B/E breaks; Berry Plastics down following downgrade; SemGroup levels emerge; Wrigley sets talk

By Sara Rosenberg

New York, July 21 - B/E Aerospace Inc.'s credit facility allocated and freed up for trading on Monday, with the term loan quoted north of its original issue discount price, Berry Plastics Group Inc.'s term loan headed lower in response to a rating downgrade that came out at the end of last week, and some real levels surfaced on SemGroup LP's term loan B.

In other news, price talk on Wrigley Co.'s proposed credit facility started making its way around the market as the deal is getting ready to launch this Wednesday.

B/E Aerospace's credit facility hit the secondary market, with the $525 million six-year term loan seen trading above the discount price at which it was sold during syndication, according to a buyside source.

The term loan was quoted at par bid, par 3/8 offered on the break late in the day Monday, the buyside source said.

Pricing on the term loan is Libor plus 275 basis points with a 3% Libor floor and it was sold at an original issue discount of 99. The spread on the loan can drop to Libor plus 250 bps if total leverage is less than 2.5 times, but this step down can only take affect after delivery of a Dec. 31 compliance certificate.

During syndication, the term loan was first downsized by $100 million from $575 million after the company upsized its 10-year senior notes offering to $600 million from $500 million, and then it was upsized by $50 million to account for a drop in value of B/E Aerospace's stock price, which is a component of the funding for the acquisition for which the bank debt and bonds are being obtained.

In addition, during syndication, the step down in pricing was added to the oversubscribed term loan and the original issue discount was decreased from the initially proposed 98½ level.

B/E Aerospace's $875 million senior secured credit facility (Ba1/BBB-) also includes a $350 million five-year revolver priced at Libor plus 275 bps with a 3% Libor floor.

JPMorgan, UBS and Credit Suisse are the joint lead arrangers and joint bookrunners on the deal, with JPMorgan the administrative agent.

Covenants include an interest coverage ratio and a total leverage ratio.

Proceeds from the term loan and the bonds will be used to help fund the acquisition of Honeywell International Inc.'s consumables solutions distribution business and to repay existing bank debt. The revolver, which is expected to be undrawn at close, will be available for working capital and general corporate purpose.

B/E Aerospace is buying the Honeywell business for $800 million in cash plus $250 million in common stock or cash, at the company's option, although in no event will fewer than 6 million shares be issued if the value of the stock component is less than $250 million.

The original credit facility commitment letter provided for an up to $1.55 billion credit facility, comprised of a $350 million revolver and a $1.2 billion term loan. However, under the commitment letter, the actual amount of borrowings available under the credit facility were to be reduced to the extent that the company obtain certain other financing, which is what happened when the notes offering was announced.

Furthermore, when the company first announced the acquisition, it had said in a news release that the facility was going to be sized at $1.35 billion, divided into a $350 million revolver and a $1 billion term loan B.

The transaction is expected to close in the third quarter, subject to customary closing conditions, including U.S. antitrust notification and reports pursuant to the Hart-Scott-Rodino Act as well as German antitrust approvals.

B/E Aerospace is a Wellington, Fla.-based manufacturer of aircraft cabin interior products and an aftermarket distributor of aerospace fasteners.

Berry Plastics trades down

Berry Plastics' term loan was softer during the trading session as the debt reacted to a rating downgrade from Standard & Poor's, according to a trader.

The term loan was quoted at 87 bid, 88 offered, down from Friday's levels of around 87¾ bid, 88¾ offered, the trader said.

On Friday afternoon, S&P lowered the corporate credit rating on Berry Plastics to B- from B and the company's second-priority senior secured notes to CCC+ from B.

The downgrade reflected weaker-than-expected trend of operating performance and cash flows and a highly leveraged financial profile, which deteriorated beyond the rating agency's expectations for the previous ratings, the rating release said.

Berry Plastics is an Evansville, Ind.-based manufacturer of plastic packaging, including plastic containers, tubes, drink cups, bottles, closures, dispensing caps, industrial buckets, consumer products, prescription vials and overcaps.

SemGroup finds levels

SemGroup LP's term loan B levels became more clear on Monday, with quotes seen in the area of 55 bid, 59 offered, according to a trader.

When asked where the debt went out at the end of last week, the trader responded, "Levels weren't real on Friday. Nobody knew where this stuff was. Thursday it was really unclear [too]. Last real levels were Wednesday when it was in the 70s."

The company has been holding a whole bunch of private lender calls recently, with the most recent one taking place late Monday afternoon, and there was a really long one that took place on Friday. The content of these calls is unavailable.

SemGroup has said that it is experiencing liquidity issues and is exploring various alternatives, including raising additional equity, debt capital or the filing of a voluntary petition for reorganization under Chapter 11.

On Monday, the company's subsidiary, SemGroup Energy Partners LP (SGLP) announced that holders of a secured loan to SemGroup Holdings LP have acted on their rights under their loan documents to vote as the sole members of SemGroup Energy Partners GP LLC.

The loan holders, Manchester Securities and Alerian Capital Management, were able to exercise this right as a result of an event of default taking place under the Holdings' credit facility.

As part of assuming controlling ownership, Manchester Securities and Alerian Capital Management have reconstituted a five-member board of directors at SemGroup Energy Partners' general partner to include two representatives from Manchester, one from Alerian, and two existing independent directors.

"These actions are necessary to protect SGLP and allow SGLP to focus on its future and best interests. Despite the challenges faced by SGLP given the uncertainty at its main customer, Semgroup LP, the board and management are enthusiastic about the company's strategic assets and future in a robust energy market," Kevin Foxx, chief executive officer, said in a news release.

The change-of-control of the general partner resulted in an event of default under the SemGroup Energy Partners amended and restated credit facility, meaning that lenders may, among other remedies, declare all outstanding amounts under the facility immediately due and payable.

SemGroup Energy Partners said that it is in productive dialogue with the agent for the lenders regarding this matter.

SemGroup is a Tulsa, Okla.-based provider of terminalling, storage, gathering, and transportation services for companies engaged in the production, distribution, and marketing of crude oil.

LCDX inches up

In more trading news, LCDX 10 was a touch better on the day and the cash market was relatively quiet, according to a trader.

The index was quoted at 97.30 bid, 97.45 offered, up from Friday's levels of 97.15 bid, 97.25 offered, the trader added.

Wrigley talk surfaces

Moving to the primary, Wrigley came out with price talk on its proposed $5.7 billion credit facility in anticipation of the Wednesday bank meeting that will be held to formally kick off syndication on the deal, according to a market source.

The $250 million revolver and the $1 billion term loan A are both being talked at Libor plus 325 basis points, and the $4.45 billion term loan B is being talked at Libor plus 375 bps, the source said.

The term loan B has a 3% Libor floor and will be offered to investors at an original issue discount of 97, the source added.

Back in May, when the structure on the deal first emerged in a filing with the Securities and Exchange Commission, sources heard rumors that the term loan B was expected around the Libor plus 400 bps context and that ratings could be in the four-Bs area, but nothing official had been announced at that time.

Goldman Sachs is the lead arranger on the deal. Barclays, GE Capital, Rabobank and Sumitomo acting signed on as co-arrangers.

Proceeds from the credit facility will be used to help fund the merger of Wm. Wrigley Jr. Co. and Mars Inc., the repayment or refinancing of certain Wrigley debt and to provide for ongoing working capital and general corporate purposes.

As part of the merger, Mars received a separate debt commitment from JPMorgan, Bank of America, BNP Paribas, Citigroup, Deutsche Bank, Lloyds TSB Bank and RBS Securities that provides for a $12 billion senior unsecured credit facility.

The Mars facility, which is expected to be investment grade, consists of a $1.5 billion revolver, an $8.5 billion term loan and a $2 billion bridge loan.

Proceeds from the Mars facility will be used to finance the equity contribution from Mars, the repayment or refinancing of certain Mars debt and for general corporate purposes.

Also, Berkshire Hathaway has agreed to provide $4.4 billion in subordinated debt financing to the surviving corporation in the merger and to invest $2.1 billion in equity securities.

Under the merger agreement, Mars will pay $80 cash for each share of Wrigley common stock and class B common stock in a transaction valued at about $23 billion.

Wrigley Co. will be operated as a separate, stand-alone subsidiary of Mars, keeping its headquarters in Chicago.

The transaction is expected to close later this year or in the first quarter of 2009, subject to customary closing conditions, including stockholder approval and certain governmental regulatory clearances.

Wrigley is a confections company. Mars is a McLean Va.-based producer of confectionery, food and petcare products.

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