Commitments pour in on Horizon Lines as existing lenders opt to rollover

By Sara Rosenberg

New York, June 17 - The book on Horizon Lines LLC's $250 million seven-year term loan has been filling up as a good portion of existing lenders have already signed up to take part in this new deal, according to a market source.

"Quite a few commitments have come in," the source said. "Quite a few people are going to rollover with some looking to upsize. It's a pretty favorable credit. [It has] very few competitors. It's an attractive market."

The term loan, which just launched to investors via a bank meeting on Wednesday, is priced with an interest rate of Libor plus 300 basis points.

The $275 million credit facility also contains a $25 million five-year revolver that went out with pricing of Libor plus 250 basis points. Prior to launch, market sources had placed the revolver price talk at Libor plus 275 basis points.

UBS and Goldman Sachs are joint lead arrangers on the credit facility, with UBS listed on the left. ABN Amro is the documentation agent.

The company is also expected to hit the high-yield market this month with a $250 million bond offering via the same three banks but with Goldman Sachs listed as left lead.

Following the transactions, total leverage will be 5x and senior leverage will 2.5x.

Proceeds from the debt transactions will be used to help fund Castle Harlan Inc.'s previously announced acquisition of Horizon Lines from The Carlyle Group for $650 million. Castle Harlan Partners IV LP, an investment fund totaling $1.163 billion in commitments that closed last September, is the actual buyer of Horizon Lines.

Horizon Lines is a Charlotte, N.C., container shipping company.

Yonkers launch, price talk

A bank meeting for Tuesday has been scheduled to launch Yonkers Raceway's $185 million term loan, according to a market source. As was previously reported, the deal was expected to launch next week, although specific timing had not been finalized.

Furthermore, price talk in the Libor plus 325 to 350 basis points context emerged, with the spread subject to ratings, the source added.

Merrill Lynch is the lead bank on the deal.

Proceeds will be used by the Yonkers, N.Y. horse racing track to fund construction.

Apollo/Eastman sets launch

A bank meeting has been scheduled for Tuesday for the launch of the new credit facility that will be used to help finance Apollo Management LP's acquisition of some businesses and product lines in Eastman Chemical Co.'s coatings, adhesives, specialty polymers and inks segment, according to an informed source.

JPMorgan and Bear Stearns are the lead arrangers on the deal, with JPMorgan listed on the left.

The acquisition is valued at $215 million, including cash of $165 million at closing, plus a $50 million note payable to Eastman. Closing, which is targeted for prior to the end of July, is subject to regulatory approval and other customary closing conditions.

In addition to the bank debt, equity will be used to fund the transaction as well.

J.P. Morgan Securities Inc. acted as exclusive financial adviser to Eastman on this transaction.

Rent-A-Center via Lehman, JP

Rent-A-Center Inc.'s recently announced proposal for a new $600 million senior credit facility will be led by Lehman Brothers and JPMorgan as co-lead arrangers and joint bookrunners, with Lehman listed on the left.

As was previously reported, the facility consists of a $400 million term loan and the $200 million revolver.

The company is looking to refinance its existing credit to get lower interest rates and to renegotiate covenants, including the basket to repurchase stock and the capital expenditures requirement, a company spokesman told Prospect News Thursday. The decision to seek the refinancing at the present time was based on the strength of the credit market and the company's enhanced credit standing since being upgraded by Standard & Poor's.

Rent-A-Center's existing credit facility contains a $400 million term loan with an interest rate of Libor plus 225 basis points, a $120 million revolver with an interest rate of Libor plus 200 basis points and an $80 million letter-of-credit facility with an interest rate of Libor plus 225 basis points, the spokesman added. At March 31, the company had a total of $397 million outstanding under its term loan and $90.3 million of availability under its revolver.

In addition to repaying the existing facility, Rent-A-Center will use proceeds for general corporate purposes.

The Plano, Texas, operator of rental purchase stores expects to complete the transaction in the third quarter.

Bear Creek closes

Bear Creek Corp. closed on its $305 million credit facility on Thursday, according to a market source. UBS was the lead bank on the deal.

The facility consists of a $150 million revolver (B1) with an interest rate of Libor plus 300 basis points and a $155 million second-lien term loan (B2) with an interest rate of Libor plus 750 basis points.

Proceeds from the facility are being used to help fund Wasserstein & Co.'s acquisition of Bear Creek from Yamanouchi Pharmaceutical Co. Ltd. in a transaction valued at about $260 million.

Bear Creek is a Medford, Ore., fruit and flower company.

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