Bear Stearns' $250 million term loan "B" for Appleton Papers, backing a management-led buyout, is said to be picking up commitments with a number of funds commiting a total of over $100 million to the credit. After launching to a skeptical buyside, the "B" had pricing flexed from LIBOR plus 31/ 2% to 41/ 4% and is being offered with a 13/ 4% discount. There is some concern among investors over the sunset nature of the business, since the main source of revenue is carbonless paper, considered a declining business (LMW, 8/10). The exact level of commitments could not be ascertained by press time.
All credit concerns are in addition to investor unwillingness to commit to new paper. One banker, commenting on the spate of deals offered at a discount to lure in commitments, said secondary pricing is low right now, but investors will need to put capital to work soon. Once the demand resumes for primary issuance OIDs will be much less common, he said. Firstar, LaSalle Bank, Toronto Dominion and M&I Bank are the agent banks.
Bill Van Den Brandt, manager of corporate communications for Appleton, said the company is still working on when to launch the bond offering that accompanies the deal, but has set no firm date.