Dole heads up on amendment; Spectrum Brands still going strong; LCDX weakens

By Sara Rosenberg

New York, Feb. 5 - Dole Food Co. Inc.'s term loan was stronger by a couple of points during Thursday's market hours as the company launched an amendment that would provide lenders with juicier pricing, as well as change leverage at the company.

Also in the secondary market, Spectrum Brands Inc. continued to see its term loan levels rise, a trend that really began earlier in the week when the company filed for bankruptcy protection, Burger King Holdings Inc. and Sally Beauty Holdings Inc. were both steady on earnings, and LCDX 10 softened.

Dole seeks amendment, loan rises

Dole Food's term loan gained some ground in trading following news of an amendment proposal that would increase pricing and revise leverage, according to traders.

One trader had the term loan quoted at 88¼ bid, 89¼ offered, up from Wednesday's levels of 84½ bid, 86 offered, a second trader saw it at 87½ bid, up from 83½ bid, and a third trader saw wide levels at 84 bid, 88 offered, up from 82 bid, 86 offered.

On Thursday morning, Dole announced that it was going to approach lenders during the session about an amendment to its senior secured credit facility.

The amendment would increase pricing and add a senior-lien leverage ratio covenant.

In addition, the amendment would allow the company to issue new notes secured by junior liens on certain U.S. assets in the amount of the greater of $500 million or an amount that, when added to the outstanding senior secured debt, equals 3.75 times the last twelve months' EBITDA.

Proceeds from the notes would be used to refinance existing senior notes.

Dole targeting asset sales

In connection with the launch of the amendment, Dole told institutional lenders that it is hoping to complete asset sales that will generate $200 million in cash proceeds in 2009.

The company also disclosed that its net gain on asset sales in continuing operations was $30 million in 2008 and $5 million in 2007.

Deutsche Bank is leading the amendment.

Dole is a Westlake Village, Calif.-based producer and marketer of high-quality fresh fruit and fresh vegetables.

Spectrum Brands up some more

Spectrum Brands' term loan once again moved higher in trading, with the momentum still being attributed to the company's recent Chapter 11 filing, according to traders.

The term loan was quoted by one trader at 69½ bid, 71½ offered, and by a second trader at 69 bid, 71 offered, up from previous levels of 68 bid, 68¾ offered. Earlier this week, prior to the bankruptcy filing, the debt was being quoted 61 bid, 63 offered.

On Tuesday, the company announced that it filed a pre-negotiated plan of reorganization, which has already been agreed upon by the holders of roughly 70% of its outstanding public notes.

Under the plan, existing bond obligations in a principal amount of $1.05 billion would be canceled and noteholders would be issued new bonds in an aggregate principal amount equal to 20% of the total unpaid principal and interest on existing bonds together with shares of new common stock.

The claims of existing secured and other general unsecured creditors would be reinstated or unimpaired and, therefore, payment of the claims would be received on existing terms either in the ordinary course or upon consummation of the plan.

And, existing common stock will be extinguished under the plan, and no distributions will be made to holders of the current equity.

Spectrum Brands is an Atlanta-based consumer products company.

Burger King holds firm

In more trading happenings, Burger King's term loan held steady at levels of 95 bid, 97 offered on Thursday following the release of earnings for the quarter ended Dec. 31, according to traders.

For the fiscal 2009 second quarter, Burger King reported net income of $44 million, or $0.33 per share, compared to net income of $49 million, or $0.36 per share, in the comparable period last year.

Revenues for the quarter were $634 million, up 3% from $613 million last year.

EBITDA for the quarter was $109 million versus $118 million last year, and adjusted EBITDA for the quarter was $110 million, down from $118 million in the second quarter of fiscal 2008.

"Our core business remains strong," said John Chidsey, chairman and chief executive officer, in a news release. "Even in this uncertain economic environment, we posted positive comparable sales and accelerated our net restaurant openings.

"Going forward, we expect earnings to continue to benefit from easing food and energy costs, expected sales lifts from new and recently reimaged restaurants, net restaurant openings, product launches, and industry-leading marketing promotions; however, continuing uncertainties in the currency markets may continue to adversely impact earnings," Chidsey continued in the release.

Burger King updates guidance

Also on Thursday, Burger King updated its full-year earnings per share estimate to a range of $1.44 to $1.49, which includes an estimated $0.10 per share negative impact due to movements in currency exchange rates, based on Dec. 31 exchange rates.

"Our overall strategies remain on course and, as forecasted, we expect to realize earnings improvement in the second half of the fiscal year," Chidsey said, in the release.

"We are well-positioned to continue both our top and bottom-line expansion as we build on our multi-year track record of positive comparable sales, driven by global expansion, socially relevant marketing campaigns, operational excellence, product innovation and day part expansion," Chidsey added.

"We have a strong and predictable cash flow and our hedging activities largely mitigated the impact of currency exchange rate volatility on our cash position. Our debt to earnings ratio is healthy and our debt terms are very favorable," said Ben Wells, chief financial officer, in the release.

"We anticipate that our strong solid cash flow and balance sheet will enable us to continue to profitably invest in our company restaurant portfolio for the long-term, building new restaurants in high traffic locations and reimaging existing ones, both aimed at generating significant returns," Wells concluded in the release.

Burger King is a Miami-based fast food hamburger chain.

Sally Beauty steady with numbers

Sally Beauty was another company that came out with quarterly earnings results on Thursday, and its bank debt also held firm on the news, according to a trader.

The company's term loan B was quoted at 84 bid, 85 offered, unchanged from Wednesday's levels, the trader said.

For the first quarter ended Dec. 31, the company reported net earnings of $16.1 million, or $0.09 per share, compared to earnings of $14.3 million, or $0.08 per share, last year.

Consolidated net sales for the quarter were $645.6 million, a decline of 1.6% from $655.8 million in the fiscal 2008 first quarter.

Adjusted EBITDA for the quarter was $81.6 million, a decline of 6.4% from $87.2 million last year.

Sally Beauty pays down some borrowings

During the fiscal 2009 first quarter, Sally Beauty repaid $6.1 million of its term loan debt, and as of Dec. 31, cash and cash equivalents were $112.6 million.

"We are pleased with our performance during this challenging business environment, ending the quarter with positive same store sales and continued earnings growth," said Gary Winterhalter, president and chief executive officer, in a news release.

"In the near term, we intend to respond to the ongoing economic challenges by focusing on cost containment and prudent capital investments. We plan to maintain a solid financial position and a capital structure that provides ample liquidity to reduce debt and invest in long-term growth," Winterhalter added.

Sally Beauty is a Denton, Texas-based specialty retailer and distributor of professional beauty supplies.

LCDX dips

LCDX 10 headed a little lower during the trading session, despite a slight improvement in the stock market, according to a trader.

The index was quoted at 76.15 bid, 76.45 offered, down from Wednesday's levels of around 76.65 bid, 76.90 offered, the trader said.

Nasdaq closed up 31.19 points, or 2.06%, NYSE closed up 83.26 points, or 1.59%, S&P 500 closed up 13.62 points, or 1.64%, and Dow Jones Industrial Average closed up 106.41 points, or 1.34%.

As for the cash market, one trader said that things felt "a little bit weaker today but not materially," while a second trader remarked that although things felt softer in the morning, by the afternoon the market was pretty much flat in light volume.

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