Supervalu to launch $4 billion deal; market softer in quiet trading; Movie Gallery up on lease news

By Paul A. Harris

St. Louis, April 19 - Supervalu Inc. unveiled a $4 billion credit facility during an otherwise quiet mid-week session in the leveraged loan market.

Elsewhere Movie Gallery, Inc. saw its bank loan paper firm while its junk bonds rose smartly, fell just as far and ended flat.

A trader said that the loan market, which had softened Monday and Tuesday, felt as if there was a decent two-way flow on Wednesday, although the market as a whole was quiet.

"Things seemed range bound," the trader said. "Nothing in particular moved much, but we finally saw some decent two-way flows."

Meanwhile another trader said that lower coupon paper was definitely softer, Wednesday.

"I'm seeing it off a quarter of a point, but there is nothing really specific that is driving it," the source commented.

Supervalu to launch $4 billion

Late in the day a market source said that Supervalu is expected to launch into general syndication a $4 billion credit facility (expected ratings Ba3/BB-) on May 2.

The Royal Bank of Scotland is leading the deal.

The facility is expected to be comprised of a $2 billion five year revolver and $1.25 billion five-year term loan A both at Libor plus 150 basis points. The revolver is expected to carry a 40 basis points unused fee. The institutional tranche is expected to be comprised of a $750 million six-year term loan B at Libor plus 175 basis points.

The deal was previously launched at the agent level at a meeting on Feb. 6.

Eden Prairie, Minn.-based Supervalu and CVS Corp. are leading a group of inventors that is acquiring Boise, Idaho-based grocery chain Albertson's.

Del Monte adds delayed draw

Elsewhere Del Monte Corp. said that it would add a $75 million delayed draw component to its term loan B add-on, increasing the total size to $925 million from $855 million. The portion to be funded at closing was reduced slightly to $850 million from $855 million.

The company was scheduled to launch its term loan B add-on Wednesday, via Bank of America, Goldman Sachs and Lehman Brothers.

Proceeds will be used to fund the acquisition of pet product assets, including the Milk-Bone dog snack brand, from Kraft Foods Global Inc. for about $580 million, and to help fund the acquisition of cat food maker Meow Mix from The Cypress Group for about $705 million.

San Francisco-based Del Monte said in the Wednesday announcement that it anticipates making a $75 million draw on its existing revolver to provide a further portion of the funding for the acquisitions.

Add-on from Wastequip

Finally in the primary, Cleveland-based manufacturer of waste collection equipment Wastequip Co. will hold a Friday conference call to set the size and terms of an add-on to its Libor plus 250 basis points credit facility (B2/B).

Credit Suisse is the bookrunner.

The existing $155 million facility was trading Wednesday morning in a 100.50 bid, 101.50 offered context, according to the source.

"Things are picking up a little bit," a bank loan trader said Wednesday morning.

"I get the sense that the calendar is starting to build, and we'll get busier."

Movie Gallery moves up

The trader said that the existing loan paper of Dothan, Ala.-based Movie Gallery, Inc. firmed on news that the company has entered into a management agreement with Hilco Real Estate, LLC. Under the agreement, Movie Gallery and Hilco will initiate a program to restructure leases at more than 1,100 existing Movie Gallery and Hollywood Video stores. The list of stores, which will not be published, does not include stores that are associated with the company's previously announced subleasing and downsizing program.

The bank loan trader said Wednesday morning that the company's loans were at 90 bid, 91 offered, up a point.

Later in the day another bank loan trader spotted the paper at 90 bid, 92 offered, up from 88 bid, 90 offered on Tuesday.

However another trader, at the close, said that while the paper had definitely moved, it had pretty much ended back where it had started the session, and spotted it closing at 89.50 bid, 90.50 offered.

Meanwhile a trader from the junk bond side also told Prospect News that Movie Gallery's bank loan paper had traded to 89 bid, 90 offered, up a couple of points in the morning, and added that it pretty much hung in there from open to close.

However, the source added, the company's 11% bonds due May, 1, 2012 (Caa3/CCC-) "gave up everything and maybe finished the day off a little from where they started."

On the news, the bonds had traded up to 50 bid but were going out at 46.50 bid, 48.50 offered, giving up the "three points that they had gained in the morning."

Dynegy closes upsized deal

In follow up news, Dynegy Inc. said it completed a $670 million senior secured credit facility (Ba3/NA/BB-), increased from the original size of $600 million.

The loan amends and restates the company's existing revolver and increases the size to $470 million from $400 million and adds a new $200 million term loan.

Under the new facility, the revolver is due in April 2009 while the term loan matures in January 2012.

Interest on the revolver depends on ratings and is currently Libor plus 175 basis points. Previously the revolver was at Libor plus 200 basis points.

The term loan has an initial rate of Libor plus 175 basis points with a potential step down to Libor plus 150 basis points depending on ratings.

At closing the revolver was undrawn.

Proceeds from the term loan were put in a collateral account to support issuance of letters of credit.

Lead arrangers are Citigroup Global Markets Inc. and J.P. Morgan Securities Inc.

Dynegy is a Houston-based energy company.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.