J.P. Morgan's $400 million term loan "B" for Land O' Lakes is moving slowly, as some investors are expressing concerns over the co-operative nature of the business and what that would mean in a default scenario. There are also issues relating to the poor historical performance of the target company Purina Mills, which has filed for Chapter 11. Purina announced last week that the Securities and Exchange Commission is investigating whether traders illegally profited from Land O' Lakes proposed $360 million acquisition of St. Louis-based Purina.
Leigh Pierce, spokeswoman at J.P. Morgan confirmed that pricing was flexed up last month due to lower than expected ratings, but she was unable to confirm details on the progress of syndication or comment on the Purina statement. The lead is looking for the existing bank group to renew Land O'Lakes' $250 million revolver, priced at LIBOR plus 1 1/2 %. The rest of the deal is structured as a $250 million term loan "A" priced at LIBOR plus 2% and a $400 million term loan "B" at LIBOR plus 3%, flexed upwards 1/2%. There is also a $250 million short-term bridge to a bond offering.