Chiquita adds pricing step downs to term loans; Silgan cuts B loan size, pricing; Calpine stronger

By Sara Rosenberg

New York, June 22 - In primary happenings, Chiquita Brands International Inc. added two potential step downs in pricing to both its term loans based on leverage and Silgan Holdings Inc. beefed up the pro rata portion of its deal even more by moving some funds out of its term loan B before reducing pricing on the downsized tranche.

Meanwhile, in the secondary, Calpine Corp.'s second-lien bank debt headed higher with some speculating that Warren Buffett's plans to invest money in the U.S. energy sector may have had something to do with the paper's performance.

Chiquita added a pricing grid to its term loan B and term loan C under which spreads can fall to Libor plus 225 basis points if total leverage is less than 3x and Libor plus 200 bps if total leverage is less than 21/2x, according to a market source.

Both the $125 million seven-year term loan B (B1/B+) and $375 million seven-year term loan C (B1/BB-) are currently priced at Libor plus 250 bps after being reverse flexed from initial price talk of Libor plus 275 bps.

Chiquita's $600 million credit facility also contains a $100 million five-year revolver (B1/B+) that is priced with an initial interest rate of Libor plus 225 bps, after reverse flexing from original price talk of Libor plus 250 bps.

The revolver has a 50 basis point commitment fee.

Wachovia and Morgan Stanley are joint lead arrangers and joint bookrunners on the deal, with Wachovia the left lead and Goldman Sachs the documentation agent

Proceeds from the credit facility and a $225 million 10-year bond offering that is talked at 8 5/8% to 8 7/8% and is scheduled to price Thursday will be used to help fund the $855 million cash acquisition of the Fresh Express unit of Performance Food Group Co.

The company had originally come to market with a $650 million credit facility a few months ago, but that deal was tabled in April because of legal matters. That deal had contained a $125 million five-year term loan A talked at Libor plus 175 bps, a $375 million seven-year term loan B talked at Libor plus 225 bps and a $150 million five-year revolver talked at Libor plus 175 bps.

Chiquita later revealed that an internal investigation showed that some of its employees had shared pricing and volume information over many years with competitors in Europe and may have engaged in other conduct in violation of European competition laws and company policies.

The European Commission was notified by Chiquita of these wrongdoings, and because of this voluntary notification and cooperation with the investigation, the European Commission has granted Chiquita immunity from any fines related to the conduct, conditioned on, among other things, continued cooperation.

Chiquita is a Cincinnati marketer, producer and distributor of bananas and other fresh produce.

Silgan shifts funds, cuts spread

Silgan moved $100 million from its term loan B into its term loan A and then proceeded to reduce pricing on the term loan B as the deal was oversubscribed, according to a market source.

Silgan's term loan A is now sized at $425 million, compared to an original size at launch of $325 million, and the term loan B is now sized at $125 million, compared to an original size at launch of $225 million, the source said.

Furthermore, pricing on the term loan B is now set at Libor plus 125 bps, compared to initial price talk of Libor plus 150 bps, the source continued.

Pricing on the term loan A remained at Libor plus 112.5 bps.

Silgan's $1 billion credit facility (Ba3/BB) also contains a $450 million revolver with an interest rate of Libor plus 112.5 bps.

The term loan B is being offered to investors at par.

Deutsche Bank Securities Inc. and Banc of America Securities LLC are the lead banks on the deal, with Deutsche the left lead.

Proceeds from the new facility will be used to refinance the company's existing senior secured credit facility.

Through this new deal, Silgan hopes to get lower interest rate margins based on its strengthening credit statistics and favorable market conditions, extend maturities and amortization periods, and gain more covenant flexibility.

Silgan is a Stamford, Conn., supplier of consumer goods packaging products.

Calpine heads higher

San Jose, Calif.-based Calpine saw its second-lien bank debt get a boost in Wednesday's secondary loan market, with levels rising by about a point during the session, according to a trader.

The paper was quoted at 83½ bid, 85 offered by the end of the day.

"There was news that [Warren] Buffett's Berkshire [Hathaway Inc.] will invest a bunch of money in the U.S. energy sector," the trader said, explaining that this could have created more focus on the energy sector in general and been the impetus behind Calpine's gains.

Calpine has also been receiving a lot of positive attention recently as the company has put out a string of good news like the completion of its Metcalf Energy Center LLC $100 million senior term loan and $155 million offering of 51/2-year redeemable preferred shares, and the completion of its $650 million 7¾% contingent convertible notes due 2015 offering that will be used to redeem in full its High Tides III preferred securities and repurchase some 8½% senior unsecured notes due 2011.

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