Del Monte breaks for trading with term B around 101, pro rata high par; Masonite changes launch timeline

By Sara Rosenberg

New York, Feb. 4 - Del Monte Foods Co. allocated its $950 million senior secured credit facility (Ba3/BB) on Friday, with its institutional paper quoted in the high par to 101 region. Meanwhile, in primary news, Masonite International Inc. shifted its expected launch timeframe by a week on scheduling issues.

Del Monte's $400 million seven-year term loan B opened for trading around par ½ bid with no offers, ticked higher to par 5/8 bid, 101 offered by the afternoon and inched even higher to par ¾ bid with no offers by late day, according to a trader, who said that he even heard that the paper traded as high as 101 at some point during market hours.

The company's pro rata paper, which consists of a $200 million six-year term loan A and a $350 million six-year revolver, traded around par ¾ during the session, the trader said.

"There are no sellers of it," the trader said. "Allocations were terrible. Heard there was like $2.2 billion in for the deal. They cut banks back on their pro rata commitments. The institutional market sucked up the B. Banks didn't get any piece of that and usually if a bank gives a large pro rata commitment they'll get a little piece of the B."

The term loan B, term loan A and revolver are all priced with an interest rate of Libor plus 150 basis points. The term loan B was originally launched with price talk of Libor plus 175 basis points but was reverse flexed during syndication.

Bank of America, Morgan Stanley and JPMorgan are the lead banks on the deal, with Bank of America the left lead.

Proceeds from the credit facility, along with proceeds from 6¾% 10-year senior subordinated notes that were recently priced, will be used to help fund the repurchase of the company's $300 million 9¼% senior subordinated notes due 2011 and refinance existing credit facility debt.

The tender offer is expected to expire on Monday.

Del Monte Foods is a San Francisco producer, distributor and marketer of branded and private label food and pet products.

Masonite launch

Masonite is now expecting to hold a bank meeting to launch its proposed $1.525 billion credit facility during the week of Feb. 14 as opposed to the week of Feb. 7 due to scheduling issues, according to a market source.

Bank of Nova Scotia, Deutsche Bank, UBS Securities, SunTrust and Bank of Montreal are the lead banks on the deal, with Scotia the left lead and administrative agent.

The facility consists of a $350 million revolver and a $1.175 billion term loan B. Price talk on the tranches is unavailable at this time.

Proceeds will be used to help fund Kohlberg Kravis Roberts & Co.'s acquisition of Masonite in an all cash transaction under which Masonite's shareholders will receive C$40.20 per share. The total value of the transaction is about C$3.1 billion.

The Mississauga, Ont.-based building products company's will also be approaching the high-yield market as part of the LBO financing package, probably in February as well, with about $825 million of bond debt that could come in a multi-tranche offering.

KKR will be providing some equity to fund the acquisition as well.

Closing of the LBO is subject to customary conditions, including regulatory, shareholder and court approvals.

Ntelos books close

Ntelos Inc. closed the books on Friday on its $660 million senior secured credit facility, according to a market source.

The deal, which is multiply oversubscribed, consists of a $400 million first-lien term loan (B2) talked at Libor plus 275 basis points, a $225 million second-lien term loan (B3) talked at Libor plus 550 basis points and a $35 million revolver (B2) talked at Libor plus 275 basis points.

Some positives that worked in favor of the deal are relatively low leverage - 5x through the second lien and 3.1x through the first lien - and it being a pretty straightforward deal from a credit perspective, a source previously explained.

Both term loan tranches were offered to investors at par.

Morgan Stanley Senior Funding Inc. and Bear Stearns & Co. Inc. are joint lead arrangers and joint bookrunners on the deal, with Morgan Stanley the left lead and administrative agent.

Proceeds from the will be used to help in the recapitalization and sale of the company to affiliates of Quadrangle Capital Partners LP and Citigroup Venture Capital.

In the first step of the transaction, Ntelos will refinance its existing debt and repurchase up to 75% of its existing equity in a self-tender offer at a price of $40 per common share.

Following that step, Quadrangle and CVC will purchase up to 24.9% of the post-recapitalization equity of the company, also at a price of $40 per share.

And, after receipt of regulatory approvals, Quadrangle and CVC will acquire the remainder of the company's equity, at the same $40 per share price, in a merger transaction.

The closings of the refinancing and initial stock repurchase by the company are not conditioned on the sale of any equity to Quadrangle and CVC.

Ntelos is a Waynesboro, Va., regional integrated communications provider.

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