Primary picks up with Del Monte, Atlantis Plastics, Aero Products tapping the market

By Sara Rosenberg

New York, Nov. 21 - It was a busy day Thursday in the primary bank loan market with the launch of a few new credit facilities, including Del Monte Foods Co.'s large $1.4 billion, Atlantis Plastics Inc.'s $110 million loan and Aero Products International Inc.'s $120 million loan.

Del Monte Foods launched its $1.4 billion credit facility (Ba3) to retail investors on Thursday. Bank of America, JPMorgan Chase, UBS Warburg, Morgan Stanley and Bank of Montreal are the lead banks on the deal that will be used to help fund the merger with certain H.J. Heinz Co. businesses.

"It's going really well," said a source close to the deal. "I think the institutional market will love this deal. It's priced fairly attractively for the ratings."

The facility consists of a $350 million six-year revolver with an interest rate of Libor plus 350 basis points, a $250 million six-year term loan A with an interest rate of Libor plus 350 basis points, a $300 million term loan A-1 (bridge loan to be taken out by bond deal) with an interest rate of Libor plus 350 basis points and a $500 million eight-year term loan with an interest rate of Libor plus 400 basis points.

Also, there will be $300 million of senior secured floating-rate notes, which will basically act like a term loan. Interest on the floating-rate notes is Libor plus 425 basis points.

One fund manager who attended the bank meeting was "favorably impressed" with the presentation. "The company generates a decent amount of free cash flow. They're picking up some strong brands, like Starkist and College Inn, and some weaker brands. The management team presented well."

The loan has met some skepticism due to the term A-1 since if the proposed bond sale is not completed the term loan will remain in place, adding more senior secured debt to the capital structure.

"There are five arrangers and it's $300 million. Between five of them, that's $60 million of capital that each firm has put up. My understanding is that those five are putting a lot of pressure on the company [to get the bond deal done]," the fund manager said.

Del Monte is a San Francisco processed food company.

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