Walter, Tube City set price talk; PBI nets orders; American Seafoods floats spread; LifeCare stronger

By Sara Rosenberg

New York, Sept. 12 - Walter Industries Inc. came out with price talk on its jumbo two-part credit facility and Tube City IMS Ltd. also released price talk as both deals launched into syndication Monday.

Meanwhile, PBI Media Holdings Inc. saw a good start to its syndication process, which also kicked off Monday, as some commitments were already in by day's end. And, American Seafoods Group LLC price talk started floating around the market as the deal is getting ready for its launch.

In secondary doings, LifeCare Holdings Inc.'s bank debt has slowly been inching its way higher and continued to do so on Monday as Katrina damage appears to be manageable.

Walter Industries announced opening price talk on its proposed $1.8 billion credit facilities at its "really well attended" bank meeting Monday, according to a market source.

The Mueller $1.05 billion term loan B is being talked at Libor plus 250 basis points, while the Walter $425 million term loan B is being talked at Libor plus 225 basis points, the source said.

Both term loan Bs are being offered to investors at par, the source continued.

Mueller's $1.175 billion credit facility (B2/B+) also contains a $125 million revolver, and Walter's $625 million credit facility (Ba3/B+) contains a $200 million revolver. Both revolvers carry pricing that is based on a leverage grid, the source added.

The credit facilities are being obtained in connection with Walter's proposed acquisition of Mueller Water Products Inc.

The company is dividing into two separate entities - one comprised of its water group (Mueller), which will include Mueller and U.S. Pipe, and the other (Walter) comprised of its energy, homebuilding and financing groups.

Mueller's term loan, revolver borrowings and super holdco notes will be used to fund a dividend to U.S. Pipe, a dividend to Walter and refinance existing debt.

Walter's term loan, revolver borrowings, some U.S. Pipe proceeds and super holdco notes will be used to fund the acquisition of Mueller and refinance existing revolver debt.

Banc of America Securities LLC and Morgan Stanley & Co. are joint lead banks on the deal, with Bank of America left lead.

Under the acquisition agreement, Walter has agreed to purchase Mueller for $1.91 billion, consisting of about $860 million in cash and the assumption of about $1.05 billion in Mueller debt. The transaction is expected to be accretive by $0.20 to $0.24 per fully diluted share in the first full year after closing.

Walter Industries is a Tampa, Fla.-based diversified company that operates in homebuilding, related financing and water transmission products and is also a producer of high-quality metallurgical coal. Mueller is a Decatur, Ill.-based supplier of water infrastructure and delivery systems.

Tube City price talk

Tube City launched its $250 million senior credit facility (B1/B+) with opening price talk of Libor plus 275 basis points on both its $75 million revolver and $175 million term loan B, according to a market source.

Furthermore, revolver upfront fees emerged with lenders getting 75 basis points for any size commitment, the source said.

The term loan is being issued at par, the source added.

Bear Stearns and CIBC are the lead banks on the deal, with Bear Stearns the left lead.

The credit facility is being obtained in connection with the company's initial public offering of Income Participating Securities in Canada.

Proceeds from the term loan and the IPO will be used to repay existing bank debt and make a payment to existing investors.

Revolver borrowings will be available for working capital needs and growth capital expenditures.

Tube City is a Glassport, Pa., provider of raw materials and services to the steel industry.

PBI sees early commitments

PBI Media launched its $323 million credit facility Monday via a bank meeting that was described as having "very good attendance," and with this positive greeting came some more good news for the deal as early orders had already been placed before the day was through, according to a market source.

The facility consists of a $60 million six-year revolver (B2/B) talked at Libor plus 250 basis points with a 50 basis point commitment fee, a $185 million seven-year term loan B (B2/B) talked at Libor plus 250 basis points and a $78 million eight-year second-lien term loan (B3/CCC+) talked at Libor plus 650 basis points.

The second-lien term loan contains call protection of 102 in year one and 101 in year two, the source said.

Both the first- and second-lien term loans are being offered to investors at par, the source added.

Originally, the deal was expected to contain a $245 million term loan B, but the tranche was downsized prior to launch.

Credit Suisse First Boston and UBS are joint lead arrangers on the deal, with CSFB the left lead.

Proceeds will be used to help fund Wasserstein & Co. LP's purchase of Primedia Inc.'s Business Information segment for $385 million in cash. The Business Information segment consists of business-to-business targeted publications.

The transaction is expected to close in the fourth quarter.

Pregis sets upfront fees

Pregis Corp. announced a revolver upfront fee of 75 basis points for any size commitment at its Monday bank meeting and is offering its term loan to investors at par, according to a market source.

The six-year revolver is sized at $50 million and is talked at Libor plus 250 basis points with a 50 basis point commitment fee.

The seven-year term loan B is sized at $85 million and is talked at Libor plus 250 basis points.

Credit Suisse First Boston and Lehman Brothers are joint lead arrangers on the $135 million U.S. credit facility (B1/B+).

Pregis is the new company being formed by AEA Investors LLC for the approximately $530 million acquisition of Pactiv Corp.'s North American and European protective and flexible packaging businesses, which will be funded in part by this new credit facility.

The transaction is expected to close in the third quarter and is subject to normal regulatory approvals and customary conditions to closing.

American Seafoods spread circulates

American Seafoods is said to be talking its $520 million senior secured credit facility (B1) at Libor plus 175 basis points ahead of Tuesday's bank meeting, according to a market source.

The facility consists of a $75 million six-year revolver, a $125 million six-year term loan A, a $140 million seven-year term loan B and a $180 million seven-year delayed-draw term loan B that will be available for seven months.

Bank of America is lead arranger and bookrunner on the deal.

Proceeds from the delayed-draw term loan will be available for the payment of principal, interest, call premium and other amounts outstanding on the company's 10 1/8% senior subordinated notes due 2010.

Proceeds from the funded term loans and the revolver will be used to refinance and replace existing bank debt at a lower interest rate, the filing added.

Closing on the new facility is targeted for early October.

American Seafoods is a Seattle-based integrated seafood company.

LifeCare ticks higher

LifeCare's term loan B has been moving up over the past couple of sessions as investors are getting more and more comfortable with the idea that the damage to three of its hospitals in New Orleans caused by hurricane Katrina is not as bad as originally feared.

On Monday, the term loan moved up to 99 7/8 bid, par 1/8 offered from around 99½ bid, 99¾ offered on Friday, according to a trader. By comparison, early last week, the bank debt was quoted at 98 7/8 bid, 99 3/8 offered.

"There's been some clarity on the New Orleans facilities. Damage isn't that bad and I think insurance is going to cover it," the trader explained.

As a result of the hurricane, the company had to evacuate all patients and staff from its three hospitals in New Orleans. These three facilities represent about 15% of the company's licensed beds and contributed about 12.5% of consolidated revenue for the six months ended June 30.

LifeCare is a Plano, Texas, operator of long-term acute care hospitals.

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