Pilgrim's Pride reveals names of agent banks; Reader's Digest steady on bankruptcy filing

By Sara Rosenberg

New York, Aug. 24 - In primary happenings on Monday, details emerged on who joined on to the Pilgrim's Pride Corp. exit financing credit facility in agent roles by providing commitments totaling over $500 million towards the revolver and term loan A tranches.

Meanwhile, on the trading front, Reader's Digest Association Inc.'s term loan B held firm in a very sleepy market, as the company made its restructuring plan official by filing for Chapter 11 bankruptcy protection.

Pilgrim's details agents

Over in the primary market, the names of the banks that committed a total of $525 million to Pilgrim's Pride's exit financing revolver and term loan A surfaced.

Bank of Montreal committed $175 million to the tranches, landing the bank a role as a joint bookrunner, according to a market source.

The other $350 million in orders came from Morgan Stanley, Barclays and ING, who are all now agents on the facility, the source said.

As was previously reported, CoBank and Rabobank are the original - and current - joint lead arrangers and bookrunners on the transaction.

The three-year revolver is sized at $500 million and talked at Libor plus 450 bps and the three-year term loan A is sized at $375 million and talked at Libor plus 500 bps.

The revolver, which is subject to a borrowing base, and the term loan A are being sold pro rata.

In addition to the revolver and term loan A, the company's $1.65 billion exit facility also includes a $775 million term loan B.

Pilgrim's B loan gets rollover

As was expected, Pilgrim's Pride's five-year term loan B has already seen rollover commitments from pretty much everyone who is involved in the company's existing deal with CoBank, the source continued.

"It's coming along," the source added.

The term loan B is talked at Libor plus 500 bps.

There are upfront fees on the revolver, term loan A and term loan B, but details on those fees are not available.

Financial covenants under the facility include leverage, fixed-charge coverage and capital expenditures requirements.

Security is the company's fixed and current assets.

Commitments are due from lenders at the end of next week.

Pilgrim's Pride is a Pittsburg, Texas-based poultry processor.

Reader's Digest unmoved by filing

Over in the secondary market, Reader's Digest's term loan B held in at previous levels after the company announced that it moved forward with its restructuring plan by filing for bankruptcy, according to a trader.

The term loan B was quoted at 40½ bid, 42½ offered, in line with Friday's levels, the trader said.

Under the restructuring agreement, senior secured lenders will exchange a substantial portion of the company's $1.6 billion of senior secured debt for equity and will reduce the company's total debt by 75%, to $550 million from about $2.2 billion. Ownership of the company will be transferred to the lender group.

Prior to the filing, more than 80% of the company's senior secured lenders had signed on to the agreement in principle.

Reader's Digest getting DIP

As part of the restructuring, Reader's Digest has received a commitment for a $150 million new money debtor-in-possession term loan that is being led by JPMorgan.

The DIP, which is convertible into a three-year exit facility, has a term of nine months with one three-month extension and is priced at Libor plus 1,000 bps with a 3.5% Libor floor. If the extension option is exercised, pricing will move to Libor plus 1,100 bps. There is also a 200 bps unused commitment fee.

"Our business operations remain solid, with anticipated fiscal 2009 revenue only down by low single digits, currency neutral, despite the recession. We look forward to emerging with a restructured balance sheet and as a financially stronger organization that is positioned to pursue our growth and transformational initiatives," said Mary Berner, president and chief executive officer, in a news release.

Reader's Digest is a Pleasantville, N.Y.-based media and marketing company.

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