Levi Strauss loan expected to meet good reception; Del Monte term B upsized, flexed down

By Sara Rosenberg

New York, Dec. 11 - Levi Strauss & Co.'s proposed $800 million credit facility, which launched on Wednesday, is being "viewed fairly positively", according to a market professional. Meanwhile, Del Monte Foods Co.'s credit facility was reworked slightly, resulting in a larger term loan B that has a lower interest rate.

Levi Strauss' loan consists of a $400 million 31/2-year term loan B with an interest rate of Libor plus 400 basis points and a $400 million three-year revolver with an interest rate of Libor plus 375 basis points. The term loan B will be used to refinance existing debt.

"They needed an $800 million revolver but it's hard to syndicate that so they're terming out half of that," the professional told Prospect News.

Working in the company's favor is its recent issue of $425 million 12¼% notes due 2012, the market professional said, explaining that if a company can sell $425 million of unsecured debt, it reflects favorably on the company itself.

The bonds priced at 98.581, so the company's net proceeds from the deal is $419 million, the professional continued. Of that amount $115 million will be used to repay indebtedness under the company's senior secured bank credit facility. The remaining net proceeds will be used to either refinance a portion of the $350 million aggregate principal amount of the 6.80% notes due Nov. 1, 2003, or other outstanding indebtedness, or for working capital or other general corporate purposes.

Scotiabank, Citibank and Bank of America are the lead banks on the credit facility.

Levi Strauss is a San Francisco brand name clothing company.

Del Monte's credit facility (Ba3) has undergone some changes, according to a fund manager. The $300 million senior secured floating rate notes that were originally priced with an interest rate of Libor plus 425 basis points are being moved to the $500 million term loan B, creating a new total size for the term loan B of $800 million.

Furthermore, pricing on the term loan B is being reduced to Libor plus 375 basis points from Libor plus 400 basis points, the fund manager added.

Originally the loan met with some skepticism due to the $300 million term A-1, since if the proposed bond sale in not completed the term A-1 loan will remain in place, adding additional senior secured debt to the capital structure.

However, the proposed $300 million senior subordinated note sale, which will be used to take out the term A-1, started its roadshow this week and is scheduled to price on Friday. Currently, price talk for the notes due in 2012 is 8½% to 8¾%, according to the fund manager.

The credit facility also contains a $350 million six-year revolver and a $250 million six-year term loan A.

Bank of America, JPMorgan Chase, UBS Warburg, Morgan Stanley and Bank of Montreal are the lead banks on the credit facility that will be used to help fund the merger with certain H.J. Heinz Co. businesses.

Del Monte is a San Francisco processed food company.

In secondary news, Wyndham International Inc.'s IRL bank debt was bid at 82½ on Wednesday in line with the paper's recent trend of higher bids on a daily basis, according to a fund manager. "It's been moving up about half a point a day," the fund manager said. "It's very well bid."

An offer for the company's bank loan was not seen though, the fund manager added.

"When it traded down to a low 73 that was really too low," the fund manager said. "[There was] 10 points of technical pressure at that point."

The Dallas hotel enterprise has over $1 billion in the bank loan market, according to the fund manager, which caused the market to become over-saturated, leading to an environment in which there was no buyers but lots of sellers.

"New buyers have been developed so the market has broadened for the paper," the fund manager continued in explanation of why Wyndham has seen this recent improvement. "I think it will probably get to 85 and then level off. It's fairly valued there because there's about 20 points of credit risk. But, we'll see what happens. Everything can change if we go to war with Iraq."

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