Huntsman launches $1.64 billion; new Spectrum Brands paper trades up; HIT shaves rate by 25 bps

By Paul A. Harris

St. Louis, April 4 - The leveraged loan market saw light activity on Wednesday as the run-up to the three-day Easter Holiday continued to unfold quietly, sources said.

Huntsman International LLC took the spotlight as it launched a $1.64 billion term loan via a conference call.

Elsewhere HIT Entertainment Ltd. completed the repricing of its term loan, shaving its rate by 25 bps, but abandoning its quest for covenant relief.

Meanwhile in the secondary market, the new Spectrum Brands Inc. loan, which broke for trading on Monday, was better bid on Wednesday.

However an institutional investor told Prospect News that paper related to the home building sector continues to languish.

Huntsman debuts $1.64 billion

Huntsman International launched a $1.64 billion covenant light seven-year term loan (BB) in an investor conference call on Wednesday.

Talk on the deal, which is being led by Deutsche Bank and Credit Suisse, is Libor plus 175 basis points.

Proceeds will be used to refinance the Salt Lake City-based specialty chemical company's existing term loans.

Can you say 'Repricing?'

"Barney and Friends" producer, London-based HIT Entertainment Ltd. completed a 25 basis points repricing of its $443 million term loan B (B1/B) on Wednesday, lowering the Libor spread to 200 basis points from 225 basis points, according to an informed source, who added that a soft call at 101.0 was added.

However, the source said, an attempt to strip out the maintenance covenants and replace them with a "covenant-light" incurrence-based covenant structure met with investor pushback. Hence the covenant amendment did not succeed.

Deutsche Bank and Merrill Lynch led the deal, which includes $70 million of new money.

An informed source told Prospect News in spite of the pushback on the covenants the HIT repricing unmistakably points ups the present strength of the leveraged loan market.

"It's not the best credit in the world but they were still able to pull it off," the source said.

Spectrum Brands trades up

Strength was also seen Wednesday in the new loans of Spectrum Brands.

The Atlanta-based consumer products company's $1.65 billion six-year credit facility broke for trading on Monday.

A market source told Prospect News on Wednesday that the deal, which more or less amounts to an overhaul of the company's entire capital structure, had been well received, and added that the new paper has been active.

The source said that the Spectrum Brands loan was most recently seen at 101.50 bid, 102 offered, up from 100.75 bid, 101.125 offered at the Monday break.

The official recounted that the deal was comprised of a $1 billion term loan, a $50 million synthetic letter of credit, and a $200 million first-out tranche of the term loan that will be taken out when the company places a pending asset-backed loan. The entire dollar-denominated portion of the financing priced at Libor plus 400 basis points, which was the wide end of price talk.

Meanwhile a €262 million carve-out term loan B priced at Euribor plus 450 bps.

All tranches carry a 101 soft call.

Goldman Sachs and Bank of America were the joint lead arrangers and joint bookrunners on the deal, proceeds from which will be used to refinance the company's existing credit facility.

Hammers and nails

With the Mortgage Bankers Association stating Wednesday that overall mortgage application volume fell last week for the third week as interest rates rose, an institutional investor told Prospect News that debt related to the home building sector is the bad news bear of the bank loan market.

This source, who focuses on the sector, confirmed what other market sources told Prospect News on Tuesday - that the book for Realogy Corp.'s $1.95 billion term loan due 2014 is firming up at Libor plus 300 basis points, the wide end of the revised 275 basis points to 300. The deal initially was talked at Libor plus 225 to 250 basis points.

The company is in the market with a concurrent $3.15 billion junk bond deal which has undergone covenant changes. Late Wednesday junk market sources said that talk on the bonds appeared to widening amid further covenant tightening ahead of an anticipated Thursday pricing.

The institutional bank loan investor said that Realogy has been susceptible to the ongoing negative headline news in housing.

"People don't want to be in these loans at par, and then see them trade down when they break for trading," the investor said, adding that the entire sector has been trading badly.

The source said that Kearney, Mo., building products manufacturer, Ply Gem Industries Inc., in the market with a proposed $768.5 million amended and restated senior secured credit facility (B1), watched pricing escalate in much the same fashion as has been the case with the Realogy loan.

"They want to take out second-lien paper and replace it with an add-on to the first lien," the investor said of Ply Gem.

"They tried to do it with no covenants and low pricing, and the market wouldn't accept it.

"They had to add covenants and up the pricing. Pricing started around 225 and is now up to 275.

"It's going better but I don't think they have the book done."

Later in the session an informed source who confirmed the Libor plus 275 basis points pricing told Prospect News that the deal was done, but added that the paper had not yet broken for trading.

UBS is the lead bank on the deal.

Lodgenet closes

Meanwhile LodgeNet Entertainment Corp. said it completed a $675 million senior secured credit facility as part of its acquisition of Ascent Entertainment Group, Inc., the owner On Command Corp. LodgeNet paid $380 million.

In addition to funding the purchase, the new credit facility was used to refinance the company's existing $68 million of bank debt and will be used to pay for the tender offer for LodgeNet's $200 million of 9½% senior subordinated notes due 2013 currently under way.

The new loan (Ba3/B+) is via lead arrangers Bear Stearns and Credit Suisse and is made up of a $50 million six-year revolver at Libor plus 225 bps, a $400 million seven-year funded term loan B at Libor plus 200 bps, with a step down to Libor plus 175 bps at 3.25 times total leverage and a$225 million seven-year delayed-draw term loan B at Libor plus 200 bps, also with a step down to Libor plus 175 bps at 3.25x total leverage.

LodgeNet is a Sioux Falls, S.D.-based provider of interactive TV and broadband to hotels.

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