Movie Gallery momentum builds; NRG trades up; Central Garden & Pet cuts term loan spread

By Sara Rosenberg

New York, Feb. 22 - Movie Gallery Inc. experienced another day of gains in trading as people continue to become more and more comfortable with the name, creating more appetite for the paper. Also in trading, NRG Energy Inc. headed higher as market players have refocused their attention on the name.

Meanwhile, in the primary, Central Garden & Pet Co. reverse flexed pricing on its term loan B by 25 basis points.

Movie Gallery's term loan headed up by another half a point to a point during market hours as market technicals for the paper continue to improve even though there hasn't been any change to the actual credit, according to a trader.

Furthermore, as Movie Gallery gains more and more positive attention, Blockbuster Inc. has also reaped the rewards as levels on its term loan headed higher on Wednesday as well.

Movie Gallery's term loan closed the session quoted at 93 bid, 94½ offered, according to a trader, who said that the debt had traded in the low 94's for a good part of the day before coming under a touch of pressure in the later hours, which pushed bids down a little and widened out levels.

However, despite the minor late-day pressure, Movie Gallery's term loan was stronger on a day-over-day basis, as levels had closed out Tuesday's session around the 92½ bid, 93½ offered context.

"As people see it moving up, people are more comfortable with it," the trader said about Movie Gallery's term loan. "When it dropped into the 80's people were concerned but now that it's moving into mid-90's you're starting to see more buyers step in."

Early on last week, Movie Gallery's term loan had fallen to the 89 bid, 91 offered context after a new movies-on-demand service called MovieBeam Inc. was announced, creating some nervousness over the potential affects on Movie Gallery's bottom line.

However, once people had time to digest the news, Movie Gallery's term loan started to rebound and has been treading higher on a daily basis since last Thursday.

For the most part, Blockbuster's bank debt has been unaffected by the somewhat tumultuous ride that Movie Gallery has been on. But, with the noticeable upward trend in Movie Gallery levels and increased attention on the sector, it was just a matter of time before Blockbuster started to reap the rewards as well.

To that end, Blockbuster's term loan ended Wednesday's session better by about an eighth of a point at 97 bid, 98 offered in sympathy with Movie Gallery's strong performance, the trader said.

"The focus was more on Movie Gallery though. Blockbuster wasn't as active," the trader added.

Movie Gallery is a Dothan, Ala.-based operator of video retail stores. Blockbuster is a Dallas-based video rental company.

NRG heads higher

NRG Energy's term loan B was up in active trading as investors have turned their focus back to the issue after being somewhat distracted by the larger Georgia-Pacific Corp. deal, according to a trader.

"When Georgia-Pacific hit the market people turned their attention to it. This is another sizable deal. Now people are starting to refocus on it," the trader explained.

NRG's $3.575 billion seven-year term loan, which broke for trading toward the end of January, closed Wednesday's session at 101 bid, 101½ offered, up from previous levels of par ¾ bid, 101¼ offered, the trader said.

Meanwhile, Georgia-Pacific's $5.25 billion seven-year term loan B, which broke for trading at the start of last week, closed Wednesday's session at par 5/8 bid, par 7/8 offered, unchanged from previous levels, although the debt did see a nice amount of flow as well.

NRG is a Princeton, N.J.-based energy company. Georgia-Pacific is an Atlanta-based manufacturer and marketer of tissue, packaging, paper, building products and related chemicals.

Central Garden lowers pricing

As for primary happenings, Central Garden & Pet reduced pricing on its 300 million seven-year term loan B to Libor plus 150 basis points from original price talk at launch of Libor plus 175 basis points, according to a market source.

Pricing on the company's $350 million five-year revolver was left unchanged at Libor plus 150 basis points, the source added.

JPMorgan, CIBC and Bank of America are the lead banks on the $650 million credit facility (Ba2/BB), with JPMorgan the left lead.

Proceeds from the facility will be used to help fund the acquisition of Farnam Cos. Inc. for $287 million and refinance existing debt.

Central Garden & Pet is a Walnut Creek, Calif., marketer and producer of products for pets, lawns and gardens. Farnam is a manufacturer of health care products primarily for horses, household pets and livestock.

Blackboard downsizes

Blackboard Inc. reduced the size of its six-year term loan B to $60 million from $70 million but left price talk unchanged at Libor plus 225 basis points, according to a syndicate document.

The company's $10 million five-year revolver was left unchanged in terms of size and price talk, which is also currently set at Libor plus 225 basis points. The revolver carries a 50 basis point commitment fee.

Credit Suisse is the lead arranger on the now $70 million (down from $80 million) credit facility.

Proceeds will be used to help fund the acquisition of e-learning company, WebCT, in a cash transaction for $180 million.

This credit facility is the same deal that was launched in November. It was postponed for review due to some regulatory issues.

However, the U.S. Department of Justice recently terminated its review of the merger, giving the transaction clearance for completion. The deal is now expected to close in March or April, subject to customary closing conditions.

Blackboard is a Washington-based provider of enterprise software applications and related services to the education industry.

Babcock & Wilcox closes

The Babcock & Wilcox Co. closed on its new $650 million exit financing credit facility (B1/B+) in conjunction with its emergence from Chapter 11 bankruptcy, according to a company news release.

The facility consists of a $200 million five-year revolver at Libor plus 300 basis points with a 50 basis point commitment fee, a $200 million six-year pre-funded letter-of-credit facility at Libor plus 275 basis points and a $250 million six-year delayed-draw term loan at Libor plus 300 basis points.

During syndication, the pre-funded letter-of-credit tranche was upsized from $150 million and pricing was reverse flexed from Libor plus 300 basis points, and the revolver was downsized from $250 million.

Credit Suisse, JPMorgan, Wachovia and Scotia acted as the lead banks on the deal, with Credit Suisse the left lead.

Babcock & Wilcox is a Barberton, Ohio, company that designs, supplies and services power generation systems and equipment.

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