Credit Suisse First Boston and Salomon Smith Barney have wrapped up syndication of the $331.9 million debt package backing Texas Pacific Group's $675 million acquisition of Gate Gourmet, Swissair Group's airline catering business, after ratcheting up pricing. The credit was syndicated amidst a struggling airline sector, and its six-year, $160 million "B" piece saw pricing increase from LIBOR plus 41Ž 2% to LIBOR plus 61Ž 2%, with a 3% LIBOR floor. The original issue discount was also increased from 11Ž 2% to 4%.
The institutional tranche was increased by $10 million, while the six-year, European "B" piece decreased by the same amount to $48.6 million and mirrored the U.S. "B" piece's pricing increase. The pro rata pricing was also tuned up, with both the multi-currency, five-year, $50 million revolver and the five-year, $73.3 million Euro "A" loan increasing from LIBOR plus 4% to LIBOR plus 43Ž 4%. The revolver carries a 1% facility fee. A CSFB official declined to comment, while a Salomon banker did not return calls.
The credit filled with about 20 investors, the banker noted, declining to name the lenders. He added that UAL Corp.'s concurrent bankruptcy filing did not have a direct affect on the success of the credit. The bankrupt airline is one of Gate Gourmet's major customers. "It's the general backdrop of the airline industry," the banker noted, explaining that the facility's final pricing terms is more a reflection of the waning sector. Most investors were well aware of UAL's problems when the credit launched, he added.
Fort Worth, Texas-based TPG received the nod from a federal bankruptcy judge to purchase Gate Gourmet in October. Gate Gourmet went on the block after SwissAir sought bankruptcy protection in Switzerland. But the approval had to be decided in New York because SwissAir's SAirGroup Finance (USA) unit--which funds the parent's operations and was a chief creditor of Gate Gourmet--sought bankruptcy protection in New York. SAirGroup Finance issued a $350 million bond offering to help Gate Gourmet finance the $780 million purchase of its U.S. catering rival, Dobbs International in 1999 (LMW, 12/2). A TPG spokesman declined comment.