Playtex hopes to lower interest rates by refinancing with a $470 million term B

By Sara Rosenberg

New York, May 6 - The big news of the day in bank loans was Playtex Products Inc.'s decision to refinance through the amendment of its current credit facility agreement, according to market sources. The company is taking advantage of a market environment in which the supply/demand ratio works in its favor, allowing for a decrease in spreads. Credit Suisse First Boston is the lead bank on the deal.

The loan is anticipated to consist of a $470 million term loan B with an interest rate of Libor plus 225 basis points, market sources said. The replacement B tranche will also be used to repay the company's term A loan. According to a fund manager, the A loan is probably mostly paid off through amortization, which is why the new term B is only slightly larger than its original size of $400 million. The existing revolving credit facility is not expected to be part of the refinancing. The company was not immediately available to confirm the structure of the loan.

Playtex should be able to execute the price change on its loan, according to a market professional. He explained that in the present market environment, there is a strong desire for product amongst investors and chances are people will agree to lower spreads so as not to risk losing the asset all together.

On May 22, 2001, the Westport, Conn. manufacturer and marketer of branded consumer and personal products company entered into a new senior secured credit facility consisting of a $100 million six-year term A, a $400 million eight-year term B and a $125 million six-year revolver, according to a filing with the Securities and Exchange Commission.

In other primary news, Venetian Casino Resort LLC, a subsidiary of Las Vegas Sands Inc., is scheduled to bring a new $480 million senior secured credit facility to market. The new loan is expected to close during the second quarter of 2002.

Proceeds from the loan, combined with proceeds from an $850 million mortgage notes offering, will be used to repay, redeem or repurchase the company's existing bank credit facility, its 12¼% mortgage notes due 2004 and 14¼% senior subordinated notes due 2005, its furniture, fixture and equipment credit facility, its mall debt and certain other indebtedness, according to a company press release. In addition, proceeds will be used to finance the construction and development of a 1,000-room addition to the Casino Resort, additional meeting and conference space and an expansion to the parking garage.

Further details on the structure of the loan and the timing of the deal were not immediately available.

In secondary activity, two big names that continue to be watched are Aurora Foods Inc. and WorldCom Inc. due to the recent slide downwards of trading levels that both companies' bank loan paper have experienced recently.

Aurora Foods has been dropping in price lately due to weaker than expected first quarter results and market talk of possible accounting irregularities. Any irregularities are only talk at this point; the company has not raised the possibility although it has said it has had difficulty "identifying reliable information" in some areas and needs to work on defining its units as part of new goodwill accounting standards.

The loan paper was trading at par approximately two weeks ago, according to a fund manager. On Friday, the paper traded at 92. Aurora did not trade on Monday, the fund manager added.

At March 31, the St. Louis, Mo. producer and marketer of branded food products company reported a net loss of $12.9 million, before the cumulative effect of accounting changes, compared with a net loss of $7.8 million in the same year-ago period, a press release said. The net loss included a $20.1 million pre-tax charge. Net sales for the quarter were $215.8 million, excluding the charge, compared with $230.1 million a year ago. Including the charge, net sales for the quarter were $198.1 million.

Leveraged players are still focusing their attention on WorldCom Inc., despite its investment grade ratings, as the company's bank loan paper trading levels continued to fluctuate throughout the day. The global communications provider's loan traded as low as 92 to 93 and then bounced back slightly to trade at 94 to 95, a trader said. Investors have been watching WorldCom's performance closely since the appointment of John Sidgmore as chief executive officer after the resignation of Bernard Ebbers.

In follow-up news, syndication on RailAmerica Inc.'s new $475 million credit facility (Ba3/BB) is expected to be wrapped up by the end of this week, according to a syndicate source. UBS Warburg and Morgan Stanley are joint lead-arrangers for the deal.

The loan consists of a $100 million six-year revolver with an interest rate of Libor plus 200 basis points and a $375 million seven-year term B tranche with an interest rate of Libor plus 275 basis points, the syndicate source said. There is a commitment fee of 50 basis points on the revolver. All company assets will be used to secure the loan. Proceeds will be used to refinance existing debt.

The offering went really well, according to the syndicate source. "We consider it a done deal," he added.

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