Search results for

ABN AMRO has fully underwritten a $200 million credit backing The Carlyle Group's $300 million majority stake acquisition of CSX Corp.'s CSX Lines subsidiary. ABN will be shopping a six-year, $175 million "B" term loan and a five-year, $25 million revolver. Marketing to commercial and institutional investors is set for Jan. 14, said Mark London, managing director and co-head of U.S. leveraged finance at ABN. He added that pricing would most likely be determined by the middle of next week. CSX will receive $240 million in cash and $60 million in securities in the transaction. Equity for the acquisition, set to close in this quarter, will come from Carlyle's flagship U.S. buyout fund.

OM Group's term loan "C" has ticked up roughly seven points over the last month as the company completed an amendment to its credit facility and announced restructuring initiatives. The "C" loan is currently quoted with a bid/ask spread of 90 1/3 to 92 2/3, compared with a spread of 83 to 85 1/2 at the beginning of December, according to LoanX. "Anyone who bought [the paper] in the low 80s is patting themselves on the back right now," one trader commented. The bank debt plummeted roughly about 18 points into the mid-70s at the end of October after the Cleveland-based specialty chemicals maker posted poor results (LMW, 11/4).

Dealers said there has been more interest in Conseco's director and officer loans since the details of the company's reorganization plan have emerged. The interest has been drummed up by revelations that the $480 million of D&O loans will be treated in a similar way to the company's $1.5 billion revolver in the company's emergence from bankruptcy. "There are buyers of the revolver around 70 and buyers of the D&O loans around 68," noted one trader.

Lenders looking for a fresh start in 2003 are chirping about a busy pipeline for the first two months of the year, and investors are setting their sights on the $1.6 billion deal for Dole Food Company coming next month. Deutsche Bank, Scotia Capital and Bank of America are leading the deal, one in a lineup that is set to take the field after clearing the holiday season. The credit will back Dole's $2.5 billion buyout agreement with David Murdock, Dole chairman and ceo, and will also refinance some of Dole's existing debt. Investors that have been looking for paper are waiting for the credit. "It's a big liquid deal and they have been in the high-yield market for some time," one investor stated, adding that it is collateralized by real estate. A B of A official declined to comment, while Deutsche Bank and Scotia Capital bankers did not return calls. Murdock and other officials at Dole did not return calls.

Richardson Electronics has negotiated a $102 million credit with leverage and coverage ratio covenants more relaxed than those in its previous $108 million line. Previous covenants did not allow leverage to exceed 3.5 times for the LaFox, Ill.-based company, explained Dario Sacomani, v.p. and cfo. That cap has been removed in response to the uncertain economy and instead the company will pay up on a leverage-based grid. "It's new because of the incremental operating flexibility in respect to the new covenants," Sacomani stated, also explaining that the line is an extension of the previous revolver. The credit maturity has been extended 15 months to September 2005.

Xerion Capital Partners, a distressed investment firm set up by Daniel Arbess, a founder and ex-head of special situations investments at New York-based Triton Partners, will begin to buy assets in the coming weeks. "Our immediate focus will be on mid-cap businesses struggling with excessive leverage and possibly facing, undergoing or emerging from recapitalization or reorganization," said Arbess.

The Andersons, a regional grain merchandiser, has secured its first-ever syndicated loan, selecting U.S. Bank to be lead arranger for the $200 million line. The company opted to roll its bilateral deals into one line after the complexity of working with six different law firms representing six different banks and their unique documentation got to be too much, commented Gary Smith, v.p. of finance and treasurer of Andersons. "The syndication approach got it all under one umbrella," he said.

More hedge funds are looking to capitalize on the economics of buying unfunded revolvers trading at a discount, and some market players are raising concerns over the increasing counterparty risk involved with assigning unfunded loans to these unregulated entities. Banks are among those concerned as they question whether or not these funds will have the appropriate capital to back up a potential drawdown. "Because they are not regulated no one is really sure about how creditworthy these hedge funds are," noted one dealer.

Goldman Sachs, CIBC World Markets, and Deutsche Bank are launching retail syndication this month of Thomas H. Lee and Bain Capital's $725 million credit backing the $1.66 billion purchase of Boston-based Houghton-Mifflin from Vivendi Universal. The deal, which launched to managing agents last month, could face problems due to high leverage, bankers stated. However, other bankers said they were expecting the credit for the textbook publishing company to be met with a good reception. A Goldman official and a Deutsche Bank spokesman declined to comment, while a CIBC banker did not return calls.

J.P. Morgan and Bear Stearns are meeting this week to launch a refinancing and an add-on institutional piece for publishing house American Media (AMI), an Evercore Partners portfolio company. The bank debt, along with a bond deal, will back AMI's acquisition of Los Angeles-based Weider Publications for $350 million, which represents a price 12.7 times Weider's cash flow. The transaction is expected to close this quarter. A J.P. Morgan spokesman declined to comment, while a Bear Stearns banker did not return calls by press time.

Octagon Credit Investors, the leveraged loan and high-yield manager subsidiary of J.P. Morgan Partners, is ramping up assets for a new $300 million collateralized loan obligation called Octagon V. Octagon waited until the end of the year before attempting to price. "The credit environment became more compelling," said an official familiar with the deal. The vehicle is structured to have up to 90% loans and 10% bonds and is approximately two-thirds done, he said. J.P. Morgan priced the notes. Officials at Octagon and a spokesman for J.P. Morgan could not be reached by press time.

It calls itself the American Dream business. Fannie Mae is the largest source of financing for home mortgages in the US, and since its creation as a government agency in 1938 has helped finance the homes of millions of Americans; today 19 million American families live in homes financed in part by the company. Last year it purchased or guaranteed US$615 billion of home mortgages; it has US$838 billion in assets and guarantees, another US$990 million in mortgage-backed securities, and is arguably the largest issuer of debt worldwide after the US Treasury. So a behemoth like this shouldn't care about Asia, should it? Well, apparently it does. At the end of October a team including its chairman and CEO, Franklin Raines, and treasurer Linda Knight, chose Hong Kong as the venue to announce Fannie Mae's benchmark calendar for 2003. Fannie Mae's Benchmark Securities – we wouldn't normally capitalize it, but they've taken out a trademark on the name so it seems to warrant a certain gravitas – offers large issues of callable and non-callable debt offerings designed to give investors strong and predictable liquidity, regularity and credit quality. New issue maturities between two and 10 years have a minimum size of US$4 billion, often followed by reopenings. In 2001, Fannie Mae issued US$84.75 billion of non-callable benchmark notes and bonds. The reason Raines picked Hong Kong, amid a frantic four-day investor relations tour that also took in Singapore, Beijing and Tokyo, is to acknowledge the role Asian investors play in these securities. (This was the company's 18th annual visit to the region, a trip that would hit up to 200 potential buyers.) Asian investors account for 14% of investors in benchmark notes and bonds.