Adelphia hosts call for lenders while bank paper weakens; Riverwood sells out within one day

By Sara Rosenberg

New York, June 6 - Adelphia Communications Corp. held a "big bank call" Thursday to give banks an update on the company, according to a trader. During market hours, the Olympus loan continued to be better bid than the Century loan and secondary players observed a slight weakening in levels. Meanwhile, in primary activity, Riverwood Holdings Inc. new bank loan was oversubscribed a day after the bank meeting was held.

"They're trying to figure out what they need to do to keep lenders happy," a market professional said about Adelphia's bank call.

Olympus was bid at 90, with no trades on the paper taking place during market hours, a trader said. The Century loan was bid at 851/2, offered at 87 and traded at 861/4. During late trading Wednesday, Adelphia Century saw bids at 861/2.

The slight drop in value was in continuing response to a downgrade by Moody's Investors Service. On Wednesday, Moody's lowered the bank debt of Adelphia's subsidiaries including Olympus Cable Holdings senior secured bank debt to B2 from B1, Century Cable Holdings senior secured bank debt to Caa1 from B1 and Century-TCI senior secured bank debt to B3 from B1.

Riverwood Holding Inc.'s $250 million term C, which is an add-on to the company's existing term B, "is already oversubscribed", according to a syndicate source. The bank meeting for the new tranche was held Wednesday. Deutsche Bank and JPMorgan Chase Bank are lead banks for the offering.

The Atlanta, Ga. paperboard and packaging company's new term C matures in about 5.8 years and has an interest rate of Libor plus 250 basis points, the syndicate source said.

Proceeds from the loan combined with proceeds from an initial public offering and an anticipated sale of public notes will be used to repay outstanding debt.

The addition to the credit facility is the second one done by the company. In April, Riverwood International Corp., a subsidiary of Riverwood Holding, added a $250 million senior secured term B with an interest rate of Libor plus 250 basis points to the existing credit facility, which matures on March 31, 2007.

Advanced Medical Optics Inc. held a bank meeting this week for its new $140 million credit facility (B1/BB-), according to a syndicate source. Merrill Lynch and Bank of America are the lead banks on the deal.

The loan consists of a $100 million six-year term B with an interest rate of Libor plus 350 basis points and a $40 million five-year revolver with an interest rate of Libor plus 300 basis points, the syndicate source said. Proceeds from the term loan will be used to help fund the spin-off from Allergan Inc, which is expected to occur on or around June 29. The revolver will be used for future capital expenditures and working capital.

"I hear that they have $80 million in commitments already," a market professional said.

Advanced Medical Optics is an Irvine, Calif. manufacturer and marketer of medical devices for the eye and contact lens care products.

Allocations were done on Thursday for Alliance Imaging Inc.'s $286 million 61/2-year term C, which was offered at par, according to a syndicate source. The interest rate on the term C is Libor plus 237.5 basis points. The loan is expected to close on Monday.

The company is consolidating its current term B and term C loans into one term C, reducing the interest rate by about 50 basis points, a syndicate source previously told Prospect News. Deutsche is the lead arranger and administrative agent for the deal.

Alliance Imaging is an Anaheim, Calif. provider of outsourced diagnostic imaging services.

Coming up in the primary, United Defense Industries Inc. is scheduled to hold a bank meeting Friday in regards to adding $300 million to its credit facility (Ba3/BB-). The loan consists of a $250 million seven-year term B with an interest rate of Libor plus 275 basis points and a $50 million five-year term A with an interest rate of Libor plus 275 basis points, according to a syndicate source. Deutsche and Lehman Brothers are the lead banks on the deal.

"We're seeing more and more Friday bank meetings, which is pretty interesting," a market professional said. Typically, bank meetings have been held on Tuesday through Thursday, he added.

Proceeds will be used to help fund the acquisition of U.S. Marine Repair Inc. Both the acquisition and the loans are targeted to close on the same date, which presently is anticipated by the end of June, a company spokesman previously told Prospect News.

Reasons for using bank debt to finance the majority of the acquisition include convenience, economic attractiveness, ability to obtain the money within a relatively short time and confidence by the banks that people are interested in the sector, the spokesman said.

United Defense is an Arlington, Va. provider of tracked, armored combat vehicles.

In other news, Roundy's Inc. closed on its $375 million credit facility (BB-), according to a syndicate source. The Pewaukee, Wis. food wholesaler and retailer's loan consists of a $250 million seven-year term B with an interest rate of Libor plus 250 basis points and a $125 million five-year revolver with an interest rate of Libor plus 300 basis points.

Closing on the loan occurred in conjunction with the completion of Willis Stein & Partners' acquisition of the company.

"We are very pleased to have closed this acquisition," said Avy Stein, managing partner of Willis Stein, in a press release. "We are now fortunate to own one of the nation's premier grocery wholesale and retail companies that has established itself as a highly-respected Midwestern institution with first-class partners and stakeholders. Roundy's prestigious reputation along with the impressive credentials of our senior management team being headed by Bob Mariano, chief executive officer, and Darren Karst, chief financial officer, bode well for Roundy's continued success."

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