J.P. Morgan's drawn out, reworked and buttered up deal for Land O'Lakes was said to be ready for close tomorrow. A buysider said J.P Morgan was looking to close the credit last Friday. The deal was originally launched in July amidst a slew of successful food deals, but it did not fly. A reworked structure with call protection and richer pricing got the deal rolling, the investor said. Leigh Pierce, spokeswoman for J.P. Morgan, declined comment and Lydia Botham, spokeswoman for Land O'Lakes did not return calls.
The revolver garnered the required $250 million in commitments and pricing stayed at LIBOR plus 2%. The term loan "A" was increased from $250 million to $325 million with a spread of LIBOR plus 2 1/2%, while the "B" was downsized from $400 million to $250 million with pricing flexed upwards 1% to LIBOR plus 3 1/2%. Call protection of 103, 102 and 101 was added for the first three years, respectively.
The credit backs the acquisition of Purina Mills for $230 million. Originally, pricing was considered thin, but there was also concern over the co-operative nature of the business and what that would mean in a default scenario. There was also the historical performance of Purina Mills, which has filed for Chapter 11 (LMW, 8/20).
A bond piece intended to take out a term-loan "C" is going on the road next week. The bond is a crossover, with investment-grade and high-yield ratings and so success is uncertain, said a banker. It does not really matter to the overall credit though, said the buysider, as the bond was only intended to term out the "C" debt and so would not have reduced leverage. The "C" was also meant to be maturing in a year-and-a-half, so the worst case scenario, if the bond is not completed, is the loan matures, he explained.