Adelphia moves higher on court approval of entire $1.5 billion DIP facility

By Sara Rosenberg

New York, Aug. 23 - Adelphia Communications Corp. bank debt strengthened in secondary trading in what was otherwise labeled as an extremely quiet Friday following news that the company received court approval for a $1.5 billion debtor-in-possession credit facility. The DIP is being provided by a consortium of banks led by JPMorgan Chase Bank and Citigroup USA Inc.

As was previously announced on June 28, the Coudersport, Pa. cable company received court approval for an initial advance under the facility of up to $500 million.

"I'm hearing that [Adelphia] did go up but I haven't seen any actual trading," a trader said. "The old facility was in the low 60's. It might have jumped up to the mid-60's."

"I think Adelphia should be a little higher because they got court approval for the whole DIP," a fund manager said. "But so many people are out that it's hard to tell. I haven't seen anything today. My phone hasn't rung once except for social calls."

Bank loan market activity is expected to remain fairly quiet until after the Labor Day weekend holiday, according to market sources. However, once September rolls around, the market anticipates seeing an influx of new primary offerings including deals from Del Monte Foods Co., Genesee & Wyoming Inc., Meridian Automotive Systems Inc., Nellson Neutraceutical Inc., Penn National Gaming Inc. and Rayovac Corp.

Del Monte Foods, a San Francisco, Calif. processed food company, is expected to launch a $1.6 billion credit facility, according to market sources. Bank of America, JPMorgan Chase, UBS Warburg and Morgan Stanley are the lead banks on the deal.

The loan consists of a $450 million six-year revolver with an interest rate of Libor plus 250 basis points, a $250 million six-year term loan A with an interest rate of Libor plus 250 basis points and a $900 eight-year term loan B with an interest rate of Libor plus 275 basis points, market sources said.

Proceeds will be used to help fund the merger with certain H.J. Heinz Co. businesses.

Genesee & Wyoming, a Greenwich, Conn. operator of short line and regional freight railroads, is expected to begin syndication of a new $250 million senior secured credit facility, following the closing of the Utah Railway Co. acquisition. Fleet National Bank is the lead bank on the deal.

Details on the loan are not currently being disclosed, a company spokesman previously told Prospect News.

Proceeds will be used to provide the company with access to capital for general corporate purposes including future acquisitions.

Meridian Automotive Systems, a Dearborn, Mich. auto parts company, is expected to launch a new $275 million senior secured credit facility. Credit Suisse First Boston is the lead bank on the deal.

The loan is anticipated to consist of a $150 million term loan due 2009 and a $125 million five-year revolver, according to a filing with the Securities and Exchange Commission. The term loan is an add-on to the company's existing term for a total of $290 million, according to a fund manager. The interest rate on the term loan will be subject to a grid that ranges from Libor plus 275 to 350 basis points and the initial rate is expected to be Libor plus 350 basis points, the fund manager said.

Proceeds will be used to repay outstanding debt and the loan is scheduled to close in conjunction with the completion of an initial public offering.

Nellson Neutraceutical, an Irwindale, Calif. formulator and manufacturer of functional bars and powders, is expected to launch a new $145 million secured credit facility, according to a syndicate source. UBS Warburg is sole lead arranger and sole bookrunner for the deal.

The loan is anticipated to consist of a $15 million five-year revolver and a $130 million seven-year term loan B.

Proceeds from the loan will be used to help fund the company's leverage buyout by Fremont Partners.

Penn National Gaming, a Wyomissing, Pa. owner and operator of gaming properties, is expected to launch a $1 billion credit facility, consisting of a $100 million five-year term A with an interest rate of Libor plus 250 basis points, a $700 million six-year term B with an interest rate of Libor plus 275 basis points, a $100 million seven-year second priority term with an interest rate of Libor plus 425 basis points and a $100 million revolver with an interest rate of Libor plus 250 basis points, according to a filing with the Securities and Exchange Commission.

Bear Stearns and Merrill Lynch are joint lead arrangers, joint bookrunners and syndication agents.

Proceeds will be used to help fund the acquisition of Hollywood Casino Corp and refinance debt.

Rayovac, a Madison, Wis. battery and lighting device company, is expected to launch a $675 million credit facility, consisting of a $200 million revolver, a €100 million term and a$375 million term B. Bank of America and Citigroup are the lead banks on the deal.

Proceeds will be used to help fund the acquisition of Varta AG's consumer battery business, retire existing bank debt and provide for expanded working capital needs.

In follow-up news, URS Corp. closed on a $675 million senior secured credit facility (Ba3/BB-), consisting of a $200 million five-year revolver with an interest rate of Libor plus 300 basis points, a $125 million term loan A with an interest rate of Libor plus 300 basis points and a $350 million six-year term loan B with an interest rate of Libor plus 350 basis points. Credit Suisse First Boston was the lead bank on the deal.

At closing, $475 million was drawn under the facility.

Proceeds from the loan, combined with proceeds from an issuance of $20 million senior notes, were used to refinance outstanding debt and to help fund the acquisition of EG&G Technical Services from The Carlyle Group for $500 million.

"By adding revenue of nearly $900 million, the acquisition of EG&G catapults URS to the forefront as a leading provider in the rapidly growing area of outsourced operations and maintenance services for the federal government, particularly in national and homeland defense where we expect spending will accelerate and remain at high levels for years to come," said Martin M. Koffel, chairman and chief executive officer of URS, in a news release. "The combination of EG&G and URS will enable us to provide services throughout the lifecycle of projects. By integrating URS' pre-construction consulting, planning and design expertise with EG&G's complementary post-construction operations and maintenance services, this transaction opens up many opportunities in our markets, and we will move forward quickly to capitalize on the strategic synergies available to the combined company."

URS is a San Francisco, Calif. engineering and design services provider.

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