Allied Waste falls on postponed bond deal; Terex continues to tremble under add-on's weight

By Sara Rosenberg

New York, Sept. 20 - Allied Waste Industries Inc.'s bank debt dropped by almost two points in secondary trading Friday in an immediate reaction to news that the company postponed its bond offering. Meanwhile, Terex Corp.'s term loan B continued to fall on Friday as it remained under pressure from the add-on term loan C.

Allied Waste's term loans B and C were quoted around 96½ to 97½ on Friday afternoon, according to a trader. On Wednesday, the loan strengthened by about a point to 98¼ bid, 99¼ offer following the announcement of the proposed bond sale as market participants looked favorably on the prospect of proceeds being used towards paying down parts of its term loans A, B and C maturing in 2005, 2006 and 2007 respectively. On Thursday the bank debt had settled in at the new levels remaining basically unchanged on the day.

The Scottsdale, Ariz. waste services company announced it was withdrawing its offer of $250 million senior notes due 2012 on Friday, citing poor market conditions as the catalyst behind the decision.

"We and our advisors believed an opportunity to access the high yield markets at favorable rates was available. The volatility in the market since we announced our intent on September 17 has resulted in an indicated coupon which we feel can be improved upon in a more stable market environment," stated Tom Ryan, chief financial officer, in a news release.

"We saw this as a modest opportunistic step toward achieving our longer term objectives, and with very little in the way of near term maturities, are pleased that we have the luxury of considerable time in meeting those objectives in an economical fashion," Ryan said. "We appreciate the consideration given to our offering by investors and the hard work of our underwriters."

Meanwhile Terex's term loan B moved down slightly to a bid of around 96½ and an offer of around 971/2, the trader said. On Thursday, the loan was quoted at 97/98, down from a previous trading level of around par.

The term B is feeling market pressure due to the recently launched term loan C, which is priced with an interest rate 50 basis points higher than the existing loan. The term C, according to market sources, is still in syndication and has not yet begun to trade in the secondary. Credit Suisse First Boston and Salomon Smith Barney are the lead banks on the deal.

Syndication of Gray Communications Systems Inc.'s $450 million senior secured credit facility (Ba3/B+) is "done," according to a syndicate source. "We raised about $1.3 billion. It was a blowout," the syndicate source said.

When the credit facility launched, market participants expected the syndication process to be a success. "It's a solid deal," a fund manager previously told Prospect News. The manager continued: "It's not fabulous but it's not bad. [Gray] had a little too much leverage (with total leverage of about 6.5 times), but it's a good strategic move for them [to buy 5 stations from Benedek Broadcasting]." Meanwhile, a sell-side source had told Prospect News "Gray should be a pretty easy deal. It's a basic business. Fundamentally, it's a deal that should work."

The loan is expected to close in mid-October and allocations are anticipated to be out "in the next week or so," the syndicate added.

Wachovia is listed on the left as the lead bank on the deal.

The loan consists of a $375 million eight-year term loan B with an interest rate of Libor plus 325 basis points and a $75 million seven-year revolver with an interest rate of Libor plus 300 basis points.

Basically all assets will be used to secure the Atlanta, Ga. communications company's loan.

Proceeds will be used to help fund the acquisition of 15 stations from Stations Holding Co., the parent company of Benedek Broadcasting.

The launch of Genesee & Wyoming's $250 million senior secured five-year revolver on Thursday "went great" with the bank meeting described as "well attended", according to a syndicate source. Fleet National Bank is the lead bank on the deal.

The revolver's interest rate can range from Libor plus 200 to 250 basis points depending on the Greenwich, Conn. railroad operator's leverage ratio, the syndicate source said. Initially, the loan was priced with an interest rate of Libor plus 200 basis points and has a commitment fee of 37.5 basis points.

Proceeds will be used for general corporate purposes including future acquisitions.

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