 31/2% and a five-year, $75 million revolver with a spread of 3% over LIBOR. A Citi official declined to comment on the deal. Emil Hensel, cfo of Cross Country, confirmed the structure for the underwritten deal and said Wachovia Securities was set to join as a co-lead as of late last week. He noted that Citi leads the existing credit, pointing to the selection of the bank to arrange the new facility. The existing deal is priced at LIBOR plus 15/8%. Cross Country expects existing lenders to join the new deal, Hensel noted.

Dresdner Bank sold roughly $600 million of its loan portfolio last Wednesday. Three dealers were invited to bid, but the winner of the auction could not be confirmed. The credits up for sale comprised five U.S. credits W.R. Grace & Co., NRG Energy, WKI Holding's World Kitchen, Mandalay Resort Group, and Wynn Resorts as well as a host of European names. The sale was said to be conducted via Dresdner's European desk rather than the bank's New York trading desk. Dresdner's total lending volume was EUR123.1 billion last year, but the amount allocated to corporate borrowers could not be determined.

Franklin Mutual Advisers is close to starting a closed-end mutual fund for individual investors that will invest in special situations, including distressed bank debt and bonds. The Franklin Mutual Recovery Fund will join a handful of other funds that invest in distressed securities open to retail investors, such as Martin Whitman's Third Avenue Value fund and Legg Mason's Opportunity Trust. "Franklin has been investing in distressed securities since the 1950's and we have a great deal of institutional knowledge relating to distressed investing," stated Michael Embler, v.p. in charge of the distressed investing effort. Embler will be co-portfolio manager with David Winters, who is the president and CIO of Franklin Mutual Advisers. One of the trustees for the fund will be distressed debt guru Edward Altman, the Max L. Heine Professor of Finance at New York University. Winters was traveling and could not be reached for comment.

Gerber Scientific recently closed on a $110 million refinancing credit that includes tranches led by two different lenders. The four-year deal has a $45 million asset-based, multi-currency revolver led by Fleet Capital Corp., while Ableco Finance--a fund affiliated with Cerberus Capital Management--leads the company's $65 million term loan facility. The deal refinances an unsecured revolver put in place in 1998 led by Wachovia Securities, said Shawn Harrington, executive v.p. and cfo of Gerber. Getting an unsecured deal is not as easy in today's market, he said, explaining the switch to an asset-based revolver structure. He noted that the term loan portion is secured as well, but he would not specify the collateral package. The previous five-year revolver was originally for $235 million, but was reduced to $80 million and was set to mature this coming August, Harrington added.

The possibility of further weakening in the markets that Global Imaging Systems serves is a source of concern for the office technology provider's credit quality, said Paul Aran, v.p. and senior analyst at Moody's Investors Service. Global's business could also be invaded by bigger companies that normally do not serve Global's middle-market niche, but are forced to shift focus, searching for profitability in a weaker economy, Aran explained. Larger competitors may step up efforts to gain market share through more aggressive pricing. Global offers a line of digital office imaging solutions including the sale and service of copiers, fax machines and printers, along with video conferencing and other electronic presentation systems.

Goldman Sachs is reported to have won the bidding to provide a $300 million loan to The Mills Corp. for its $435 million purchase of the Del Amo Fashion Center in Torrance, Calif, according to sister publication Real Estate Finance & Investment. Goldman had a leg up as it marketed the massive property on behalf of seller Guilford Glazer. Officials at the Arlington, Va.-based real estate investment trust were in Spain for the opening of Madrid Xanadu and could not be reached while David Douglass, director of corporate communications at Mills did not return calls. Officials at Goldman also did not return calls for comment.

GSC Partners, a domestic and European investment firm with about $6 billion in capital under management, has wrapped up the fundraising for the GSC Recovery II Funds, which will invest $757 million in distressed debt. The fund is only partially invested. "There is still a sufficient amount of unallocated capital," said a source familiar with the new fund. GSC Recovery II will employ the same strategies as GSC Partners' original recovery effort that was completed in 1998. It is an opportunistic, broad-based fund that seeks fundamental value across a wide range of industries, noted the source.

Huntsman Corp. is pursuing a $250 million bond deal with all the proceeds directed to paying down the company's $450 million "B" loan, said Sean Douglas, Huntsman's treasurer. The "B" piece traded up in the 95 range last week in anticipation. Market players believe the company will also choose to increase the size of its bond offering just short of an amount to take out the entire "B" piece, but Douglas declined to comment on the possibility of a larger offering or give a ball-park coupon for the new issue.

The five-year, $150 million "B" loan for PacifiCare Health Systems was oversubscribed last week after J.P. Morgan and Morgan Stanley pitched the $300 million refinancing deal to investors with spreads of LIBOR plus 31/2% on the institutional piece and LIBOR plus 31/4% on the three-year, $150 million revolver. The rates are cheaper than those that the commercial health plan and Medicare HMO provider received for its deal in 2001. That credit was priced in the LIBOR plus 5% range after leads Morgan Stanley and Bank of America had to juice up the interest rate because of investors' concerns over management's ability to reduce cost issues.

Kevin Petrovcik is the product manager for INVESCO's bank loan and CDO group and the chair of The Loan Syndications and Trading Association's CDO group. He is responsible for the ongoing product development, structuring and marketing of new investment funds for the INVESCO group, which manages over $5 billion in bank loan and high-yield bond assets, including over 10 CDO structures. The LSTA established the CDO committee last year to identify and address specific issues relating to collateralized loan obligations and collateralized debt obligations within the syndicated loan marketplace.

As bigger M&A deal flow moves at a snail's pace these days, middle-market leveraged buyout credits are swamping the bank debt arena. Buyout firms are pushing the leverage envelope, given the improved availability of financing, said David Horing, managing director at private equity firm American Securities Capital Partners. "The market has improved and it's possible to get greater levels of debt financing than six [to 12 months ago]," he said. Recently closed middle-market LBO credits include Oreck Corp., Breed Technologies and ILC Industries, while new deals Medex and Pure Fishing are in syndication.

After surging up out of the 70s since the end of last month, Mirant Corp.'s bank debt has lost some steam. Small pieces of the company's revolvers traded in the 83-85 context last week, traders said. The bank debt ran up as high as 852/3-881/3, according to LoanX, before this recent slouch. Lenders are getting frustrated with the company's slowness in restructuring its debt maturities and the volatility of its bank debt is attributed to behind the scenes negotiations. Mirant has not completed a deal in this market where everything is getting done quickly, said one trader. The company is looking to restructure $5.3 billion of debt maturing through 2007.