RepconStrickland tweaks deal; Gavilon floats talk; Kinetic firms timing; Delphi DIP loan bid up

By Sara Rosenberg

New York, April 10 - RepconStrickland shifted some funds between its term loan A and term loan B, and marginally widened the term loan B original issue discount, and Gavilon LLC came out with price talk on its asset-based revolver as the deal is getting ready to launch with a bank meeting next week.

Also in the primary, Kinetic Concepts Inc. came out with timing on its recently announced credit facility as a bank meeting has been scheduled for next week.

Meanwhile, over in the secondary, Delphi Corp.'s second-lien debtor-in-possession term loan was bid higher on news that the company may take legal action against Appaloosa Management LP, Rite Aid Corp.'s term loan held firm after the company released earnings results, and LCDX 10 and cash were a touch stronger with equities.

RepconStrickland made some changes to its credit facility, including reworking term loan tranche sizes and the term loan B discount price, and then allocated the facility on Thursday, according to a market source.

Under the changes, the five-year term loan A was upsized to $85 million from $75 million, while pricing was left in line with original talk at Libor plus 350 basis points, the source said.

The six-year term loan B was downsized to $90 million from $100 million, and while pricing was left unchanged at Libor plus 475 bps, with a 3.25% Libor floor, the original issue discount was modified to 98.75 from 99, the source continued.

As for the company's $50 million five-year revolver, that was left unchanged in terms of size and pricing, which is Libor plus 350 bps.

"RC and A were healthily oversubscribed so moved $10 [million] from the B to the A," the source added.

KeyBank acted as the lead bank on the $225 million deal.

Proceeds were used to help fund Arclight Capital LLC's acquisition of Repcon Inc., which was then merged with Arclight's existing portfolio company, AltairStrickland Group, to create RepconStrickland.

RepconStrickland is a provider of services to the refining, petrochemical and energy industries.

Gavilon price talk

Moving to primary happenings, Gavilon revealed that its proposed $1.5 billion asset-based revolving credit facility will be launched with price talk of Libor plus 250 bps, with a 37.5 bps commitment fee, according to a market source.

JPMorgan and BNP Paribas are the joint lead arrangers and bookrunners on the deal that will be presented to lenders with a bank meeting on Monday.

Other bookrunners on the revolver include BOTM, ING, Societe Generale, Barclays, Calyon, Fortis, Credit Suisse and CoBank.

Proceeds will be used to help fund Ospraie Management's acquisition of the company from ConAgra Foods Inc. for $2.1 billion, subject to certain adjustments.

Under the agreement, ConAgra Foods will get $1.6 billion in cash, subject to working capital fluctuations, and $525 million face value of payment-in-kind debt securities of a newly created Gavilon holding company.

The PIK securities will include a 10.5% two-year tranche, a 10.75% three-year tranche and an 11% four-year tranche.

ConAgra Foods will receive an additional $39 million at closing if the senior operating cash flow facility made available to Gavilon at closing is rated less than investment grade.

The transaction is subject to satisfaction of customary closing conditions, including normal regulatory approvals and the company having access to a senior operating cash flow facility consistent with the terms of the bank commitments it has received.

Gavilion, which is currently known as ConAgra Trade Group, is an Omaha, Neb.-based grain merchandising, fertilizer distribution, agricultural and energy commodities trading and services, and grain, animal and oil seed byproducts merchandising and distribution business.

Kinetic Concepts timing emerges

Kinetic Concepts firmed up timing on the launch of it proposed $1.9 billion senior secured credit facility, as a bank meeting has been scheduled to take place on April 17, according to market sources.

The facility consists of a $300 five-year million revolver, a $1 billion five-year term loan A and a $600 million six-year term loan B.

Pricing on the revolver and the term loan A are expected at Libor plus 325 bps, and pricing on the term loan B is expected at Libor plus 350 bps, according to the commitment letter that was filed with the Securities and Exchange Commission.

There is a 3.25% Libor floor for all tranches.

The revolver has a 50 bps commitment fee and any portion of the term loans that is delayed draw will have a delayed-draw fee of half the spread.

Original issue discounts are expected to be 99 on the term loan A and 95 on the term loan B, the commitment letter said.

An original issue discount in an amount equal to 1% of the amount of the commitments under the revolver will be effected in the form of an additional upfront fee equal to such amount, payable to the lenders under the revolver on the closing date.

Financial covenants include a maximum leverage ratio and a minimum fixed-charge coverage ratio.

As part of permanent financing and subject to market conditions, Kinetic may access the equity-linked markets during 2008.

Pro forma leverage is expected to be around 2.9 times.

Bank of America and JPMorgan are the joint lead arrangers and joint bookrunners on the deal that will be used to help fund the acquisition of LifeCell Corp.

Under the purchase agreement, Kinetic will commence a cash tender offer to acquire all outstanding shares of LifeCell's common stock at a price of $51 per share. The transaction is valued at $1.7 billion in cash.

Kinetic is a San Antonio-based medical technology company. LifeCell is a Branchburg, N.J.-based provider of biological products for soft tissue repair.

Delphi bid higher

Moving to the trading news, Delphi's second-lien DIP term loan was bid stronger during market hours on the heels of news that the company may take legal action against Appaloosa, according to a trader.

The loan was quoted at 99¼ bid, 99¾ offered, compared to previous levels of 98¾ bid, 99¾ offered, the trader said.

In an 8-K filed with the SEC late Wednesday, Delphi said that it has formed a special litigation committee and has engaged independent legal counsel to consider and pursue any and all available equitable and legal remedies as a result of Appaloosa's decision last week to terminate its $2.55 billion investment in Delphi, which halted Delphi's emergence from Chapter 11.

Delphi is considering commencing legal action in the United States Bankruptcy Court for the Southern District of New York to seek all appropriate relief, including specific performance by the investors of their obligations under the investment agreement.

Delphi is a Troy, Mich.-based automotive electronics manufacturer. General Motors is a Detroit-based automaker.

Rite Aid holds firm

Rite Aid's term loan was steady on Thursday as the company announced fourth-quarter and full-year numbers that were pretty much in line with expectations, according to a trader.

The term loan was quoted at 92½ bid, 93½ offered, unchanged from Wednesday's levels, the trader said.

For the fourth quarter, Rite Aid reported a net loss of $952.2 million, or $1.20 per diluted share, compared to last year's fourth quarter net income of $15.1 million, or $.01 per diluted share.

Included in the quarter's loss is a non-cash income tax charge from the recording of a valuation allowance against deferred tax assets that accounted for $894.9 million, or $1.12 per diluted share, and resulted in the loss of an expected non-cash tax benefit for this year's fourth quarter.

Revenues for the fourth quarter were $6.82 billion, a 50.5% increase from the prior year fourth-quarter revenues of $4.53 billion.

And, adjusted EBITDA for the quarter was $276.3 million, or 4% of revenues, compared to $201 million, or 4.4% of revenues last year.

For the 52-week fiscal year ended March 1, the company reported a net loss of $1.1 billion, or $1.54 per diluted share, compared to last year's net income of $26.8 million, but a loss of $.01 per diluted share because of the negative impact of preferred stock dividends.

Included in the year's loss is a previously announced non-cash income tax charge from the recording of a valuation allowance against deferred tax assets that accounted for $802.7 million, or $1.11 per diluted share.

Also contributing to the full-year and fourth-quarter net loss were increases in expenses resulting from the Brooks Eckerd acquisition, including, among other things, an increase in depreciation and amortization expense and additional interest expense.

Revenues for the full year were $24.3 billion, up 39.8% from last year's revenues of $17.4 billion.

And, adjusted EBITDA for the year was $962.8 million, or 4% of revenues, compared to $696.9 million, or 4% of revenues for last year.

The company said that the increase in full-year and fourth-quarter revenues was primarily due to the addition of revenues from the acquired Brooks Eckerd stores, along with an improvement in gross margin rates.

Rite Aid also announced guidance for fiscal 2009 on Thursday. Based on current trends, continued integration activities and an expectation that the challenging economic environment will continue, the company expects a net loss between $260 million and $375 million, or a loss per diluted share of $.34 to $.48.

Adjusted EBITDA for fiscal 2009 is expected to be between $1 billion and $1.1 billion.

And, sales for fiscal 2009 are anticipated to be between $26.7 billion and $27.2 billion, with same store sales improving 2% to 4% over fiscal 2008.

Rite Aid is a Camp Hill, Pa.-based drugstore chain.

LCDX, cash trade up

LCDX 10 and the cash market in general both felt stronger during the session as the stock market was better, according to a trader.

The index went out around 96.90 bid, 97 offered, up from around 96.75 bid, 96.90 offered, the trader said.

And, cash was up about a quarter of a point across the board, the trader added.

As for equities, Nasdaq closed up 29.58 points, or 1.27%, Dow Jones Industrial Average closed up 54.72 points, or 0.44%, S&P 500 closed up 6.06 points, or 0.45%, and NYSE closed up 22.04 points, or 0.24%.

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