Rexnord, Philadelphia Newspapers set talk; Owens-Illinois upsizes; Coffeyville tweaks repricing

By Sara Rosenberg

New York, June 13 - Rexnord Corp. and Philadelphia Newspapers LLC came out with opening price talk on their credit facilities as both deals were launched to investors Tuesday.

Also in the primary, Owens-Illinois Inc. increased the size of its credit facility by $200 million, Coffeyville Resources LLC softened its first-lien term loan repricing request and Tensar Earth Technologies increased its first-lien add-on while eliminating its second-lien add-on.

Rexnord announced opening price talk on its $705 million credit facility (B1) Tuesday as the deal was presented to lenders through a bank meeting that saw very strong attendance, according to a market source.

Both the $580 million covenant-light term loan and the $125 million revolver were launched with price talk of Libor plus 200 basis points, the source said.

The revolver carries a 50 basis point commitment fee.

Merrill Lynch, Credit Suisse, Bear Stearns and Lehman are the lead banks on the deal, with Merrill Lynch the left lead.

Proceeds will be used to help fund the leveraged buyout of Rexnord by Apollo Management from The Carlyle Group and management

Under the LBO agreement, Apollo is purchasing RBS Global, Inc., the corporate parent of Rexnord, for $1.825 billion.

The transaction is subject to government approvals and other customary conditions and is expected to close in the third quarter.

Rexnord is a Milwaukee-based manufacturer of highly engineered precision motion technology products, primarily focused on power transmission.

Philadelphia Newspapers price talk

Philadelphia Newspapers released price talk on its $325 million credit facility as syndication on the transaction officially kicked off with the holding of a bank meeting during market hours, according to a source.

Both the $50 million revolver and the $275 million term loan B were launched with opening spread guidance set at Libor plus 250 to 275 basis points, subject to ratings, which are expected to emerge next week, the source said.

RBS Securities is the lead bank on the deal.

Proceeds, along with $105 million in mezzanine debt, will be used to help fund the company's acquisition of Philadelphia Newspapers, Inc. from The McClatchy Co.

The $562 million acquisition covers the Philadelphia Inquirer and Philadelphia Daily News, both daily newspapers, and related media assets including philly.com.

The two newspapers are owned by Knight-Ridder, Inc., which McClatchy has agreed to acquire.

The Philadelphia Newspapers acquisition is expected to close within roughly the same time frame as the close of McClatchy's Knight Ridder acquisition, which is expected this summer.

Philadelphia Newspapers was formed by a group of local investors headed by advertising executive Brian Tierney for the purpose of acquiring these assets.

Owens-Illinois ups size

Owens-Illinois decided to increase the size of its credit facility (B1/BB-/BB-) to $1.7 billion from $1.5 billion, with funds added to the revolver tranche and the term loan B tranche, according to a market source.

The multi-currency revolver is now sized at $900 million, up from an original size of $850 million, while pricing on the paper remained unchanged at Libor plus 175 basis points, the source said.

Meanwhile, the dollar- and euro-denominated term loan B is now sized at $450 million, up from an original size of $300 million, with pricing on this paper also remaining unchanged at Libor plus 175 basis points, the source continued.

Of the total term loan B size, $200 million is dollar denominated and $250 million is euro-equivalent denominated.

Owens-Illinois' $225 million equivalent Australian term loan A and $125 million equivalent Canadian term loan C were both left unchanged in terms of size, and pricing on these tranches remained at Libor plus 175 basis points as well.

Deutsche Bank and Bank of America are the lead banks on the deal, with Deutsche the left lead.

Proceeds will be used to refinance existing bank debt as well as to fund the tender offer for the company's $100 million 8 7/8% senior secured notes due 2009 that was announced on Monday.

The tender offer will expire on July 11.

Owens-Illinois is a Toledo, Ohio, manufacturer of packaging products.

Coffeyville amends repricing

Coffeyville Resources modified its first-lien term loan repricing proposal, making it a less significant spread cut when compared to the original request, according to a market source.

The company is now asking lenders to lower its term loan pricing to Libor plus 225 basis points from current pricing of Libor plus 250 basis points, the source said.

By comparison, when the repricing was first launched, the company was looking to take the spread down by 50 basis points to Libor plus 200 basis points.

Goldman Sachs is the lead bank on the transaction.

Coffeyville Resources is a Kansas City, Kan., supplier of petroleum and nitrogen fertilizer products.

Tensar Earth ups first-lien add-on

Tensar Earth Technologies increased the size of its first-lien term loan B add-on and eliminated its second-lien term loan add-on due to strong reception for the first-lien debt, according to a market source.

The first-lien term loan B add-on is now sized at $80 million, up from an original size of $55 million, while pricing remained unchanged at Libor plus 275 basis points, the source said.

The second-lien term loan add-on that was removed from the deal was sized at $26.5 million.

Tensar is also in-market with a $10 million add-on to its revolver that is priced with an interest rate of Libor plus 275 basis points.

Proceeds from the incremental bank debt will be used for acquisition financing.

Credit Suisse is the lead arranger on the deal.

Tensar is an Atlanta-based provider of technology-driven site solutions for site development of commercial, residential, industrial and municipal properties as well as transportation and environmental infrastructure.

Secondary weaker

The secondary loan market in general felt weaker by about an eighth to a quarter of a point on Tuesday, with somewhat diminished trading volume, as other markets were plagued with losses, according to a trader.

"High yield started lower. [The] stock market overseas got crushed. [The] U.S. stock market was down. Things just didn't feel good in other markets, so we were lower," the trader said.

"It's a macro theme. Not credit specific. You can't really find one name that was off. Everything felt weaker," the trader added.

Visteon closes

Visteon Corp. closed on its new $800 million seven-year secured term loan (B1/B+) that carries an interest rate of Libor plus 300 basis points and contains call protection of 102 in year one and 101 in year two on optional prepayments.

JPMorgan and Citigroup acted as the lead banks on the deal.

Most of the proceeds from the loan were used to repay amounts outstanding under the company's existing credit facilities that were scheduled to expire in June 2007, including a $350 million 18-month term loan and a $241 million delayed-draw term loan.

In addition, the Van Buren Township, Mich., automotive supplier repaid $50 million of borrowings under its $771 million multi-year secured revolving credit facility and reduced the amount available under that facility to $500 million, a company news release said.

The existing multi-year revolver is expected to be eliminated upon completion of the company's proposed $700 million in new revolver tranches, which will be divided into two five-year facilities for the United States and Europe. This new revolver has not yet been syndicated.

"We are following through on our plan to refinance on a longer term basis all of our near-term credit facilities that expire in June 2007," said James F. Palmer, executive vice president and chief financial officer, in the release. "This is an important step in Visteon's three-year improvement plan."

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