Atkins Nutritionals' $215 million first lien and $78.5 million second lien loans climbed five points last week with small trades at 92-94 and 72-73, respectively, before falling hard after a lender call in which sponsors Parthenon Capital and GS Capital Partners signaled they would not contribute more equity to the company. "There is a friction between the bank group and the company," said one portfolio manager. Following the call, the first lien was quoted at 83-85 and the second lien at 61-65.
The reasons for the initial climb could not be determined, though speculation whirled about the possibility of an acquisition by a larger company that would pay the debt back at par (LMW, 10/25). A spokesman for Atkins said any acquisition is just a rumor.
The company's $293 million bank debt was put in place Nov. 2003, when Parthenon and GS Capital bought the company in a leveraged buyout. At the time the company's bank debt traded above par. UBS led the financing that also includes a $30 million revolver. Atkins revolver and "B" loan are priced at LIBOR plus 3 1/2% and LIBOR plus 3 1/4%, respectively. The second lien is priced at LIBOR plus 5 3/4%.