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Dean Foods Company-- formerly Suiza Foods-- has effectively integrated its December 2001 acquisition of Dean Food Corp. and reduced its leverage since the $1.7 billion transaction. Based on this post-acquisition rebound, Moody's Investors Service has upgraded Dean's senior secured rating from Ba2 to Ba1. Since the purchase, Dean has become the largest fluid milk processor in the U.S. and the only one with national reach, Moody's states. Scale, a favorable cost position in the industry and customer and supply diversity also works in the Dallas-based dairy product company's favor. Moody's notes that Dean has durable cash flow, as milk is a food staple with stable demand levels. Additionally, Dean has realized over $100 million of cost savings, compared to the initial $60 million targeted after the acquisition.

Investment banks with both restructuring and mergers and acquisitions practices such as Chanin Capital Partners, Houlihan Lokey Howard & Zukin and Ernst & Young Corporate Finance (EYCF) are pitching to traditional private equity firms the purchase of bank debt or bonds of distressed companies as an acquisition strategy. With private equity investing becoming more competitive owing to a lot of money chasing a few good deals, acquiring a good company with a bad balance sheet through the purchase of its debt in the secondary market is an alternative way to gain control of the company and have a good return on investment, explained Richard Morgner, managing director at Chanin. He said he has received some 30 inquiries over the last three to six months from private equity clients, whom he declined to name, that are interested in exploring the strategy.

Dutch mortgage originators using the securitization market for funding purposes, are increasingly looking to add dollar tranches to their residential mortgage-backed securitizations as a way to diversify their investor bases, say securitization bankers and issuers.

A $16 million auction of El Paso Corp.'s $1 billion credit expiring in August was completed in the 93-94 1/2 context late last week. The identities of the parties involved in the transaction could not be determined. Bank debt for the company has rallied over the past week, with market players anticipating that the August credit will be completely taken out. Additionally, news that the company is moving forward with its restructuring plans, which include asset sales and new financing, pushed the August bank debt up from the 86 1/2 87 1/2 range.

Spiraling fee costs and a diverse roster of creditors are contributing to an already complicated restructuring of the beast that is Enron Corp. Under the Enron big top, restructuring pros can find all the things that make workouts in today's market complicated and slow. One of the challenges in today's restructurings is the emergence of new lenders with different agendas, all fighting for their share of what's left.

Allied Security, a contract security provider, is able to draw strength from its stable operations in a security-conscious environment to support its new $125 million credit facility. "The business is a very stable business. Very few businesses are likely to turn around and cut their security staff," said Paul Aran, senior analyst at Moody's Investors Service. "Corporations are constantly revisiting their security needs," he added, noting that most firms are likely to want more security in these times. Moody's has assigned a B2 rating to the deal, noting that a strong management team, low account turnover and the company's ability to retain employees also support the credit.

Bill Swenson, a managing director and head of CIBC World Market's loan sales and trading group, and Amy Trapp, also a managing director in CIBC's loan group, were let go from the Canadian bank last Thursday. The duo was let go as the firm looks to adjust its operating model in the face of a brutal market, said a person familiar with the situation. The latest loss of personnel, however, does not signal the firm's departure from the loan product, he said. A spokesman could not confirm the departures, citing firm policy not to comment on human resource matters. Last November, Paco Torrado, a par trader at CIBC was also let go by the firm as part of another round of layoffs (LMW, 11/3). Swenson joined CIBC in 1995 and was employed by Meenan, McDevitt & Co. before that. Trapp moved to CIBC in 1998 from Bank of America.

TD Securities has closed the books on its high-yield bond distribution business. The move follows the departure of the four remaining members of TD's sales and trading unit to other firms, and its decision not to replace them. Brendan O'Halloran, managing director and group head of U.S. capital markets, characterizes the decision as a mutual one. "It's part and parcel of the fact that we'd be placing less emphasis on distribution. We were going in that direction and they saw that. They had other opportunities and they took them," he says.

Last week, Institutional Investor Seminars held its first Turnaround Management & Corporate Restructuring Summit at the W New York in midtown. Highlights included discussions on the growing size and complexity of bankruptcies and the conflicts that ensue. Managing Editor Pierre Paulden was on hand and compiled the following report.

UBS Warburg is shopping a $130 million deal for defense, aerospace and industrial products provider ILC Industries, backing the leveraged buyout of the company by Behrman Capital. A banker familiar with the deal said that ILC management will keep an equity stake in the company in order to keep "skin in the game" and the same management in place. The company's ceo, Clifford Lane, is rolling over a $40 million interest in the company, while Behrman is investing $70.4 million, an investor noted. The fully underwritten deal includes a $115 million "B" piece priced at LIBOR plus 4% and a $15 million revolver at LIBOR plus 31/ 2%. UBS launched the credit last Wednesday. A UBS official declined to comment.

US LEC has preemptively restructured the amortization payments on its $150 million credit led by General Electric Capital Corp. and Wachovia Bank to avoid an anticipated funding gap. As a super-regional telecom company operating in a capital-intensive market, the company took out the debt to build out its networks. However, unlike many other telecom companies, US LEC was able to negotiate a deal with its banks to give the company room to grow and achieve free cash flow, rather than have to encounter a liquidity crisis situation in the future, explained Michael Robinson, US LEC's cfo.

WestLB last week priced a $1 billion multi-sector collateralized debt obligation called Blue Heron Funding V, says a CDO market participant. The deal closed last Wednesday. The CDO is managed out of New York by the portfolio management unit of WestLB. WestLB is the underwriter for the notes, which are backed by a pool of commercial mortgage-backed securities, residential mortgage-backed securities, asset-backed securities and CDOs. This deal, a hybrid between an asset-backed commercial paper conduit and a CDO, is similar to others in the Blue Heron series that have put options embedded in the structure (BW, 9/30). Tom McCaffery, WestLB's regional head of global financial markets in New York, was travelling and unavailable for comment.