Pinnacle Foods, Cambium set talk; Masonite dips with numbers; Aramark bounces on repricing

By Sara Rosenberg

New York, March 12 - Pinnacle Foods Group Inc. and Cambium Learning Inc. came out with price talk on their credit facilities as the deals were launched with bank meetings on Monday.

Meanwhile, in trading news, Masonite International Inc.'s term loan softened following the release of financial results, Aramark Corp. seesawed slightly on the launch of its repricing, and Spectrum Brands Inc. headed down near anticipated pay down levels as plans for a refinancing emerged.

Pinnacle Foods held a bank meeting in New York on Monday with a 1:30 p.m. ET start to kick off syndication on its proposed $1.3 billion senior secured credit facility (B2/B-), and in conjunction with the launch, price talk surfaced, according to a market source.

Both the $125 million revolver and the $1.175 billion term loan B were presented to lenders with opening talk set at Libor plus 275 basis points, the source said.

The term loan is covenant-light, and the revolver has a total leverage covenant, but only when it is drawn, the source added.

Lehman and Goldman Sachs are the lead banks on the deal, with Lehman the left lead.

Proceeds will be used to fund The Blackstone Group's buyout of the company from J.P. Morgan Partners, LLC, J.W. Childs Associates, LP, CDM Group and former bondholders of Aurora Foods Inc. for $2.16 billion in cash.

The actual borrower under the credit facility will be Peak Finance LLC, the affiliate of the Blackstone Group that is being merged into Pinnacle.

In connection with the buyout, Pinnacle Foods expects to repurchase its outstanding 8¼% senior subordinated notes due 2013.

Pinnacle Foods is a Cherry Hill, N.J., manufacturer, marketer and distributor of branded food products.

Cambium price talk

Cambium Learning released opening price talk of Libor plus 275 bps on both tranches under its $158 million credit facility as this deal was also launched to investors on Monday, according to a market source.

Tranching on the deal is comprised of a $30 million six-year revolver with a 50 bps commitment fee and a $128 million six-year term loan B.

Credit Suisse and Barclays are the joint lead arrangers on the facility.

Proceeds will be used to help fund Veronis Suhler Stevenson's leveraged buyout of the company from J.H. Whitney & Co.

Cambium is a Natick, Mass., education company that provides intervention services for literacy and mathematics.

Allied Waste launches with step down

Allied Waste Industries Inc. presented its institutional bank debt to lenders on Monday in line with previous price talk but included a step down based on leverage, according to a market source.

More specifically, the $1.105 billion term loan B and the $490 million synthetic letter-of-credit facility were launched with talk of Libor plus 175 bps, as expected, but the tranches were also launched with a step down to Libor plus 150 bps at 4¼ times leverage, the source said.

Allied Waste's $3.17 billion credit facility also includes a $1.575 billion revolver that is talked at Libor plus 175 bps as well.

JPMorgan and Citigroup are the lead banks on the deal, with JPMorgan the left lead.

Proceeds will be used to refinance existing debt.

Allied Waste is a Phoenix nonhazardous solid waste management company.

Masonite weakens on numbers

Moving to the secondary market, Masonite's term loan traded lower as the company announced financial results for the fourth quarter and a reduction of business by its largest customer, according to a trader.

The term loan ended the day at 99 5/8 bid, 99 7/8 offered, down from previous levels of 99¾ bid, par offered, the trader said.

For the fourth quarter, Masonite's sales were $585 million compared with $595.2 million in fourth-quarter 2005, operating EBITDA was $69 million compared with $49.6 million in 2005 and consolidated adjusted EBITDA was $75.8 million compared with $69.5 million in the prior-year period.

"Masonite felt the full impact of weakness in both the new residential construction and the repair and remodeling markets during the fourth quarter," said Kenneth W. Freeman, chairman and chief executive officer, in a company news release. "Despite difficult market conditions, our profitability improved significantly compared to the fourth quarter of 2005."

For the full year, the company reported net sales of $2.465 billion compared with $2.429 billion in 2005, operating EBITDA was $302.4 million compared with $228.1 million in 2005 and adjusted EBITDA was $332.6 million compared with $298.4 million in the prior year.

The main news affecting the term loan, however, seemed to be Masonite's loss of business with an important customer, a trader added.

In the earnings announcement, Masonite said that its largest customer will reduce its volume of business with the company by about 50% starting later this year, as a result of price increases implemented by Masonite during 2006.

"Although we are disappointed with this decision, it is essential that we ground Masonite on a solid foundation of selling our door products at prices that provide us with appropriate returns for the value we provide," said Freeman in the release. "We are actively pursuing opportunities to accelerate growth with existing and new customers, and we are evaluating selective adjustments in capacity as we strive to balance supply and anticipated demand."

Masonite is a Mississauga, Ont.-based manufacturer of residential and commercial doors.

Aramark rollercoasters with repricing

Aramark's term loan B moved around during trading hours as the company launched its repricing proposal; however, by the end of the day, the paper was basically unchanged for a variety of possible reasons, according to a trader.

Closing levels on the term loan B were seen at par 5/8 bid, par 7/8 offered - in line with prior levels - but, shortly after repricing details emerged, the paper had dropped to par ½ bid, par ¾ offered before bouncing back up, traders said.

One explanation for the lack of sustained losses is that investors had already priced in the repricing since rumors had started floating around last week, traders remarked.

Another explanation given was that the soft call protection and a step up provision provided for in the repricing proposal may have contributed to levels ending up unchanged.

And yet another factor, according to one trader, could be that people don't expect the repricing to pass as is since it is being viewed as a little aggressive by some lenders. In fact, one source that participated in the lender call told Prospect News that there was quite a bit of pushback from investors.

Under the proposal, Aramark is looking to lower the spread on its U.S. term loan B, euro term loan B and synthetic letter-of-credit facility to Libor plus 175 bps from Libor plus 212.5 bps.

The tranches would carry a step up to Libor plus 200 bps if senior secured leverage is more than 4.75 times. The current step down provision under the tranches would be eliminated.

In addition, the tranches would also have 101 soft call protection for one year.

Goldman Sachs is leading the repricing.

This repricing would take effect on April 16, exactly three months from the date that the original deal closed.

Aramark is a Philadelphia-based professional services company that provides food, hospitality, facility management services as well as uniform and work apparel.

Spectrum falls on refi

Spectrum Brands' term loan headed lower during market hours as investors are expecting to be taken out at par now that a refinancing transaction has been announced, according to a trader.

The term loan ended the day around par ¼ bid, par ¾ offered, down from 101¼ bid, 101½ offered, the trader said.

On Monday morning, Spectrum Brands revealed plans for an at least $1.6 billion six-year credit facility to refinance its existing credit facility.

Goldman Sachs and Bank of America are the joint lead arrangers and joint bookrunners on the deal, with Goldman also acting as syndication agent.

The refinancing is anticipated to be completed by March 30.

Spectrum Brands is an Atlanta-based consumer products company and a supplier of batteries and portable lighting, lawn and garden care products, specialty pet supplies, shaving and grooming and personal care products, and household insecticides.

HealthSouth closes

HealthSouth Corp. completed the repricing of its term loan B and tranche A letter-of-credit facility to Libor plus 250 bps, according to a company news release.

JPMorgan acted as the lead bank on the deal.

Originally, the company had asked lenders to take pricing down on the term loan B to Libor plus 275 bps. Prior to the amendment, the term loan B carried an interest rate of Libor plus 325 bps with a step down to Libor plus 275 bps if ratings improved.

The amendment also gives the company the appropriate approvals for its divestiture activities.

HealthSouth is a Birmingham, Ala., provider of ambulatory surgery and rehabilitative health care services.

Mohegan closes

Mohegan Tribal Gaming Authority closed on its new $1 billion five-year senior secured revolving credit facility, according to a company news release.

Bank of America, RBS Securities and Calyon acted as the joint lead arrangers and joint bookrunners on the deal, with Bank of America administrative agent, Citizens Bank of Connecticut and Calyon co-syndication agents, and Citicorp and Wells Fargo co-documentation agents.

There is a $250 million accordion feature.

Proceeds will be used to refinance the authority's existing credit facility and for working capital and other business purposes, including the financing of the Project Horizon expansion at Mohegan Sun and the Phase II expansion at Mohegan Sun at Pocono Downs in Wilkes-Barre, Pa.

Mohegan is an Uncasville, Conn., gaming company.

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