Blockbuster gets commitments, with some early tickets even arriving before launch

By Sara Rosenberg

New York, July 22 - Blockbuster Inc.'s $1.45 billion credit facility (Ba2/BB/BB) is off to a nice start as some commitments have already found their way into the books and overall market sentiment regarding the transaction's ability to get done is positive, especially given the incredibly strong market environment prevalent in the primary.

"There are a handful of fairly large early tickets that came in prior to the bank meeting," a market source said. "The meeting was very well attended. Good ratings."

The facility consists of a $500 million seven-year revolving credit facility, of which $150 million will be reserved for a Viacom letter of credit, a $200 million seven-year term loan A and a $750 million seven-year term loan B. All three tranches are priced with an interest rate of Libor plus 200 basis points.

JPMorgan, Citigroup and Credit Suisse First Boston are the lead banks on the deal, with JPMorgan listed on the left.

Security is pledges of the stock of some of Blockbuster's direct and indirect subsidiaries.

Blockbuster is looking to get the new credit facility to help fund the Viacom Inc. "split off."

This new facility will replace the company's existing revolver.

Proceeds will be used to pay a special distribution of $5 per share, or about $905 million, to its stockholders and to pay some of the transaction costs related to the special distribution, the split-off and credit agreement. The credit facility will also be available for working capital and general corporate purposes.

Viacom currently owns 81.5% of Blockbuster's outstanding shares. This means Viacom will receive a cash payment of $738 million in the special distribution.

The special distribution is part of the plan to separate Blockbuster and Viacom. This separation will occur through an exchange offer under which Viacom stockholders will have the chance to exchange some or all of their shares of Viacom class A or class B common stock for shares of Blockbuster class A and class B common stock held by Viacom. The exchange ratio for the offer will be set prior to the beginning of the offer.

The divestiture is expected to be completed in the third quarter of 2004.

Blockbuster is a Dallas provider of in-home movies and game entertainment.

Some Pinnacle lenders roll over

Pinnacle Entertainment Inc.'s $250 million term loan that will essentially reprice and modestly upsize the company's existing term loan had a successful launch Thursday with some existing lenders already placing orders by mid-afternoon and some even trying to increase their positions.

"I think the [bank meeting] went great. [They] had a lot of investors there," a market source said. "[It's] already taking a lot of commitments in, so it's headed to a good place."

At the meeting, pricing of Libor plus 300 basis points surfaced on the term loan that will consist of $125 million delay draw and $125 million funded. The delay draw is for 12 months and contains an unfunded fee of 100 basis points.

The company's existing term loan that is being refinanced had a total size of $225 million - $75 million delay draw and $150 million funded - with an interest rate of Libor plus 350 basis points, according to the source. Currently there is a little under $200 million outstanding under the existing term loan.

In connection with this amendment, the company is also looking to increase its revolver to $100 million from $75 million. Pricing on the revolver will remain unchanged.

"Only new lenders [being approached] are revolver lenders," the source added.

Commitments from lenders are due "in a couple of weeks," the source concluded.

Lehman Brothers and Bear Stearns are the lead banks on the deal, with Lehman listed on the left.

In addition to refinancing the existing term loan, the new $250 million term loan will also be used to help fund the increased scope and budget of the company's Lake Charles project.

Late Monday night, Pinnacle announced that it increased the budget of the L'Auberge du Lac casino resort in Lake Charles, La., to $365 million from $325 million to reflect scope changes including an increase in the number of guest rooms to 746 from about 700. Funding will come from cash and cash equivalents, ongoing cash flows from operations and, of course, credit facilities.

Pinnacle is a Las Vegas owner and operator of gaming entertainment facilities.

Goldman left lead on Texas Genco

Goldman Sachs is the left lead bank on the Texas Genco Holdings Inc.'s proposed credit facility and bond offering that will be obtained in connection with the company's acquisition by GC Power Acquisition LLC from CenterPoint Energy Inc., according to a market source.

As was already reported, Deutsche Bank and Morgan Stanley are lead banks on the debt transactions as well.

Details on size and timing are unavailable at this time; however, one market source had previously told Prospect News that the debt financing package will be "significant" and that timing is likely to be fourth quarter business.

GC Power Acquisition LLC, a newly formed entity owned in equal parts by affiliates of The Blackstone Group, Hellman & Friedman LLC, Kohlberg Kravis Roberts & Co. LP and Texas Pacific Group, is acquiring Texas Genco for about $3.65 billion in cash.

The transaction, subject to customary regulatory approvals, will be accomplished in two steps. The first step, expected to be completed in the fourth quarter of 2004, involves Texas Genco's purchase of the 19% of its shares owned by the public for $47 per share, followed by GC Power Acquisition's purchase of a Texas Genco unit that will be formed to own its coal, lignite and gas-fired generation plants.

In the second step, which is expected to take place in the first quarter of 2005 following receipt of approval by the Nuclear Regulatory Commission, GC Power Acquisition will complete the acquisition of Texas Genco, the principal remaining asset of which will then be Texas Genco's interest in the South Texas Project nuclear facility.

Total cash proceeds to CenterPoint from both steps of the transaction will be about $2.9 billion.

GC Power Acquisition LLC was advised by Goldman Sachs, Deutsche Bank and Morgan Stanley and the law firms Simpson Thacher & Bartlett LLP, Stroock & Stroock & Lavan LLP and Vinson & Elkins LLP. CenterPoint Energy was advised by Citigroup Global Markets Inc. and Baker Botts LLP, and the special committee of independent directors of Texas Genco was advised by RBC Capital Markets Corp. and Haynes and Boone LLP.

Texas Genco is a Houston wholesale electric power generating company.

PlayCore size shifts by Monday

Size shifts on PlayCore Inc.'s $145 million credit facility are expected to be posted by Monday, but could be announced as early as Friday, according to a market source.

"There's an oversubscription issue so [they] will shift some funds from higher cost of capital tranche to lower cost of capital tranches," the source explained.

Market speculation regarding this shuffling of some funds from the third-lien tranche into its first- and/or second-lien term loans has been circulating since early this week.

"The first lien and the second lien were done. The third lien was a touch short so they might do some 'rejiggling' to move some of the third-lien debt. Whatever they were short on the third lien, they might move into the first or second or a combination of the two in order to pick up the slack. They'll get it done. They'll just move maybe five or six or 10 million bucks and be done with it," a fund manager previously told Prospect News.

The credit facility currently consists of a $15 million five-year revolver with an interest rate of Libor plus 500 basis points at the operating company level, a $50 million five-year first-lien term loan with an interest rate of Libor plus 500 basis points at the operating company level, a $40 million six-year second-lien term loan with an interest rate of Libor plus 900 basis points and a 2% Libor floor at the operating company level and a $40 million 61/2-year third-lien term loan with a fixed-rate of 18%, split into 5% cash and 13% PIK, at the holding company level.

All term loans are being offered at par. Investors receive 100 basis points upfront for revolver commitments.

Leverage multiples include 3.7x second-lien debt at the operating company, 1.7x first-lien debt at the operating company and 5.7x total debt at the holding company.

Credit Suisse First Boston is the sole lead arranger and bookrunner on the deal.

Proceeds will be used by the Chattanooga, Tenn., playground equipment manufacturer to refinance existing debt.

Innophos gets orders

People have already started placing orders for Innophos Holdings' $220 million term loan even though price talk on the tranche has not yet been revealed since the syndicate is waiting on ratings, according to a market source. Ratings on the facility are expected to come out early next week.

The $270 million credit facility, which just launched via a bank meeting on Wednesday, also contains a $50 million revolver with an interest rate of Libor plus 275 basis points.

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

Proceeds will be used to help fund Bain Capital's acquisition of Rhodia's North American specialty phosphates business for an enterprise value of $550 million. The acquisition, which was first announced on June 11, is expected to close in the third quarter.

NES sparks interest

NES Rentals Holdings Inc. has received "a lot of levels of interest" as the company just wrapped up its "mini roadshow" for its $275 million six-year second-lien term loan (B3/B) that started Monday and ended Wednesday with meetings taking place in New York, Boston, Chicago and Los Angeles, according to a market source.

Price talk has not yet surfaced on the deal, but some people have already expressed a desire to invest the deal, basing the size of their commitment on the ultimate pricing level.

"Half a dozen, 10 guys or so have said if it's priced at X, I'll commit Y," the source said.

Bank of America and Bear Stearns are the lead banks on the deal.

The tranche contains call protection of 102 in year one and 101 in year two.

Proceeds will be used to refinance existing bank debt.

NES Rentals is a Chicago equipment rental company to industrial and construction end-users.

Merisant pricing

Pricing on Merisant Co.'s $255 million credit facility (B2) firmed up with the $35 million five-year revolver priced with an interest rate of Libor plus 300 basis points and a commitment fee of 50 basis points, the $50 million six-year euro term loan priced with an interest rate of Libor plus 325 basis points and the $170 million six-year term loan B priced with an interest rate of Libor plus 325 basis points, according to a syndicate document.

Previously, price talk on the deal had the revolver talked at Libor plus 300 to 325 basis points with a 50 basis points commitment fee, the euro term loan talked at Libor plus 300 to 325 basis points and the term loan B talked at Libor plus 325 to 350 basis points.

Credit Suisse First Boston and RBC are the joint lead arrangers and joint bookrunners on the deal.

Proceeds will be used for recapitalization purposes.

As was previously reported, Tabletop Holdings Inc., the parent of Merisant Co., filed an S-1 registration statement in April with the Securities and Exchange Commission to offer up to $700 million of Income Deposit Securities and senior subordinated notes due 2014. Furthermore, the company revealed that it was working on putting together a new credit facility.

The Chicago low-calorie sweetener company will use proceeds to repay all the borrowings under Merisant's senior secured credit facility and to unwind interest rate hedges, tender for Tabletop's $136 million principal amount at maturity of 12¼% senior subordinated discount notes due 2014 and Merisant's $225 million principal amount of 9½% senior subordinated notes due 2013, to buy back some class B stock from existing stockholders and to make payments under existing management incentive plans.

Jean Coutu cuts B pricing

Jean Coutu recently reverse flexed its $1.1 billion seven-year term loan B to Libor plus 225 basis points, according to a market source. Initially the tranche was launched at Libor plus 275 basis points and then pricing was said to have been reduced to Libor plus 250 basis points before ending up at 225 over Libor.

The $350 million five-year revolver and the $250 million five-year term loan A are still both priced at Libor plus 275 basis points, the source added.

Deutsche, National Bank of Canada and Merrill Lynch are the lead banks on the deal, with Deutsche on the left.

Proceeds from the credit facility, combined with proceeds a bond offering, will be used to fund Jean Coutu's acquisition of the Eckerd drugstores for $2.375 billion from J.C. Penney Co. Inc.

Jean Coutu is a Longueuil, Quebec-based drugstore chain.

Quest Cherokee changes pricing

Quest Cherokee LLC reverse flexed pricing on its $120 million six-year term loan to Libor plus 400 basis points from Libor plus 425 basis points and increased pricing on its $15 million five-year synthetic letter-of-credit facility to Libor plus 400 basis points from Libor plus 375 basis points on Wednesday afternoon, according to a market source.

Pricing on the $20 million five-year revolver was unchanged at Libor plus 375 basis points, the source added.

UBS is the lead bank on the deal.

Proceeds will be used to refinance existing debt and for general corporate purposes.

Quest Cherokee is an independent energy company focused entirely on developing and expanding coalbed methane reserves in the Cherokee Basin in Kansas and Oklahoma. It is owned by Cherokee Energy Partners, a subsidiary of ArcLight Energy Partners, and Quest Resource Corp.

Charter down on auction, report

Charter Communications Inc.'s term loan A and term loan B bank debt was down by about three eighths of a point and traded actively on Thursday due to pressure from a term B auction and a negative equity report that was put out by UBS, according to a trader.

The St. Louis communications company's term loan A was quoted at 97¾ bid, 98 offered and the term loan B was quoted at 98¾ bid, 99¼ offered, the trader said.

"There was an auction on the Bs. About $8 million traded around 99 to ¼ and that put some pressure on it," the trader added.

The UBS equity report came out Wednesday, at which time the bank cut its rating on Charter's stock to "reduce" from "neutral".

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.