NCI increases revolver, Burger King center of talk

By Paul A. Harris

St. Louis, Mo., Aug. 29--As the Dog Days of August continued to wind down toward the Labor Day recess, sources reported a quiet day, Thursday, in the leveraged loan market.

One morsel of news emerged among the issues on the forward calendar as NCI Building Systems, Inc. announced it pulled the plug on a $50 million add-on that was in the high-yield bond market, and tacked on $25 million to its credit facility.

Meanwhile, no new announcements were heard, and sources reported that nothing of consequence took place among issues trading in the aftermarket.

In an earnings statement Houston-based metal building products manufacturer NCI cited market uncertainties as it dropped plans to do a $50 million add-on to its 9¼% senior subordinated notes due 2009, opting instead to increase the revolver portion of its new credit facility from $100 million to $125 million. The new $250 million facility is expected to consist of a six-year, $125 million term loan B and a five-year, $125 million revolver, according to the statement.

The statement also stipulated that the transaction is expected to close during the coming two weeks.

Prior to the increase the market was anticipating that the company's senior secured credit facility (Ba3/BB-) via Bank of America and Wachovia, would see the term loan B price at Libor plus 275 basis points and the revolver at Libor plus 250 basis points. By press time Thursday Prospect News was unable to determine if the interest rates had changed.

One topic of conversation through the week of Aug. 26 has been the Burger King Corp. leveraged buyout which, according to sources, is anticipated to bring a significant amount of new paper into the market.

On July 25 Diageo plc announced that it agreed to sell Burger King to a group comprised of Texas Pacific Group, Bain Capital and Goldman Sachs Capital Partners.

Although no news surfaced Thursday on the credit facility Prospect News learned from a capital markets source that the bond piece of the Burger King LBO is anticipated to be $600 million, in tranches of dollars, euros and pounds.

Commenting on the bond deal, the source said that Burger King's EBITDA is approximately $330-$350 million. The purchase price is $2.26 billion, which gives the purchase a multiple of 6.5 times, the source said, adding that if one assumes the equity portion is 30%, leverage is approx 4.6 times.

The source also commented that given a bond piece that is $600 million the senior leverage is approximately 2.8 times.

"There hasn't been a lot of information on the Burger King loan yet," one investor told Prospect News on Thursday.

"What I've been hearing is that it would come in late September- maybe on the 25th."

One of the deals this source reported to be of interest post-Labor Day is the US Airways debtor-in-possession financing.

Prospect News learned Wednesday that the bank meeting for US Airways' $500 million DIP credit facility is expected to take place early in the week of Sept. 2.

Credit Suisse First Boston is the lead bank.

The facility will price at Libor plus 350 basis points and will be split 50-50 between a term loan and a revolver. It will mature Sept. 30, 2003 or upon consummation of a reorganization plan, should that occur earlier.

Texas Pacific Group will put up $100 million and Bank of America will put up $50 million as part of the financing.

"It's a one-year deal at Libor plus 350," the source said. "So it sounds pretty interesting."

This investor also said that the Del Monte Food Co.'s $1.6 billion credit facility via Bank of America, JPMorgan Chase, UBS Warburg and Morgan Stanley is of interest.

The facility is comprised of a $450 million six-year revolver at Libor plus 250 basis points, a $250 million six-year term A, also at Libor plus 250 basis points, and a $900 million eight-year term B at Libor plus 275 basis points.

The San Francisco,-based processed food company is also bringing $300 million of notes to finance the merger with certain H.J. Heinz Co. businesses.

One source told Prospect News Thursday that no notable movement had been seen among issues in the secondary market.

"It's been a quiet day, which is what I was we expected," one trader said. "I think things are pretty snugged down right now and everybody's ready for the long weekend."

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