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Buyout firm Apollo Management and the K-12 management of Sylvan Learning Systems will use $130 million in bank debt to help fund the acquisition of the K-12 core Sylvan businesses, in a transaction worth $275-300 million. Sylvan will focus on its international and online university business, while a new company, Educate Operating Co. is being formed by Apollo and the K-12 management to provide education for students ranging from kindergarten through high school. The bank facilities for Educate will consist of a five-year, $20 million revolver and a five-and-a-half year, $110 million term loan, rated B1 by Moody's Investors Service.

Wachovia Securities and Lehman Brothers are teaming up to launch syndication of a $200 million deal that backs the buyout of Johnson & Johnson's JELCO intravenous catheter business by medical device manufacturer Medex and One Equity Partners--the private equity arm of Bank One. The credit, scheduled to hit the market tomorrow, includes a six-year, $175 million "B" loan and a five-year, $25 million revolver.

CIBC World Markets pitched an add-on $48 million "B" loan last Tuesday for petroleum transporter The Kenan Advantage Group to back two acquisitions for the Canton, Ohio-based company. A banker familiar with the deal could not offer details about the acquisitions, but he said the four-year add-on piece is priced at LIBOR plus 4%, in line with the existing $45 million "B" loan. The existing credit was executed in April 2001 and also includes a five-year, $15 million revolver and a $45 million "A" loan priced at LIBOR plus 31/2%. First Union National Bank, LaSalle Bank and Key Bank are also agents on the credit.

Credit Suisse First Boston and Merrill Lynch were scheduled to launch syndication last Friday for a $100 million refinancing deal for Jafra Cosmetics International. The five-year credit includes a $40 million revolver and a $60 million "A" loan. Pricing for the deal could not be confirmed by press time, but the current facility is priced at LIBOR plus 25/8% and includes a $65 million revolver and a $25 million "A" piece. J.P. Morgan is the syndication agent on the existing deal, but Merrill is taking the role in the new credit. The company's Mexican division is also issuing $175 million in notes due 2011 alongside the B1-rated credit. CSFB and Merrill bankers did not return calls.

Deerfield Capital Management has priced the notes for its latest collateralized loan obligation, Forest Creek, after increasing the deal from $300 million to $325 million. There was across-the-board oversubscription on the vehicle, which is now two-thirds ramped up, according to a source. Jonathan Trutter, Deerfield's cio, declined to comment on the transaction, referring calls to officials at underwriter Bear Stearns. Ira Wagner, a senior managing director at Bear Stearns, did not return calls by press time. Deerfield has $2.3 billion in loan assets under management.

Traders said $10-15 million pieces of Federal-Mogul Corp. bank debt changed hands last week as the company filed its disclosure statement and released its quarterly earnings report. The trades were completed in the 75-76 context and the sellers were said to be banks looking to cash out. By late Tuesday, the paper was bid at the 76 level. Total trade volume in the name last week could not be determined. The earnings are in line with expectations, said one dealer. In regard to the disclosure statement, one buysider said the projections offered by the filing are not particularly upbeat, but the bank debt levels are receiving a boost as the end of bankruptcy proceedings nears. The disclosure statement offers additional details to the company's plan of reorganization, which was filed on March 6.

Interstate Bakeries Co. is asking its bank group for amendments to its credit facility as sharp declines in operating results pressure leverage levels and limit liquidity. Proposed bank facility amendments will give Interstate a more comfortable EBITDA cushion, but the company will have to substantially deliver on a restructuring plan to remain within the new proposed covenant levels, according to Moody's Investors Service. Calls to Frank Coffey, senior v.p. and cfo of Interstate, were not returned by press time.

Bank lenders were being rolled into Kmart's $200 million "B" piece that was originally set aside for institutional players after buyside commitments left the tranche short last week. GE Commercial Finance, Bank of America and Fleet Retail Finance were allocating the $2 billion exit facility to mostly agent round lenders. A banker familiar with the deal would not comment on the level of institutional "B" loan commitments, but he noted that the credit was not like a normal leveraged deal because pricing for the term loan and the $1.8 billion revolver were the same at LIBOR plus 31/2%. The term loan was implemented for the "B" player's benefit, he said.

Andrea Labonte, a v.p. in leveraged finance at Bear Stearns, left the firm last month. A Bear Stearns spokeswoman confirmed her departure, but did not know details regarding her future plans. A person familiar with Labonte's situation said she is out of the loan business, at least for awhile. Labonte joined Bear Stearns in 1999 after working at NationsBanc Montgomery Securities and Bank of America previously. Bram Smith, a senior managing director in leveraged finance at Bear Stearns, joined the firm earlier this month after Labonte had departed (LMW, 4/14). Labonte could not be reached for comment.

Merrill Lynch Capital and Citigroup last week offered more bait to lure investors into Carlyle Management Group's $325 million acquisition credit for Breed Technologies, but tickets still came up short. The lead banks cut the size of the deal, threw in an original issue discount and boosted the coupon, but were still looking at a post-close selldown as they moved to wrap up the deal last Friday. The credit had to close and fund last week for the acquisition of the airbag, steering wheel and seat belt company to stay on schedule.

Standard&Poor's (S&P) dropped the Republic of the Philippines' foreign currency rating yesterday (Thursday). The downgrade from BB+ to BB comes six months after the agency reduced the sovereign's rating outlook to negative. It also comes two days after the Philippine government announced that the budget deficit for the first three months of the year was Ps58.9bn, nearly 7% wider than the Ps55.2bn target.

Australia Credit Suisse First Boston and Deutsche Bank yesterday (Thursday) launched the latest global securitisation for Australian lender Members Equity. The non-bank lender has now raised $5.8bn from offshore investors in four offerings.