Secondary levels continue rise as demand overpowers supply; Ad Directory ups second-lien tranche size

By Sara Rosenberg and Paul A. Harris

New York, Oct. 27 - Strong demand for paper continued to push secondary bank debt levels higher as was evidenced by gains in such names as Reliant Energy Inc., Western Wireless Corp. and PanAmSat Corp. on Wednesday. And, these strong market technicals are also apparent when looking at the way new-issue paper has performed recently.

While on the primary side, Advertising Directory Solutions Holdings upsized its second-lien term loan by $80 million and decreased its bond offering by $40 million.

Houston-based energy company Reliant saw its bank debt quoted at 101½ bid, 102 offered, up about half a point on the day. Bellevue, Wash.-based wireless provider Western Wireless saw its term loan B quoted at 101 5/8 bid, 102 1/8 offered, up about an eighth of a point. And, Wilton, Conn.-based satellite operator PanAmSat was quoted at par ¾ bid, 101¼ offered, up about an eighth of a point on the day and three eighths over the last couple of days, according to traders.

Not to mention, Boise Cascade LLC, a paper, forest products and timberland company, continued to see its term loan B trading strong at 101 5/8 bid, 101 7/8 offered and its term loan C trading strong at par ¾ bid, 101¼ offered - where they broke on Tuesday. And, Dresser-Rand Co., an Olean, N.Y., supplier of infrastructure equipment to the energy industry, continued to see good flow on its term loan in the 101½ bid, 101¾ offered context, up slightly from the 101 3/8 bid, 101 5/8 offered levels where it was quoted on the break Tuesday, a trader said.

"It's just buyers," one trader said about the run-up in the secondary. "People are looking for paper. Just look at all these new issues and how well they're trading. Look at Dresser-Rand. That's Libor plus 200 and it's trading well."

Advertising Directory ups term loan

Advertising Directory Solutions Holdings, also known as SuperPages Canada, increased the size of its second-lien term loan (B2/B-) to $310 million from $230 million and decreased the size of its eight-year fixed-rate senior notes offering to $170 million from $210 million, according to a market source.

Price talk on the Burnaby, B.C.-based directories publisher's second-lien term loan remained at Libor plus 400 basis points, the source added.

The now $1.139 billion credit facility also contains a $60 million revolver (B1/BB-) and a $769 million term loan B (B1/BB-) talked at Libor plus 225 basis points.

JPMorgan, Bank of America, Deutsche and Merrill Lynch are the lead banks on the deal that will be used to help fund Bain Capital's acquisition of the Verizon Communications' directory operations in Canada.

National Mentor cuts pricing

On the primary front, National Mentor's in-market $175 million term loan B was reverse flexed to Libor plus 325 basis points from talk in the Libor plus 350 basis points area, according to a market source.

The change was made on Tuesday as price talk of 9 5/8% to 9 7/8% surfaced on the company's $150 million offering of eight-year senior subordinated notes. And, on Wednesday, the company priced the bonds at par to yield 9 5/8%.

JPMorgan and Bank of America are the lead banks on the deal, with JPMorgan listed on the left.

The $255 million credit facility (B1/B+) also contains an $80 million six-year revolver.

Proceeds from the bank deal and the bonds will be used to refinance existing debt and redeem preferred stock held by Madison Dearborn Partners.

National Mentor is a Boston provider of community-based, residential, in-home and out-of-home services to people with developmental disabilities, children with emotional and behavioral challenges, and people with acquired brain injury.

Cox price talk

Price talk of Libor plus 87.5 basis points emerged on all tranches of the $7 billion credit facilities for Cox Enterprises Inc. and Cox Communications Inc. as the deals launched via a conference call on Wednesday, according to an informed source.

"The call went very well. There was only one question," the source added.

Cox Enterprises will be getting a total of $2.25 billion in bank debt comprised of a $1.75 billion five-year revolver and a $500 million five-year term loan, while Cox Communications will be getting a total of $4.75 billion in bank debt comprised of a $2.75 billion revolver and a $2 billion five-year term loan.

Citigroup Global Markets Inc., Lehman Brothers Inc. and JPMorgan Chase Bank are joint lead arrangers and joint bookrunners on the credit facilities, with Citigroup left lead. JPMorgan Chase Bank is administrative agent, and Citicorp North America Inc. and Lehman Commercial Paper Inc. are syndication agents.

The credit facility is being obtained to help fund the merger of Cox Enterprises with Cox Communications under which Cox Enterprises will acquire the outstanding publicly held minority shares of Cox Communications for $34.75 per share in a cash tender offer.

Proceeds from the credit facility will be used to fund this tender offer, as well as to refinance debt and provide for working capital.

Cox Enterprises is an Atlanta media company. Cox Communications is an Atlanta cable company.

Amkor closes

Amkor Technology Inc. closed on its $300 million six-year second-lien term loan with an interest rate of Libor plus 450 basis points. Citigroup had the sole selling role, with JPMorgan and Merrill Lynch acting as joint bookrunners.

Proceeds will be used for working capital and general corporate purposes.

"We are pleased with the structure and terms of this credit facility, which provides Amkor with additional liquidity during the current semiconductor industry downturn," said Ken Joyce, chief financial officer, in a company news release.

Amkor is a West Chester, Pa., provider of contract semiconductor assembly and test services.

Technical Olympic closes

Technical Olympic USA Inc. closed on its new $600 million four-year unsecured revolver that includes an accordion feature allowing the company to expand the facility by an additional $150 million, according to a company news release.

Citigroup and Deutsche Bank acted as joint lead arrangers on the deal, with Citigroup listed on the left. KeyBank acted as a co-documentation agent. All in all, the syndicate is comprised of 16 lenders.

The new revolver was used to replace the company's existing $350 million secured revolver.

"We greatly appreciate the commitment from our lending group and the confidence they have shown in our current business and growth strategy. The capital provided by our lending group provides a solid foundation for growth and allows us the flexibility and liquidity to capitalize on new opportunities in our markets," said Antonio B. Mon, president and chief executive officer, in the release.

Technical Olympic is a Hollywood, Fla., designer, builder and marketer of detached single-family residences, town homes and condominiums.

Peabody closes

Peabody Energy Corp. closed on its $1.35 billion senior secured credit facility (Ba1/BB+) consisting of a $450 million 51/2-year term loan A with an interest rate of Libor plus 125 basis points and a $900 million 51/2-year revolver with an interest rate of Libor plus 125 basis points.

Wachovia Securities and Bank of America were the lead banks on the deal.

Proceeds were used by the St. Louis coal producer to refinance institutional term loan debt.

"Peabody's track record of performance gives the financial community continued confidence in the company and offers us very favorable borrowing rates," said Richard A. Navarre, executive vice president and chief financial officer, in a company news release. "This refinancing again lowers Peabody's interest expense and enhances our financial flexibility to capitalize on future growth opportunities."

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