Investors poured into Fleming Companies' $350 million "B" loan even as they chirped for a juicier spread. Now they are hoping there will not be a flex down. The deal was more than two times oversubscribed and the company is weighing its options. "It is still too soon to say whether there will be an upsize or a price flex, but considering the progress of the "B" it is obviously something to think about," said Matt Hildreth, senior v.p. and treasurer of Fleming. Deutsche Bank and J.P. Morgan lead the credit, which is currently priced at LIBOR plus 21/ 4%. But there is opposition to a flex of yet another credit. "The buyside would be pretty [angry] if pricing went lower. It's getting uneconomical for a lot of them," one banker said.
At press time, pricing had not been flexed nor was the "B" upsized. Hildreth said a price flex has not yet been discussed with the banks. A banker said the firm priced the "B" aggressively because many deals have been getting done lately south of 250 (LMW, 5/27). The credit backs the acquisition of Core-Mark International and Head Distributing and also refinances existing debt. The $600 million revolver priced on a grid basis, ranging from LIBOR plus 13/ 4% to 21/ 4%, is progressing well, Hildreth noted. He explained leverage is not being increased through the acquisition, which is one of the strong supporting factors for the credit. Fleming is offering eight million shares of stock as part of the new financing and leverage remains below 4 times. Deutsche Bank, as sole bookrunner, is leading a $200 million senior note offering with Wachovia Bank and Lehman Brothers.