Laidlaw continues above par after struggling in syndication; Wyndham up despite pay down

By Sara Rosenberg

New York, June 19 - Laidlaw Inc.'s credit facility continued to surprise market participants with its performance in the secondary on Thursday as quotes moved up to par ½ bid, par ¾ offered, according to one source, and par ½ bid, 101 offered, according to a second source. Wyndham International Inc., also to the surprise of some, strengthened by a point on Thursday after dropping slightly following a pay down earlier this week.

Laidlaw's deal allocated and broke for trading this past Tuesday, moving up to around par immediately after hitting the secondary, according to a fund manager.

"This wasn't a blow-out during the syndication process. They had to add a lot of enhancements to attract commitments because investors perceive the company to be vulnerable since a lot of its business comes from municipalities and municipalities are operating with deficits so they won't really spend a lot of money on transportation," the fund manager said.

"There's a 200 basis points Libor floor. It sold at 98. They almost added call protection but they pulled that out at the last minute. It was attractive enough to get done but theoretically if they needed to make all these enhancements it shouldn't have traded up by about two points right after breaking."

Laidlaw flexed its $625 million six-year term loan B up a number of times to attract investors, finally settling at Libor plus 500 basis points, after flexing up from Libor plus 350 basis points to Libor plus 425 basis points and then from Libor plus 425 basis points to Libor plus 475 basis points.

Furthermore, the institutional tranche was being offered at 99¼ and then was offered at 99, finally settling at 98.

The $825 million senior secured credit facility (Ba3/BB) also contains a $200 million five-year revolver with an interest rate of Libor plus 300 basis points.

Credit Suisse First Boston and Citibank are leading the Burlington, Ont. transportation company's exit financing deal. The company filed for Chapter 11 on June 28, 2001 and hopes to emerge by the end of this month.

Wyndham's bank debt was also stronger on Thursday with the IRL trading at 91, according to a fund manager, who remarked that it was pretty interesting to see such a solid level right after a pay down.

"There was a 11½% pay down on the IRL, a 5.6% pay down on the B. [The IRL] moved down like a point after the pay down and traded on Tuesday and Wednesday at around 90. Now, it's solidly back at 91."

The term loan B was quoted at 86 bid, 88¼ offered on Thursday, according to the fund manager.

The fund manager explained that it is pretty common for paper to move higher prior to a pay down since people are willing to pay more knowing that they will be taken out at par. However, usually after a pay down occurs people are not willing to pay as much for the paper.

The Dallas hotel enterprise's IRL rallied last week to around the 91 level following news that the company completed a $425 million mortgage refinancing secured by 19 hotel properties with a new loan that has an initial maturity date of June 9, 2005 and can be extended at the company's discretion to July 8, 2008. The loan was made by affiliates of Lehman Brothers.

This refinancing satisfies 65% of the pay down required to extend the maturity date of its credit facilities under an amendment, which calls for the extension of the maturity date of the IRLs and revolver to April 1, 2006 from June 30, 2004, upon satisfaction of certain conditions, including the repayment of certain levels of existing debt within the next nine months.

Due to the completion of this milestone the company anticipates being able to complete the remaining conditions for extending the maturity dates prior to the nine-month deadline.

In follow-up news, Merisant Co.'s $320 million credit facility, which launched this past Tuesday, is moving along quite nicely as the term loan B was said to already be fully committed prior to the bank meeting, according to a fund manager.

"We committed. We've been a lender since before it was spun off from Monsanto in 2000. The management team is solid. Good history of paying down debt. Met their budget three years in a row now. Strong brand name," the fund manager said.

The facility consists of a $40 million 51/2-year revolver with an interest rate of Libor plus 300 basis points and a 50 basis points commitment fee, a €40 51/2-year term loan A with an interest rate of Libor plus 300 basis points and a $240 million 61/2-year term loan B with an interest rate of Libor plus 325 basis points.

Credit Suisse First Boston is the lead arranger and administrative agent on the deal, Wachovia is the syndication agent, and Bank One and Fortis are co-documentation agents.

The credit facility is being obtained as part of the Chicago tabletop sweetener company's recapitalization plan.

Interface Inc. closed on its new $100 million revolver (B2/B+) with an initial interest rate of Libor plus 300 basis points that was obtained through the amendment and restatement of its credit facility. Wachovia Securities Inc. is the sole lead arranger, manager and bookunner on the deal.

Wachovia Bank is the domestic agent, multicurrency agent and collateral agent, Fleet Capital Corp. is the syndication agent and General Electric Capital Corp. is the documentation agent.

The interest rate and the unused fee are based on the company's fixed charge coverage ratio. If the ratio is less than or equal to 1.00 to 1.00, then the rate is Libor plus 350 basis points and the unused fee is 100 basis points. If the ratio is greater than 1.00 to 1.00, but less than or equal to 1.25 to 1.00, then the rate is Libor plus 300 basis points and the unused fee is 75 basis points. If the ratio is greater than 1.25 to 1.00, but less than or equal to 1.50 to 1.00, then the rate is Libor plus 275 basis points and the unused fee is 75 basis points. And, if the ratio is greater than 1.50 to 1.00, then the rate is Libor plus 250 basis points and the unused fee is 50 basis points, according to a filing with the Securities and Exchange Commission.

The revolver is due May 15, 2005, but may be extended to Oct. 1, 2007 if the company meets certain conditions relating to liquidity and the repayment of long-term debt.

The borrowing base of the revolver depends on the level of assets maintained.

"The amendment and restatement of our revolving credit facility provides Interface with ample liquidity and financial flexibility, while also allowing the company to take advantage of opportunities for growth as they arise," stated Patrick C. Lynch, chief financial officer, in a news release. "The new terms of the facility give Interface a strengthened capital structure and will fulfill our working capital needs, ensuring a strong foundation for our operations going forward."

Interface is an Atlanta manufacturer, marketer, installer and servicer of products for the commercial and institutional interiors market.

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