Buysiders that have committed to the $200 million "B" piece for Swift & Co., the name given to ConAgra Foods' beef and pork processing business, are set to receive a 3/8% ticking fee after waiting all summer for the deal to fund and close. The credit, which totals $550 million, was syndicated by J.P. Morgan and Salomon Smith Barney in July, but an accompanying $400 million high-yield bond deal was put on ice when ConAgra was embroiled in an E. coli scare. As a result, loan investors were forced to sit tight until the bonds could return to market. Calls to J.P. Morgan and Salomon were not returned by press time.
One buysider familiar with the credit said, "The bond roadshow is picking back up, although the deal has been downsized from $400 million to $250 million." In addition to a comfort level being reached over the E. coli issue, the high-yield bond market is set for a comeback, one banker said, citing the record weekly inflow of $1.6 billion into high-yield bond mutual funds two weeks ago. Another banker suggested more caution, however, adding "there is a feeling that investors are waiting until after Sept. 11." The bonds are expected to be priced on Friday.
The financing backs Hicks, Muse, Tate & Furst and Booth Creek Management's $1.4 billion acquisition of a majority stake in the beef and pork processing business. The plan is for ConAgra to reduce its equity interest in the business from more than $1 billion to just $150 million. In exchange, ConAgra will receive $800 million in cash and transfer some of its debt to the new venture. An official at Swift, the current ConAgra pork business, referred calls to a spokesman for Hicks, Muse, who declined to comment.