Stillwater sees warm reception from existing lenders, new institutional investors

By Sara Rosenberg

New York, May 24 - Stillwater Mining Co.'s Monday bank meeting was well attended with the deal receiving "very strong interest" from existing lenders and the new institutions that were approached to participate as ratings, asset coverage and sector attracted investors, according to a market source.

The $140 million credit facility (Ba3/BB) consists of a $40 million five-year revolver with an interest rate of Libor plus 300 basis points and a $140 million six-year term loan B with price talk of Libor plus 325 basis points.

"The term loan B is going very well at this time," the source said. "The majority of existing lenders are looking to roll over and said they want to maintain their positions."

TD Securities is the lead arranger on the deal, and Toronto Dominion Inc. is the administrative agent.

Total leverage is roughly 2.48x, and senior leverage is roughly 2x.

Proceeds will be used to refinance the company's existing credit facility and for general corporate purposes.

Stillwater is a Columbus, Mont., developer, extractor, processor and refiner of palladium, platinum and associated metals.

Dresser launches

Dresser Inc. held a bank meeting on Monday for its previously announced $175 million add-on to its existing senior secured term loan C. The add-on will carry an interest rate of Libor plus 250 basis points, the same pricing as the existing term loan C carries, a company spokesman told Prospect News.

Morgan Stanley is the lead arrangers, bookrunner and administrative agent on the term loan C.

"I would imagine it would go out to the existing lending group because there's been some pretty strong demand for our debt," the spokesman speculated. "We paid down some of our debt. When we refinanced the term B with the term C we paid down $25 million in principal as part of that transaction. We were oversubscribed so I don't see why we would have to go to outsiders."

In March, Dresser refinanced, or basically repriced, about $382 million of its term loan B with the $235 million term loan C and a $125 million senior unsecured term loan with an interest rate of Libor plus 350 basis points. The company had originally planned to obtain a $100 million senior unsecured term loan and a $260 million term loan C, but due to demand, the term loan C was downsized by $25 million and the unsecured term loan was upsized by $25 million.

Proceeds from the $175 million add-on will be used to purchase the distribution business of Nuovo Pignone SpA, a subsidiary of General Electric. The transaction is expected to close in June.

Dresser is a Dallas designer, manufacturer and marketer of highly engineered equipment and services sold primarily to customers in the flow control, measurement systems, and compression and power systems segments of the energy industry.

Vicar oversubscribed

Vicar Operating Inc.'s $225 million term loan E is already two times oversubscribed as the Thursday commitment deadline fast approaches, according to a market source. Goldman Sachs and Wells Fargo are the lead banks on the deal, with Goldman listed on the left.

The term loan E is essentially an $80 million add-on rolled into an existing $145 million term loan D, the source said.

Pricing on the E loan is Libor plus 250 basis points, the same as pricing on the D loan that is being refinanced.

Proceeds from the "add-on" will be used to fund the acquisition of National PetCare Centers Inc. for $77 million. Closing on the acquisition is targeted for June.

On Monday, Standard & Poor's rated the term loan E at BB- with a recovery rating of 4.

"The rating action reflects Vicar's consistent organic revenue growth, historically disciplined acquisition strategy, and commitment to reducing its debt. The NPC transaction will increase the company's total debt by about $80 million and is a deviation from the company's tuck-in acquisition strategy (about $30 million annually). Standard & Poor's believes that after the NPC transaction, Vicar will return to a more modest growth strategy and remain committed to reducing its debt obligations," S&P explained.

"The speculative-grade ratings on Vicar reflect its narrow operating focus in a highly competitive industry with numerous local players. Such concerns are partially offset by its conservative growth strategy, revenue diversity across over 300 animal hospitals, established laboratory platform, lack of exposure to third-party reimbursement, and by its commitment to repay debt."

Vicar is a subsidiary of VCA Antech Inc., a Los Angeles animal healthcare services company.

Maax, Yankees oversubscribed

Maax Inc.'s $110 million term loan B (B1/B+), which is priced with an interest rate of Libor plus 275 basis points, is also oversubscribed ahead of its commitment deadline later this week, according to a market source.

Goldman Sachs, Merrill Lynch and Royal Bank of Canada are the lead banks on the deal, with Goldman listed on the left.

The credit facility also contains a C$50 million revolver with an interest rate of Libor plus 250 basis points and a C$130 million term loan A with an interest rate of Libor plus 250 basis points.

Proceeds, combined with proceeds from a bond offering and an equity contribution, will be used to support Maax's leveraged buyout by J.W. Childs Associates LP, Borealis Private Equity LP and Ontario Municipal Employees Retirement System. Under the terms of the acquisition, which was announced in March, Maax shareholders will receive $22.50 per common share in cash and the Sponsor Group will indirectly acquire all the issued and outstanding shares for a purchase price of about $640 million, including the assumption of existing debt.

The merger is subject to certain conditions including, shareholder approvals, funding under the existing debt commitments and receipt of all necessary consents and regulatory approvals, including approvals under the Competition Act, Hart-Scott-Rodino Antitrust Improvements Act and Investment Canada Act. Closing is expected to occur on or about June 1.

Maax is a Sainte-Marie de Beauce, Quebec-based manufacturer of bathroom products and accessories, spas and kitchen cabinets.

And, the New York Yankees $225 million credit facility that is priced with an interest rate of Libor plus 250 basis points reached oversubscription as well.

The commitment deadline for the deal is also slated for later this week, according to a source.

Goldman Sachs is the lead bank on the New York major league baseball franchise's deal.

Iasis June business

Iasis Healthcare Corp's proposed credit facility that will be obtained in connection with the company's leveraged buyout will "definitely" be June business as far as a retail launch is concerned, although the syndicate is already talking to banks regarding the transaction, a market source told Prospect News on Monday.

The company is also expected to approach the high-yield market in June with a new bond offering as part of the LBO, subject to market conditions, the source added.

Furthermore, its has now been confirmed that Bank of America, Citigroup, Goldman Sachs, Lehman Brothers and Merrill Lynch are the lead banks on the deal, with Bank of America listed on the left.

Previously it was rumored that Bank of America, Goldman Sachs, Lehman Brothers and Merrill Lynch would be involved in the financing since all four banks acted as financial advisers to the various counterparties involved in the LBO.

As was already reported, Iasis entered into a definitive agreement with an investor group led by Texas Pacific Group (TPG) under which TPG will acquire Iasis from JLL Partners for about $1.4 billion. The transaction is expected to close by June 30.

In connection with the LBO, Iasis began a cash tender offer and consent solicitation for any and all of its $230 million principal amount of 13% senior subordinated notes due 2009 and its $100 million principal amount of 8½% senior subordinated notes due 2009. The offer is scheduled to expire at midnight ET on June 3.

As of May 19, the company had received the required consents to amend the indentures governing its 13% senior subordinated notes and its 8½% senior subordinated notes, and holders of $226.5 million principal amount of the outstanding 13% notes and $100 million of the outstanding 8½% notes delivered valid tenders.

The refinancing of Iasis' credit facility and the receipt of financing are all conditions to the company's newly announced tender offer.

Iasis is a Franklin, Tenn., owner and operator of medium-sized acute care hospitals.

Bucyrus price talk

Both the $50 million revolver and the $100 million term loan that make up Bucyrus International Inc.'s proposed $150 million senior secured credit facility are talked in the Libor plus 300 basis points context, according to a market source.

Goldman Sachs Credit Partners LP and GMAC Commercial Finance LLC are the lead banks on the deal, which is expected to launch in July along with an initial public offering of common stock.

However, although the bank meeting is still a ways off, the revolver is already fully syndicated, the source added.

Proceeds from the bank deal, combined with expected proceeds of $122.8 million from the IPO, will be used to redeem all the company's $150 million outstanding 9¾% senior notes due 2007 and repay its existing bank debt.

The existing facility matures Jan. 8, 2005 and carries interest at Libor plus 200 to 225 basis points.

Bucyrus is a South Milwaukee, Wis., manufacturer of surface mining equipment.

Charter active

Charter Communications Operating LLC's credit facility traded around on Monday in an otherwise relatively calm secondary, according to traders, with some placing the paper unchanged at the 98 3/8 bid, 98 7/8 offered range and others quoting it up about a quarter of a point at 98 5/8 bid, 99 1/8 offered on Standard &Poor's outlook revision.

"There was some activity in the name. People are filled up on the name. Before the new Charter deal, funds could put all the different Charter issuers in different baskets. Now it's all in one issuer basket and they exceed concentration limits. The name will bounce around. There's nothing fundamentally different in the name. It's just reallocations of a very active name," one trader said.

However, a second trader said the paper was "firmer" and higher on the day following the S&P release.

On Monday, S&P revised its outlook on Charter Communications Inc. and subsidiaries to positive from developing and affirmed all ratings.

"The outlook revision is based largely on the company's improved maturity profile following the April 2004 refinancing," explained S&P credit analyst Eric Geil in a release. "Operating improvement, including a slowing rate of basic subscriber loss, also factored into the outlook revision."

In April, the St. Louis cable company refinanced all of its subsidiary bank debt with one large $6.5 billion credit facility consisting of a $3 billion term loan B priced with an interest rate of Libor plus 325 basis points, a $2 billion term loan A priced with an interest rate of Libor plus 300 basis points and a $1.5 billion revolver priced with an interest rate of Libor plus 300 basis points.

CalGen up

Calpine Generating Co. LLC's first and second lien term loans were up on the day primarily in reaction to the high-yield market being higher, according to a trader.

The second lien paper rallied by about two or three points to end the day quoted at 95½ bid, 96½ offered, the trader said.

The first lien did not react as strongly, only moving up by about half a point to 99 bid, 99½ offered, the trader added.

CalGen is a wholly owned subsidiary of Calpine Corp., a San Jose, Calif., power company.

Juno closes

Juno Lighting Inc. closed on its $245 million credit facility consisting of a $165 million delayed draw first lien term loan (B1/B+) with an interest rate of Libor plus 275 basis points, a $50 million second lien term loan (B2/B-) with an interest rate of Libor plus 550 basis points and a $30 million revolver (B1/B+) with an interest rate of Libor plus 300 basis points and stepdowns in pricing depending on leverage. The second lien term loan has call protection of 102 in year one and 101 in year two.

At launch, the first lien term loan was sized at $150 million and the second lien term loan was sized at $60 million, but the tranches were shuffled a bit during syndication. Furthermore, during syndication, pricing on the tranches was changed with the first lien term loan reverse flexed from original pricing of Libor plus 300 basis points and the second lien term loan reverse flexed from original pricing of Libor plus 575 basis points. And, a stepdown in pricing was added to the first lien term loan during syndication with the interest rate able to go down to Libor plus 250 basis points if leverage falls below 4x.

Leverage is 3.2 times through the first lien and 4.5 times through the second lien. Interest coverage is just over four times.

The second lien term loan was funded Monday and the proceeds were used to retire Juno's previously existing credit facility, according to a company news release. Juno expects to use the remaining proceeds, together with proceeds of the first lien delayed draw term loan, to redeem its $125 million of 11 7/8% senior subordinated notes, pay a one-time cash dividend to its preferred and common stockholders of $60 million and fund working capital requirements.

Wachovia was the lead bank on the deal for the Des Plaines, Ill., lighting fixtures manufacturer.

Reader's Digest closes

The Reader's Digest Association Inc. closed on its $385 million credit facility consisting of a $200 million 31/2-year term loan A with an interest rate of Libor plus 200 basis points and a $185 million four-year term loan B with an interest rate of Libor plus 200 basis points. JPMorgan was the lead bank on the deal.

Proceeds were used to refinance existing bank debt.

"Following its successful offering of unsecured senior notes in March 2004, RDA paid down a major portion of its term loans to $437 million as of March 31. The reduction in total outstanding term loan debt enabled RDA to restructure its remaining term loans at significantly more favorable rates than the former arrangements. In the restructuring, the company has reintroduced bank term loans and has repriced and correspondingly reduced its existing institutional term loans. Applicable interest rates under the amended pricing grid have been reduced from the former Libor plus 300 basis points to Libor plus 200 basis points for both the bank and institutional term loans," a company news release said.

"We are gratified by the lenders' favorable reaction to our continued strong cash flows, reduced leverage and diversified capital structure," said Michael S. Geltzeiler, senior vice president and chief financial officer, said in the release. "In addition to advancing our goal to pay down term loan financing as quickly as possible, these moves will result in several million dollars in interest savings over the next few years."

Reader's Digest is a Pleasantville, N.Y., publisher and direct marketer.

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