Rock-Tenn downsizes senior notes to $200 million, shifts $200 million to pro rata bank financing

By Paul A. Harris

St. Louis, Feb. 20 - Rock-Tenn Co. has downsized the bond portion of its acquisition financing to $200 million from $400 million, while upsizing the pro rata portion of its credit facility by $200 million, market sources told Prospect News on Wednesday.

One source said that the notes, which had been expected to launch in mid-February, are now a $200 million bridge loan arranged by Wachovia Bank, Bank of America and SunTrust Bank.

The credit facility, meanwhile, has been upsized to $1.2 billion from $1 billion, with the increase going to the pro rata portion of the bank deal.

The facility now is comprised of a $550 million Libor plus 250 basis points term loan A, upsized from $350 million. The pro rata portion also includes a $450 million Libor plus 250 bps revolver.

The bank deal also includes a $200 million term loan B talked at an all-in yield of Libor plus 300 bps.

Proceeds will be used to fund the acquisition of Southern Container Corp., to refinance the company's existing credit facilities and provide in excess of $200 million of undrawn capacity.

Initially Rock-Tenn stated that the acquisition was expected to close in late March 2008. However on Wednesday a company spokesman, who was asked to reiterate that timing, replied that the acquisition is expected to close sometime in March.

The Federal Trade Commission granted an early termination of its regulatory review of the acquisition on Jan. 24.

Rock-Tenn is buying Southern Container, a Hauppauge, N.Y., privately held containerboard manufacturing and corrugated packaging business, for $851 million in cash.

Rock-Tenn is a Norcross, Ga., manufacturer of packaging products, merchandising displays and bleached and recycled paperboard.

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