EnerSys Repays Second Lien; Sunny D Returns To Mart

Industrial battery manufacturer EnerSys used the proceeds from its initial public offering to repay its $120 million second-lien term loan and $17.9 million of its "B" loan. The company got about $140 million in proceeds, explained Mike Hastings, v.p. and treasurer. Standard & Poor's raised EnerSys Capital's $480 million credit one notch to BB reflecting the expectations of sustained improvement in the company's debt leverage after the IPO. The credit comprises a $100 million revolver and $380 million "B" loan. The credit has a recovery rating of 4, indicating a 25-50% recovery of principal in the event of default.

The debt was incurred earlier this year to refinance $219 million of existing debt and pay a $250 million cash dividend to equity holders Morgan Stanley Capital Partners, limited partner co-investors and management (LMW, 3/1). Total leverage is now about three times compared to 4.6 times at the end of March, S&P says.

The ratings consider the niche nature of the industrial battery market and exposure to increasing lead costs and cyclical end-user markets, S&P says. But the risks are partially balanced by EnerSys' recognized brand names, leading market share, greater access to capital and expected healthy intermediate-term demand prospects in several key markets, S&P adds.

* UBS is back in the market with a $295 million credit backing J.W. Childs Associates' acquisition of fruit drink businesses Sunny Delight and Punica from The Proctor & Gamble Co. The credit comprises a $40 million revolver, $170 million first-lien term loan and $85 million second-lien term loan. Moody's Investors Service lowered the ratings assigned to the credit due to material shortfalls in actual fourth quarter results compared to the company's forecast. The revolver and first-lien term loan were downgraded to B1 from Ba3 and the second-lien term loan dropped to B2 from B1.

The credit originally launched May 5, but was never completed (5/3). The original facility comprised a $50 million revolver, $100 million euro equivalent term loan, $150 million first-lien term loan and $75 million second-lien term loan for which only $35 million was to be funded at closing. The amount of common equity in the deal was increased from $125 million to around $145 million. Adam Suttin, a partner with J.W. Childs, did not return calls.