Neiman B loan nets orders; General Growth Properties bid rises as call added; Rite Aid dips on refi

By Sara Rosenberg

New York, Sept. 13 - The Neiman Marcus Group Inc.'s credit facility is off to a running start as institutional investors had already started throwing in orders pre- and post-launch, leaving most to believe that the term loan portion of the deal will be a no-hassle event, but whether the asset-based revolver will carry the same fate is still unclear.

In other happenings, General Growth Properties Inc.'s term loan A was stronger on the bid side Tuesday as soft call protection was added to the company's currently in-market repricing proposal. And, Rite Aid Corp.'s term loan dropped to around par as news of a refinancing circulated.

Neiman Marcus held a very well attended bank meeting on Tuesday to kick off syndication on its proposed $1.6 billion credit facility - a process that is anticipated to go smoothly on the institutional side as term loan orders had already been flowing in before the actual launch took place.

However, with a relatively decent sized asset-based revolver being sought, some have turned their focus to how asset-based lenders will react to the transaction.

"Definitely had commitments in the book beforehand and have had some in post-launch," a market source said about the term loan. "It's going well and [I] expect it to [keep going] well."

According to a buyside player, talk around the market is that there were already $800 million of commitments on the term loan B prior to the actual Tuesday morning bank meeting; however, definitive confirmation of this number was unattainable.

"Thank goodness for Neiman Marcus," the buyside player continued. "[It's a] nice big deal for the market to chew on."

"I heard there were 100 plus people there," a third source said about the Tuesday morning bank meeting.

"The question is how long it's going to take these guys to do the revolver," the source continued. "Asset-based lenders are not shy about holding size. But, a lot of these guys take the 'I lead it or I don't do it' approach. There's good asset coverage. Good operating performance. It could potentially be a blowout but we'll see."

Neiman Marcus' 71/2-year term loan B is sized at $1 billion and is talked at Libor plus 300 basis points. The institutional tranche, which is being offered to investors at par, contains soft call protection of 101 for one year against voluntary repayments.

Meanwhile, the company's five-year asset-based revolver is sized at $600 million and is talked at Libor plus 175 basis points with a 37.5 basis point commitment fee. Revolver commitments of $50 million receive an upfront fee of 25 basis points, the source added. Commitments of $25 million and $15 million toward the revolver receive upfront fees as well.

Credit Suisse First Boston and Deutsche Bank are the joint lead arrangers on the deal.

Proceeds will be used to help fund the approximately $5.1 billion leveraged buyout of Neiman Marcus and for general corporate purposes.

Back in May, when the LBO was announced, the company revealed that it had received a commitment for up to $3.9 billion in debt financing, including a $600 million asset-based revolver. The remaining $3.3 billion was said to be comprised of term loans, notes and, if necessary, bridge loans.

The company also received equity commitments from sponsors of $1.55 billion for LBO financing as well.

Under the terms of the acquisition agreement, Texas Pacific Group and Warburg Pincus LLC will acquire all of the outstanding class A and class B shares of Neiman Marcus for $100.00 per share in cash. Each of the investors will own equal stakes in the company upon completion of the transaction.

Neiman Marcus is a Dallas-based high-end specialty retailer.

General Growth up on soft call addition

General Growth Properties' term loan A moved up about half a point after the syndicate added 101 soft call protection for one year to the company's pro rata repricing proposal, according to a trader.

The term loan A was quoted at par ¾ bid after the soft call news emerged, up from the par ¼ bid level where the paper was previously quoted, the trader said.

Under the repricing proposal, General Growth Properties is looking to take the spread down on both its term loan A and its revolver to Libor plus 175 basis points from Libor plus 225 basis points.

Around two months ago, the company completed a similar repricing for its $2 billion term loan B, taking the institutional spread down to Libor plus 175 basis points from Libor plus 225 basis points. The term loan B became non-callable for one year for repricing purposes only as a result of the amendment.

However, it took General Growth Properties two attempts to get the term loan B repricing done. The first try was launched without the help of underwriters with the only incentive offered to lenders being a 10 basis point consent fee in return for approvals.

The second try, which as mentioned above was successful, had the help of four underwriters - Credit Suisse First Boston, Lehman Brothers, Wachovia and Bank of America. But it took the addition of the non-call provision to get the deal to completion.

General Growth Properties is a Chicago-based regional shopping mall real estate investment trust.

Rite Aid falls on refi talk

Rite Aid's term loan fell to right around the par region as talk that the deal is being refinanced made its way around the secondary loan market, according to a trader.

The term loan was quoted at 99¾ bid, par ¼ offered by the close Tuesday, down from prior levels of par ½ bid, 101 offered, the trader said.

Rite Aid is a Camp Hill, Pa., drugstore chain.

Northwest soars on bankruptcy chatter

Northwest Airlines Corp.'s bank debt gained about half a point to a full point across the board as rumors of a potential Chapter 11 filing flew around the marketplace.

The term loan A was quoted at 98¼ bid, 99 offered, the term loan B was quoted at 99 bid, 99½ offered and the term loan C was quoted at 98½ bid, 99¼ offered, according to a trader.

The Eagan, Minn.-based airline, like others operating in its sector, has been struggling with soaring fuel costs and low-fare competition.

Furthermore, regional air carrier Mesaba Aviation Inc. revealed that it has served Northwest with a notice of default under the parties' Airline Services Agreement because Northwest failed to make an approximately $18.7 million payment to Mesaba that was due on Monday.

If the payment is not made on or before Sept. 20, Mesaba may exercise available remedies against Northwest, according to an 8-K filed by Mesaba with the Securities and Exchange Commission Tuesday.

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