York Label breaks; Georgia Gulf rises; GM down, Chrysler up; Bellisio Foods firms timing

By Sara Rosenberg

New York, Aug. 6 - York Label's credit facility freed up for trading on Wednesday, with the term loan seen slightly atop its original issue discount, and Georgia Gulf Corp.'s term loan was stronger on its recently announced amendment and/or refinancing plans.

Auto names were active again, although this time there was no clear direction in the sector as General Motors Corp.'s term loan softened, Chrysler Financial's first-lien term loan strengthened and Ford Motor Co.'s term loan was basically unchanged.

In primary happenings, Bellisio Foods Inc. set timing on the launch of its proposed credit facility as a bank meeting has been scheduled for next week.

York Label's credit facility allocated and hit the secondary market during the session, with the $138 million term loan quoted a bit higher than the original issue discount price at which it was sold during syndication, according to a trader.

The six-year term loan was quoted at 95¼ bid, 96 offered, the trader said.

The term loan is priced at Libor plus 500 basis points with a 3% Libor floor and it was sold at a discount of 95.

During syndication, the term loan was upsized from $135 million, pricing firmed at the high end of initial guidance of Libor plus 475 bps to 500 bps, and the original issue discount increased from initial talk in the 97 to 98 area.

York Label's roughly $190 million credit facility (B1/B+) also includes a C$27 million six-year term loan, a $23 million five-year revolver and a C$2 million five-year revolver.

During syndication, the Canadian term loan was downsized by C$3 million when the U.S. term loan was upsized.

Bank of America is the lead bank on the deal that will be used to help fund the buyout of the company by Diamond Castle.

York Label is an Omaha, Neb.-based provider of labeling technologies to major global consumer goods, wine & spirits, pharmaceutical and food & beverage companies.

Georgia Gulf trades up

Georgia Gulf's term loan was noticeably higher in trading on Wednesday on the back of the company's recent statement that it is looking to make progress on a covenant amendment or refinance its senior credit facility to obtain a structure with greater flexibility, according to a trader.

The term loan was quoted at 94½ bid, 95 offered, up from pervious levels of 92 bid, 93 offered, the trader said.

Late in the day Tuesday, the company issued its second-quarter results and with those results, the company revealed its plans for an amendment and/or refinancing.

The company explained that covenant requirements in the credit facility are scheduled to tighten significantly through the first quarter of 2010 and that, due to less asset sales and a challenging economic outlook for the remainder of the year and into 2009, 2008 EBITDA could be as much as 15% below 2007 EBITDA.

Georgia Gulf also said that it can now focus on the credit facility since a settlement agreement was reached regarding the alleged notice of default on its 7 1/8% notes.

As of June 30, the company was in compliance with its debt covenants.

For the second quarter, the company reported net sales of $849.8 million, down from net sales of $851.9 million for the second quarter of 2007 primarily due to difficult market conditions in the United States.

Net income for the quarter was $27.9 million, or $0.80 per diluted share, compared to a net loss of $4.2 million, or $0.12 per diluted share, during the same quarter in the previous year. Net income for the quarter includes a pre-tax net gain from asset sales of $31.1 million, or $0.84 per diluted share, whereas the 2007 net loss includes a loss from discontinued operations of $2.3 million, or $0.7 cents per diluted share.

Georgia Gulf is an Atlanta-based manufacturer of chlorovinyls and aromatics, and a manufacturer of vinyl-based building and home improvement products.

Autos bounce around

General Motors, Chrysler Financial and Ford were all trading around on Wednesday, and they all performed differently on no credit specific news, with one trading down, one trading up and one holding steady, according to a trader.

General Motors, a Detroit-based automotive company, saw its term loan quoted at 74 bid, 75 offered, down from 74¾ bid, 75¾ offered, the trader said.

Chrysler Financial, a provider of automotive financial products and services, saw its first-lien term loan quoted at 80¾ bid, 81¼ offered, up from 80 3/8 bid, 81 3/8 offered.

And, Ford, a Dearborn, Mich.-based automotive company, saw its term loan quoted at 77 bid, 77½ offered, compared to Tuesday's levels of 77 bid, 78 offered, the trader added.

LCDX down, cash firm

LCDX 10 headed lower during the trading session, while the overall cash market was basically unchanged on the day, according to a trader.

The index was quoted at 97.30 bid, 97.40 offered, down from 97.45 bid, 97.55 offered, the trader said.

"Not sure why it's lower," the trader remarked regarding the index. "Could just be the lack of interest. Not active again. Guys are taking vacations now and maybe they're only trading things they need to."

Dean Foods steady with numbers

Dean Foods Co.'s term loan held firm on Wednesday after the company came out with second-quarter and six-month results, according to a trader.

The term loan was quoted at 94¼ bid, 95¼ offered, unchanged from previous levels, the trader said.

For the quarter, Dean Foods reported net income of $48.9 million, or $0.31 per diluted share, compared to $28.4 million, or $0.21 per diluted share, in the comparable period last year.

On an adjusted basis diluted earnings per share were $0.33, compared to $0.30 in the prior year's second quarter, and adjusted net income from continuing operations was $52 million, compared to adjusted net income from continuing operations of $41.6 million last year.

Net sales for the second quarter totaled $3.1 billion, an increase of 9% from net sales in the second quarter of 2007 of $2.8 billion.

Consolidated operating income in the quarter totaled $157.2 million, an increase of 2% from $153.6 million last year.

Adjusted second-quarter consolidated operating income totaled $162.4 million, an increase of 3% from $157.4 million in the second quarter of 2007.

For the first six months of the year, the company's net income was $79.7 million, or $0.53 per diluted share, compared to $92.2 million, or $0.68 per diluted share, last year.

On an adjusted basis, net income from continuing operations for the six months totaled $84.5 million, compared to $108.7 million in the same period of 2007, and adjusted diluted earnings per share from continuing operations totaled $0.56, compared to $0.80 last year.

Net sales for the six month period were $6.2 billion, compared to $5.5 billion in the same period last year.

Consolidated operating income in the six months was $293.3 million, compared to $307.8 million in 2007.

Net cash provided by continuing operations for the six months totaled $315 million, compared to $170 million for the first half of 2007. The company said that the increase in net cash is due primarily to decreased working capital requirements, offset by higher year-over-year interest expense and lower operating results.

Free cash flow provided by operations in the six months totaled $210 million, a $142 million increase over the $67 million in the first two quarters of 2007.

Through June 30, debt outstanding decreased by $548 million since Dec. 31, 2007. Total debt at June 30, net of $39 million in cash on hand, was about $4.7 billion and the company's funded debt to EBITDA ratio declined to 5.48 times as of the end of the second quarter.

"Overall, the business is executing well in this unprecedented inflationary environment and our near-term results reflect the consistent improvement we've made since the third quarter of last year. I'm pleased that we have returned to growth in the second quarter," said Gregg Engles, chairman and chief executive officer, in a news release.

Also on Wednesday, the company reiterated its guidance for 2008 adjusted diluted earnings of at least $1.20 per share.

For the third quarter, the company expects adjusted diluted earnings per share to be between $0.26 and $0.31.

Dean Foods is a Dallas-based food and beverage company.

Bellisio Foods sets launch

Switching to primary news, Bellisio Foods firmed up timing on the launch of its proposed $195 million credit facility with the scheduling of a bank meeting for this coming Tuesday, according to a market source.

Previously it was known that the deal was expected as August business, but no set date had been available.

The facility consists of a $30 million revolver, a $130 million first-lien term loan and a $35 million second-lien term loan, the source said, adding that price talk is not yet out.

GE Capital and NatCity are the lead banks on the deal that will be used to refinance existing debt.

Bellisio Foods is a Minneapolis-based frozen food manufacturer.

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