CamelBak, Rayovac break; Intelsat dips on more debt, FairPoint lowers spreads

By Sara Rosenberg

New York, Feb. 3 - CamelBak allocated its $152 million credit facility on Thursday, with its term loan B reaching upper par levels and its second-lien term loan reaching lower 101 levels. Also, allocating was Rayovac Corp.'s $1.03 billion credit facility (B1/B+), with its term loan B trading in the upper 101 context.

In other secondary doings, Intelsat Ltd.'s bank debt fell off a little as the company announced plans to pile on some more bond debt in its capital structure. And in the primary, FairPoint Communications Inc. reduced pricing on its $690 million senior secured credit facility (B1/BB-).

CamelBak's $100 million 61/2-year first-lien institutional term loan ended the day quoted around par ½ bid, 101 offered, and its $37 million seven-year second-lien term loan ended the day quoted around 101½ bid, 102 offered, according to a trader.

The term loan B is priced with an interest rate of Libor plus 325 basis points, after reverse flexing earlier this week from Libor plus 350 basis points. This tranche was just under two times oversubscribed.

The second-lien term loan is priced with an interest rate of Libor plus 650 basis points, after reverse flexing earlier this week from Libor plus 700 basis points. Furthermore, at the time of the reverse flex, the syndicate removed all call protection provisions, which under the deal as originally structured would have been 102 in year one and 101 in year two. This tranche was more than three times oversubscribed, a market source said.

Very little to no investors dropped out of the CamelBak deal after the reverse flexes took place, the source added.

BNP Paribas and Bank of New York are co-lead arrangers on the deal, with BNP listed on the left.

Proceeds from the facility, which also contains a $15 million six-year revolver with an interest rate of Libor plus 350 basis points, will be used to refinance debt and pay a dividend.

CamelBak is a Petaluma, Calif., producer of personal hydration systems.

Rayovac at 101 plus

Rayovac gave out allocations on its credit facility, with some calling their term loan B allotments "terrible" because the tranche had been so heavily oversubscribed, according to a buyside source.

I heard a lot of guys didn't even get $1 million and some guys got as little as $250,000," the source said.

The $540 million U.S. term loan B opened in the low-to-mid 101s, was seen quoted around 101 5/8 bid, 101 7/8 offered by late afternoon by the buyside source, and then, according to a trader, moved up to 101¾ bid, 102 offered by the end of the day.

The U.S. term loan B, which was downsized from $740 million after the company's bond offering was upsized by $200 million, to $700 million, is priced with an interest rate of Libor plus 200 basis points with a step down to Libor plus 175 basis points on ratings of Ba3/BB-. Original price talk on the tranche was Libor plus 225 to 250 basis points.

Rayovac's facility also contains a euro term loan B tranche in the equivalent of $140 million at Libor plus 250 basis points (with no grid) that was reverse flexed during syndication from Libor plus 275 basis points, a Canadian dollar term loan B tranche in the equivalent of $50 million at Libor plus 200 basis points with a step down to Libor plus 175 basis points on ratings of Ba3/BB- that was reverse flexed from Libor plus 225 to 250 basis points price talk and a $300 million revolver at Libor plus 225 basis points.

Proceeds from the credit facility, along with proceeds from the bonds, will be used to help fund the acquisition of United Industries Corp. for a total value of about $1.2 billion including the assumption of about $880 million of United Industries debt - comprised of senior debt and senior subordinated notes - that will be redeemed or replaced and a cash tax benefit of $140 million.

In addition to helping fund the acquisition, proceeds from the facility will also be used to refinance Rayovac's existing credit facility.

Bank of America, Citigroup and Merrill Lynch are the lead banks on the credit facility, with Bank of America the left lead.

Rayovac is an Atlanta-based consumer products company and one of the largest battery, shaving and grooming, and lighting companies.

United Industries is a St. Louis-based manufacturer and marketer of consumer products for lawn and garden care and household insect control. Currently 83% of United is owned by Thomas H. Lee Equity Fund IV. It is anticipated that following the transaction Thomas H. Lee will hold an ownership position in Rayovac of about 25%.

Intelsat softens on bond deal

Intelsat's new term loan B fell off by about a quarter of a point to 101 bid, 101½ offered in active trading on Thursday as the company announced plans for a special subsidiary to sell $300 million of senior discount notes due 2015, according to a trader.

"There's more debt and they got downgraded," the trader said in explanation of the weaker levels.

Proceeds from the new $300 million bond offering will be used to fund the repurchase of certain preferred shares held by the shareholders of Intelsat's new parent, Zeus Holdings Ltd.

Following the debt announcement, Moody's Investors Service downgraded Intelsat's long-term ratings including the company's senior secured bank debt rating, which was lowered to B1 from Ba3. Furthermore, the outlook is negative.

"As a result of this transaction, Intelsat's pro forma debt will increase from 5.9x EBITDA to 6.3x. Moody's believes this metric will worsen slightly in 2005 before possibly improving in 2006, leaving the company very little financial flexibility. The downgrades further reflect Moody's concern that the company is unlikely to use free cash flow or the proceeds from a future IPO to reduce leverage," Moody's said.

Standard & Poor's opted to affirm its ratings on Intelsat but revise the outlook to negative from stable.

"The outlook revision is a direct result of the proposed note issue," said S&P credit analyst Rosemarie Kalinowski, in the release. "The revision reflects not only the increase in absolute debt, but also a shift to a somewhat more aggressive financial policy."

Fitch Ratings followed S&P's example, affirming Intelsat's ratings but placing them on Rating Watch negative.

Intelsat is a Bermuda-based satellite operator.

Tower second lien up

Tower Automotive Inc.'s second-lien bank debt was quoted at stronger levels on Thursday in muted trading, with the tranche closing the day at 103.75 bid, according to a trader. On Wednesday, a different trader had the paper quoted at 103 bid, 104 offered.

Tower's first-lien term loan was basically unchanged on the day at par bid, par ¼ offered, the first trader added.

On Wednesday, the Novi, Mich.-based maker of automotive assemblies announced that it filed for Chapter 11 to address liquidity needs and facilitate a debt restructuring.

In connection with its bankruptcy filing, the company has arranged commitments for up to $725 million in debtor-in-possession financing from JPMorgan.

FairPoint reverse flexes

FairPoint Communications lowered pricing on its $690 million credit facility - consisting of a $100 million revolver due 2011 and a $590 million term loan due 2012 - to Libor plus 200 basis points from Libor plus 225 basis points, according to a market source.

Deutsche Bank, Bank of America, Morgan Stanley and Goldman Sachs are the lead banks on the deal. Credit Suisse First Boston and Wachovia are co-managers.

The company is getting the senior secured credit facility in connection with its proposed initial public offering of common stock.

Proceeds from the term loan and the IPO will be used to repay all $185.1 million of existing bank debt, fund tender offers and consent solicitations for notes, repurchase all series A preferred stock for $130.8 million, repay all $13.6 million of its subsidiaries' outstanding long-term debt and repay the $7 million unsecured promissory note issued in connection with a past acquisition.

The revolver, which is expected to be undrawn at closing, will be available for working capital and general corporate needs, including permitted acquisitions.

The IPO is contingent on successful completion of the new credit facility.

FairPoint Communications is a Charlotte, N.C., rural local-exchange carrier.

GenTek launches

GenTek Inc. held a bank meeting on Thursday for its $395 million credit facility consisting of a $60 million revolver talked at Libor plus 300 to 325 basis points, a $200 million first-lien term loan talked at Libor plus 300 to 325 basis points and a $135 million (not $175 million as was mistakenly reported in Wednesday's issue) second-lien term loan talked at Libor plus 700 basis points, the source said.

Goldman Sachs Credit Partners LP and Banc of America Securities LLC are joint lead arrangers on the deal.

Proceeds will be used to fund a special dividend to shareholders of about $320 million.

"Given our substantially debt-free balance sheet, and in light of the predictability and growth in forecasted cash flow, the proposed financing allows us to re-establish a more appropriate capital structure for GenTek. At the same time, we preserve the flexibility to further invest and grow our core businesses," said Richard R. Russell, president and chief executive officer, in a company news release late Wednesday.

"Based on a comprehensive review of strategic alternatives undertaken with Goldman, Sachs & Co. over the last several months, we believe this plan best delivers meaningful value to our shareholders, balancing both near-term and future strategic considerations," Russell added in the release.

GenTek is a Parsippany, N.J., manufacturer of industrial components and performance chemicals.

NewQuest launches

Also launching on Thursday was NewQuest Health Solutions LLC's $180 million credit facility (B1/B) via UBS consisting of a $15 million five-year revolver talked in the Libor plus 325 basis points area and a $165 million six-year term loan B talked in the Libor plus 325 basis points area.

Proceeds will be used to help fund GTCR Golder Rauner LLC's leveraged buyout of the company.

NewQuest is a Nashville, Tenn., managed care organization that operates commercial and Medicare Advantage health plans through comprehensive provider networks.

And, HealthSouth Corp. launched its $715 million five-year amended and restated credit facility via JPMorgan, Wachovia and Deutsche consisting of a $315 million term loan, a $250 million revolver and a $150 million letter-of-credit facility all talked at Libor plus 275 basis points.

The Birmingham, Ala.-based healthcare services provider will use the credit facility to refinance existing debt.

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