Primary lull has market turning to eye-catching deals from Del Monte, Burger King, QwestDex

By Sara Rosenberg

New York, Aug. 8 - With the rush of refinancing deals to take advantage of low interest rates pretty much done, bank loan market participants say they are now focusing on three upcoming offerings- Del Monte Foods Co., Burger King Corp. and QwestDex Inc. - that are expected in the near future.

Del Monte Foods Co. is looking to obtain a new credit facility to help fund the merger with certain H.J. Heinz Co. businesses, including StarKist, 9-Lives, Kibbles 'n Bits, Pup-Peroni, Snausages, Naw somes!, Nature's Goodness Baby Food and College Inn broths.

The San Francisco, Calif. processed food company has received a commitment for a credit facility up to $800 million in size, according to a filing with the Securities and Exchange Commission.

Bank of America is said to be the lead bank on the deal, however confirmation of this information was not immediately available. It is also being said that the new credit facility will launch after Labor Day, according to market sources.

The proposed merger is expected to close at the end of calendar year 2002 or early 2003, and is subject, among other things, to approval by the company's stockholders, receipt of a private letter ruling from the Internal Revenue Service, receipt of applicable governmental approvals and the satisfaction of other customary closing conditions, a company press release said.

Burger King Corp. is said to be working on a new credit facility to help fund the leveraged buyout of the company from current owner Diageo by equity sponsors Texas Pacific Group, Bain Capital and Goldman Sachs Capital Partners. The purchase price is $2.26 billion in cash on a debt-free basis.

Burger King is a Miami, Fla. hamburger fast-food chain.

"Both deals are still being worked on," a fund manager said. "Details are not out yet."

QwestDex Inc. is looking to obtain a $500 million senior secured credit facility. Banc of America Securities LLC will act as sole arranger and sole bookrunner for the bank loan. Furthermore, Banc of America Securities has committed $200 million of the new facility. Completion of the proposed bank loan is contingent upon the successful restructuring of Qwest Communications International Inc.'s existing credit facility.

Qwest is a Denver, Colo. telecommunications company and QwestDex is its directory services subsidiary.

Meanwhile, after a few modifications, including upward flexes and additional original issue discounts, Otis Spunkmeyer Inc.'s $140 million senior secured credit facility (B1) has enough commitments to get the deal done. However, the books have not yet been closed, according to a fund manager.

The loan consists of a $20 million six-year revolver and a $120 million 6½ year term loan B. Initial price talk had the interest rate on the term loan B at Libor plus 300 basis points. But since launch, the interest rate on the term loan B flexed up a few times to what is expected to be a final price of Libor plus 425 basis points, the fund manager said.

Furthermore, the deal was initially being offered at 993/4. However, this too was changed resulting in the term loan currently being offered with a 2% original issue discount, according to the fund manager.

"I think they're done at these levels," the fund manager said. "They have enough commitments now."

Merrill Lynch and JPMorgan Chase are the lead banks on the deal.

The San Leandro, Calif. cookie company will use the proceeds from the credit facility to help fund the leveraged buyout by Code Hennessy & Simmons.

Besides Otis Spunkmeyer, "there's not much going on," the fund manager said. "There are a lot of earnings calls, but not a lot of activity. A lot of people are on vacation."

In other follow-up news, upfront fees for the $750 million six-year revolver portion of Wynn Las Vegas' new credit facility have been disclosed, at 100 basis points for a $25 million commitment and 75 basis points for a $15 million commitment, according to a syndicate source. The revolver has an interest rate of Libor plus 400 basis points.

The Las Vegas, Nev. gaming company's new credit facility, which is scheduled to close in conjunction with the completion of an initial public offering, also contains a $250 million seven-year delayed-draw term with an interest rate of Libor plus 425 basis points.

Deutsche Bank is the sole administrative agent, joint advisor, joint bookrunner and joint lead arranger. Bank of America is the sole syndication agent, joint advisor, joint bookrunner and joint lead arranger. And, Bear Stearns is the documentation agent, joint advisor, joint bookrunner and arranger.

Proceeds will be used to help finance the development and construction of Le Reve and to meet pre-opening expenses and debt service obligations.

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