Packaged Ice launch slated for early July due to SEC review of leveraged buyout

By Sara Rosenberg

New York, June 18 - Confirmation came Wednesday that Packaged Ice Inc.'s proposed $170 million credit facility has been postponed, with the bank meeting now scheduled for the first week in July after the July 4 holiday and the specific date of July 8 being targeted for the launch, according to a syndicate source.

The deal has been delayed because the Securities and Exchange Commission has to review the leveraged buyout transaction. Previously counsel for the buyers had thought the deal did not need to be reviewed although according to one source that was a poor assumption since the SEC has reviewed seven or eight going-private transactions recently.

Furthermore, price talk on the deal, which is currently Libor plus 400 basis points on both tranches, may change in the near future. "We're going to revisit the price talk given the strength of the market. Certainly it will be less than 400," the source told Prospect News.

"We have a lot of reverse inquiries. We have a couple of tickets in hand already," the source added.

Interestingly, the Libor plus 400 basis points price talk seemed slightly aggressive to one fund manager since the business segment is a tough one to operate in and the collateral package is iffy due to the leasing of machines.

The facility, which consists of a $35 million revolver and a $135 million term loan B, is being led by Credit Suisse First Boston, Bear Stearns and CIBC.

Proceeds will be used to help fund the leveraged buyout of the Dallas packaged ice company by Trimaran Capital Partners and Bear Stearns Merchant Banking.

Meanwhile, American Seafoods Group LLC's $300 million credit facility is currently in the pre-marketing mode as that syndicate has approached insurance companies regarding the term loan B and existing lenders regarding the revolver, a syndicate source said.

The reason that insurance companies have been approached is that the term loan may have a fixed rate component to it that insurance companies may find attractive, the syndicate source explained.

However, since a different audience is being targeted, the deal may not move through the primary in the same fashion that the bank loan market is accustomed too. "It's not a clean, have a bank meeting and commitments are due in two weeks. When you're dealing with insurance companies you're looking at huge commitments so you tend to deal one-on-one with them," the syndicate source said.

As for the revolver, syndication is expected to be quick and painless since the company has "deep relationships" with its existing lenders, the source added.

The facility consists of an $80 million five-year revolver with a commitment fee of 50 basis points and a $220 million seven-year term loan B. Price talk on both tranches is Libor plus 300 basis points.

Leverage is in the mid-ones on a senior basis and the low-fives on a total basis, according to the syndicate source.

Security will be a pledge of American Seafoods' intercompany debt, 100% of the capital stock of American Seafoods and its wholly-owned domestic subsidiaries and a security interest in certain assets of American Seafoods and its subsidiaries.

The Seattle producer of seafood products is seeking this new credit facility since it must terminate its previous line of credit as part of its plan to issue income deposit securities. Besides having to obtain a new credit facility, the company must also close on a consent solicitation for its 10 1/8% senior subordinated notes due 2010.

Proceeds from the credit facility combined with proceeds the IDS offering will be used to pay for the repurchase of the 10 1/8% notes pursuant to the redemption and tender offer and the fees, expenses and premiums associated with the consent solicitation, redemption and tender offer.

CIBC World Markets Corp. is the lead arranger and sole bookrunner on the deal.

In follow-up news, there was a slight increase in the size of Fairchild Semiconductor International Inc.'s revolver, with the new size being $180 million, up from $175 million.

The facility (Ba3/BB-), which is expected to close and fund by the end of the quarter, also contains a $300 million five-year term loan B.

Pricing on the revolver is Libor plus 250 basis points and pricing on the term loan B is Libor plus 275 basis points.

Proceeds from the term loan B will be used by the South Portland, Maine semiconductor company to retire $300 million in 10 3/8% senior subordinated notes due in 2007. The company expects to call the notes in July. Should the Libor interest rate stay at current levels, the company expects to save approximately $18 million annually in pre-tax interest expenses.

The facility is replacing the company's existing $300 million revolver.

"This refinancing is expected to significantly reduce our interest costs while preserving our strong cash position," stated Matt Towse, senior vice president and chief financial officer, in a news release. "We chose the term B loan for its attractive rates and ease of repayment. Our business typically generates strong cash flow, especially in a market upswing, so having the flexibility to reduce debt in the future without penalty was a key consideration in our selection."

Deutsche Bank and Fleet are the lead banks on the deal.

In the secondary, Charter Communications Inc.'s bank debt was up a quarter to half a point with the paper quoted at 94 bid, 95 offered. The upward moment in the St. Louis cable company's loan was in response to a report by the Wall Street Journal that the company is close to announcing a deal with its bank group regarding an amendment to the credit facility, according to a trader.

Late in the day, the company announced that it did in fact receive lender approval to amend the Charter Communications Operating, LLC $5.2 billion senior secured credit facilities agreement, permitting the creation of intermediate holding companies in Charter's corporate structure between Charter Communications Holdings, LLC, and Charter Communications Operating, LLC.

In connection with the amendment, Charter is contributing the equity of certain subsidiaries to Charter Communications Operating, LLC.

Calpine Corp.'s bank debt was up by about a half a point on Wednesday with the paper quoted at 98½ bid, 99 offered, according to a trader, who attributed the rise to a recent overall strengthening in the sector.

On Tuesday, the company announced that it received another extension from the bank groups on its two working capital facilities totaling $950 million, this time through June 24. Previously the bank group had agreed to extend the facilities to June 16.

The San Jose, Calif. power company said the extension will give it enough time to finalize terms on a new two-year $1 billion working capital facility.

Furthermore, upon completion of a term sheet for the $1 billion facility, the banks have provided an automatic extension to July 16 so as to provide enough time to complete definitive documentation.

Nextel Communications Inc.'s term loan B and C traded and were quoted at either side of par on Wednesday, while the term loan D traded and was quoted at either side of 99, basically in line with previous levels, according to a trader.

On Tuesday, the Reston Va. wireless company's term loan B and C were quoted at 99 7/8 bid.

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