Reliant, American Airlines, International Mill break above 101; Leap Wireless wraps around par ½

By Sara Rosenberg

New York, Dec. 17 - Reliant Energy Inc. and American Airlines Inc. allocated on Friday, with both deals' institutional tranches trading actively in the higher 101 context. Also hitting the secondary on Friday was Leap Wireless International Inc. (Cricket Communications Inc. as borrower) and International Mill Service Inc.

Reliant Energy's $1.3 billion term loan B opened for trading at 101 1/8 bid, 101 3/8 offered and then ticked up to the 101½ bid, 101¾ offered range by late day, according to a trader.

The tranche, which was recently upsized from $1.1 billion, is priced with an interest rate of Libor plus 237.5 basis points, after a recent reverse flex from Libor plus 275 basis points.

The term loan B upsizing was a result of a $350 million downsizing to the company's recently priced 10-year $750 million 6¾% senior secured notes, through the removal of six-year floating-rate note tranche.

The other $150 million taken out of the originally sized $1.1 billion bond deal was added to the tax-exempt bond offering, which was increased to $500 million.

Reliant's $3 billion credit facility (B1/B+) also contains a $1.7 billion revolver with an interest rate of Libor plus 300 basis points.

Deutsche Bank, Bank of America, Barclays, Goldman Sachs and Merrill Lynch are the lead banks on the deal, with Deutsche left lead.

Proceeds from the credit facility, along with proceeds from the notes and tax-exempt bonds, will be used to refinance existing debt facilities, including a $2.1 billion revolver and a $1.7 billion term loan at the parent company, $300 million of Orion Power Midwest bank debt and $400 million of floating-rate tax-exempt bonds.

Closing on the refinancing is expected to occur before year-end.

Reliant is a Houston provider of electricity and energy services to retail and wholesale customers.

American Airlines nears 102

American Airlines' $250 million term loan B opened at 101¼ bid, 101¾ offered on the break but quickly traded higher to 101 5/8 bid, 101 7/8 offered by midday and to 101¾ bid, 102 offered by late day as a flurry of activity was seen in the name, according to market sources.

Meanwhile, the $600 million revolver was trading right around par with quotes of 99 5/8 bid, par offered, according to a trader. "That's very high for a revolver. I don't know all the details of the deal but I would expect loads of it was funded," the trader added.

The term loan is priced with an interest rate of Libor plus 525 basis points and contains 101 call protection for one year. Originally the term loan was launched with pricing of Libor plus 600 basis points and contained call protection of 102 in year one and 101 in year two, but pricing came in and call provisions were modified on strong investor demand. In fact, the amount of interest was so overwhelming that the commitment deadline for the B loan had to be moved up a couple of days.

The revolver is priced with an interest rate of Libor plus 475 basis points. This tranche was also reverse flexed during syndication with pricing coming down by 50 basis points from Libor plus 525 basis points.

The term loan was originally issued to investors at par and a fee of 50 basis points was given to lenders for a $50 million revolver commitment.

Citigroup Global Markets Inc. and JPMorgan Chase are joint lead arrangers on the deal, with Citi left lead.

Proceeds from the $850 million credit facility (B+) will be used to refinance the Fort Worth, Texas-based airline's existing $834 million facility.

Late in the day, American Airlines announced that the deal has closed.

Leap plus par

Leap Wireless' $500 million six-year term loan traded right around par ½ on its first day in the secondary loan market, with levels quoted at par ¼ bid, par ¾ offered by late day, according to a trader.

The term loan is priced with an interest rate of Libor plus 250 basis points.

The $650 million credit facility (B1/B-) also contains a $150 million five-year revolver with an interest rate of Libor plus 250 basis points and a 75 basis points commitment fee.

Banc of America Securities LLC, Goldman Sachs Credit Partners LP and Credit Suisse First Boston LLC are the lead banks on the deal.

Cricket Communications, a wholly owned subsidiary of Leap Wireless, will be the actual borrower under the credit facility.

Proceeds from the term loan will be used to redeem Cricket's existing $350 million 13% senior secured notes, pay about $42 million of call premium and accrued interest on the notes, repay about $41 million in principal amount of debt and accrued interest owed to the Federal Communications Commission, and pay associated transaction fees and expenses. Furthermore, the term loan is expected to provide the company with additional proceeds of about $57 million for general corporate purposes, including working capital and potential acquisitions.

The revolver is expected to be undrawn at closing, which is targeted for December.

Leap is a San Diego, Calif., mobile wireless services company.

International Mill tops 101

International Mill's term loan B was broke above 101 in Friday's market, with the paper quoted at 101 ¼ bid, 101 ¾ offered, according to a trader.

The $265 million (including $140 million add-on) first-lien term loan B (B1/B+) is priced with an interest rate of Libor plus 250 basis points and a step down to Libor plus 225 basis points if total leverage falls below 2.75x, according to a market source. Originally, the existing B loan and the add-on were priced at Libor plus 275 basis points.

The International Mill deal was at first brought to market as $180 million of incremental bank debt priced in-line with existing tranches. However, the syndicate recently decided to reverse flex pricing on both the first and the second-lien term loans in their entirety so the full $360 million credit facility had to be 'marketed'.

The $50 million (including $20 million add-on) second-lien term loan (B3/B-) is priced with an interest rate of Libor plus 575 basis points and a step down to Libor plus 550 basis points if total leverage falls below 2.75x, the source said. Originally, the existing second lien and the add-on were priced at Libor plus 600 basis points.

Both the incremental bank debt and the repriced existing bank debt went on to existing lenders only.

"There was a lot of demand. People like the story. Increment was two to three times oversubscribed," the source said. "To the best of my knowledge, I think this is the first time that a second-lien has ever had a step down."

"That has got to be a first. Crazy," another source added about the second-lien's ability to step down based on leverage.

Included in the $360 million credit facility is a $45 million (including $20 million add-on) revolver (B1/B+) with an interest rate of Libor plus 275 basis points.

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

Proceeds from the incremental bank debt will be used to help fund the acquisition of Glassport, Pa.-based Tube City Holdings LLC, a provider of specialty services to the global steel industry.

International Mill Service is a Horsham, Pa.-based provider of specialty services to the North American steel industry. The company closed on its credit facility about a month ago in connection with its acquisition by Wellspring Capital Management LLC.

Star Gas closes

Star Gas Partners LP's indirect subsidiary, Petroleum Heat and Power Co. Inc., closed on its new $260 million revolver, according to a company news release. JP Morgan Chase Bank is the administrative agent on the deal.

The revolver has a $75 million sub limit for letters of credit.

Borrowings are available for working capital purposes.

Security is liens on substantially all of the assets of the heating oil segment, accounts receivable, inventory, general intangibles, real property, fixtures and equipment.

At close, $119 million was drawn under the revolver to repay amounts outstanding under the heating oil segment's existing credit facilities.

Star Gas is a Stamford, Conn., distributor of home heating oil and propane.

© 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.