National Bedding term loan B opens around 101; Gate Gourmet lower on selling pressure

By Sara Rosenberg

New York, Dec. 20 - National Bedding Co. LLC's $300 million credit facility (B1/B+) allocated on Monday, with the term loan B quoted in the 101 context on the break. Meanwhile, Gate Gourmet Inc.'s bank debt was a bit lower on Monday as selling pressure continues to mount due to concerns over the company's liquidity situation and ability to amend its credit agreement.

National Bedding's $150 million six-year term loan B was quoted at 101 bid on its entrance into the secondary marketplace with no offers, according to a trader. The tranche is priced with an interest rate of Libor plus 250 basis points and was originally offered to investors at par.

The facility also contains a $75 million five-year revolver and a $75 million five-year term loan A, both priced at Libor plus 250 basis points as well.

The deal had apparently gone well being that the syndicate moved up the commitment deadline to Thursday from Tuesday, a market source said.

"I think they only went out to existing guys and everyone should [have gotten] their pro rata share of the new deal," the source added.

Bank of America is the lead bank on the deal that will be used to refinance debt and help pay a $100 million dividend.

National Bedding is a Hoffman Estates, Ill., manufacturer of bedding products.

Gate Gourmet weaker

Gate Gourmet's bank debt continued to weaken in Monday's market as investors are wary over the company's recent amendment proposal to defer loan amortization payments and waive some financial covenants. Furthermore, although the consent deadline has just passed, some believe that not everyone will sign off on the proposal just yet.

The company's bank paper was quoted at 94 bid, 96 offered on Monday, down about half a point on the bid side from Friday and about two points on the bid side from mid-last week, according to one market source.

However, according to a trader, there was a stronger bid than 94 out in the market on Monday.

On Dec. 10, Gate Gourmet held a lender call asking to defer loan amortization payments due Dec. 31 until April 1, 2005 and to waive financial covenants for Dec. 31 due to liquidity concerns. The company also asked mezzanine lenders to defer interest payments.

These amendment requests have some investors worried that there may be a Chapter 11 filing in the company's future or that come April there will still not be enough liquidity to make required debt payments.

Consents were due on Monday, but a new lender call has been scheduled for Tuesday.

"I don't think there's enough clarity going on so no one is going to sign it as it is," a fund manager said. "They scheduled a lender call for tomorrow. I don't know what it's about but I'm sure they knew that they weren't going to get all consents today. They probably always expected that they would have to do this. They haven't officially pushed out the consent deadline but I'm not signing today."

After the initial lender call was held, the company's term loan B fell to 95½ bid from the 102 context. Then, at the start of last week, levels picked up a bit with the loan trading in the 96 bid, 97 offered context on Monday and the 97 context on Tuesday as the initial shock had warn off and lenders had some time to digest the information. However, by mid-last week the term loan started to drop off again, moving to the 96½ context on Wednesday until finally reaching 94½ bid on Friday and dropping even further in the most recent session.

"There's a lot of selling pressure. I think more people are saying, hey I need to get out of this," the fund manager explained.

Citigroup is the agent on the credit facility, and Credit Suisse First Boston is the agent on the mezzanine debt.

Gate Gourmet is a Zurich, Switzerland-based airline catering company.

PanAmSat gets attention on IPO buzz

PanAmSat Corp.'s bank debt caught the eye of many market players as rumors - sparked by a story in Monday's New York Post and proven true by an early evening filing with the Securities and Exchange Commission - were flying about a potential $1 billion initial public offering, although levels on the term loan B were not significantly impacted.

Two traders said that the term loan B was unchanged to maybe up an eighth of a point, however they differed on levels as one of the traders said the paper traded at par ¾ or par 7/8, while the other trader said that the paper was quoted in the par ½ bid, par ¾ context.

Although implications of the IPO on the bank debt were not revealed until after market close, most assumed that a refinancing of the credit facility would not be attempted in connection with the offering since the company currently is borrowing "at the lowest rate they can probably get," a trader remarked.

Bearing out that prediction, there was no mention of a refinancing in the form S-1 filed with the SEC; however, an amendment to the credit facility will be needed for the IPO to get done.

Recently, the Wilton, Conn., satellite provider tried to reprice its term loan B to Libor plus 225 basis points with a step down to Libor plus 200 basis points, from Libor plus 275 basis points. This repricing was basically "let to die" since it did not get enough lender approval, another source said.

"They just got 15% so they stopped pushing people on that," the source said about the repricing.

Proceeds from the IPO will be used to repay about $345 million of term loan A debt, to redeem $353.5 million, or 35%, of its $1.01 billion 9% senior notes and to pay $200 million of a dividend payment that stockholders will receive.

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