Some find coupon on Moore loan aggressive, but syndication is anticipated to get done

By Sara Rosenberg

New York, Feb. 26 - Moore Corp.'s $850 million credit facility that launched on Wednesday was received with some hesitancy by potential investors mainly due to pricing on the institutional tranche and the offering of the tranche at par. However, overall, the deal is expected to syndicate successfully since people like the company, the acquisition strategy and the management team.

The bank meeting itself was reported to be very well attended, according to a syndicate source. "Moore had overcapacity. There were more people than chairs," the syndicate source said.

The loan consists of a $500 million seven-year term loan B with an interest rate of Libor plus 275 basis points and a $350 million five-year revolver with an interest rate of Libor plus 250 basis points, according to a fund manager.

"I don't like the Libor plus 275 pricing for a company that's in a bad industry," the fund manager explained to Prospect News. "Not a lot of companies are spending a lot of money on advertising and commercial printing. In general, companies are trying to cut back on expenditures and commercial printing is one of the first things to go.

"[Also], they're not offering any upfront fees here," the fund manager continued. "The banks are really trying to care of Moore and not really investors."

On the plus side though, "the acquisition is a great idea, combining these two companies," the fund manager said. "There are a lot of synergies so they can cut costs by closing redundant facilities.

"All said and done, I think the deal will get done," the fund manager added. "There are a lot of people who like the company. And, a lot of people who are in the existing deal will probably roll over into the new one. I just don't have that much money to spend right now so I can be skeptical about this loan."

Proceeds from Moore's newly launched loan, combined with proceeds from a bond offering, will be used to help fund the acquisition of Wallace Computer Services Inc. Moore will pay aggregate consideration of approximately $1.3 billion consisting of approximately $606 million in cash, approximately $470 million in Moore's common shares, and the assumption of approximately $210 million in debt. The combined company will be renamed as Moore Wallace.

Deutsche Bank, Salomon Smith Barney and Morgan Stanley are the lead banks on the deal.

Moore is a Mississauga, Ont. manager and distributor of print information. Wallace is a Lisle, Ill. provider of printed products and print management services.

AmeriPath Inc.'s bank meeting for a $365 million credit facility was also well attended, according to a syndicate source. Credit Suisse First Boston and Deutsche Bank are the lead banks on the deal.

The loan contains a $290 million term loan B with an interest rate of Libor plus 400 basis points and a $75 million revolver with an interest rate of Libor plus 350 basis points.

Proceeds, combined with proceeds from a bond offering, will be used to help fund leveraged buyout of AmeriPath by Welsh, Carson, Anderson & Stowe.

The buyout is expected to be completed before April 30, 2003. Completion of the transaction is subject to shareholder approval, the closing of financing arrangements, the expiration of the applicable waiting period under Hart-Scott-Rodino and other customary conditions.

AmeriPath is a Riviera Beach, Fla. provider of cancer diagnostics, genomic, and related information services.

ILC Industries Inc.'s $130 million senior secured credit facility, which also launched Wednesday, has a couple of pros, including favorable market sector and good management team, and cons, including low rating and lack of liquidity in the secondary.

"It's kind of a neat little company," a fund manager said. "They're small but they do some things that are definitely needed by the Department of Defense. They have their little niche and they're not going anywhere. It's one of the hotter industries right now. And they have a very experienced management team. I like it."

"The coupon is nice," the fund manager said. "And there's a 25 basis points upfront fee."

The loan consists of a $15 million five-year revolver with an interest rate of Libor plus 350 basis points and a $115 million seven-year term loan B with an interest rate of Libor plus 400 basis points.

"One thing kind of unfortunate is the weak rating - B1," the fund manager said, explaining that CDO and CLO participation may be limited by the rating since CDO and CLO structures tend to look for better ratings.

"[In addition], some people may not look at it because it's kind of small. On the secondary market people may not be able to trade out of it if they need to.

"It may not get the kind of coverage it deserves," the fund manager concluded.

UBS Warburg is the lead bank on the deal.

Proceeds will be used to help fund the leveraged buyout of ILC by Behrman Capital and Clifford Lane. Furthermore, Blackstone Mezzanine Partners is providing subordinated debt to fund the transaction.

ILC is a Bohemia, N.Y. supplier of defense electronics, advanced microelectronic components and engineered materials to the defense, aerospace and industrial sectors.

In follow-up news, Bresnan Broadband Holdings LLC, which launched on Monday, received its first commitment on Tuesday from GE Capital for $50 million, according to a company spokesperson. "We're working away on it," the spokesperson added.

The $400 million credit facility consists of a $100 million seven-year revolver with an interest rate of Libor plus 350 basis points, a $75 million seven-year delayed draw term loan A with an interest rate of Libor plus 350 basis points and a $225 million 7 ½ year term loan B with an interest rate of Libor plus 375 basis points.

JPMorgan Chase, TD Securities and Wachovia are the lead banks on the deal.

Proceeds from the credit facility, combined with common and preferred equity, will be used to help fund the acquisition of Comcast Corp.'s cable television systems serving 317,000 basic subscribers in Montana, Wyoming, Colorado and Utah. The transaction is expected to close by March 31, 2003, subject to customary closing conditions.

Bresnan Communications is a White Plains, N.Y. broadband communications provider.

Crown Cork & Seal Co. Inc. closed on its new $1.05 billion credit facility, consisting of a $550 million first lien revolver with an interest rate of Libor plus 400 basis points due Sept. 15, 2006 and a $500 million first lien term loan B with an interest rate of Libor plus 425 basis points due Sept. 15, 2008. The term loan B is comprised of $450 million and euro 50 million. Deutsche Bank and Salomon Smith Barney were the lead banks on the deal.

The credit facility was part of a comprehensive refinancing plan that also included the sale of $1.085 billion of 9½% second priority senior secured notes due 2011, €285 million of 10¼% second priority senior secured notes due 2011 and $725 million of 10 7/8% third priority senior secured notes due 2013.

Proceeds from the refinancing plan are being used to refinance the company's prior revolver and certain unsecured senior notes.

"We are very pleased with the refinancing plan and the confidence shown in Crown by investors. The refinancing improves our liquidity and extends the maturities of most of our debt to 2006 and beyond. We are now able to focus all of our attention on strengthening Crown's leadership position in its core businesses," said John W. Conway, chief executive officer, in a news release.

In conjunction with the refinancing, the company formed a new public holding company named Crown Holdings, Inc.

Crown Cork is a Philadelphia supplier of packaging products.

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