Venetian, Innophos actively trade on break; Journal Register cuts term pricing

By Sara Rosenberg

New York, Aug. 10 - Venetian Casino Resort's and Innophos Holdings' bank facilities broke for trading on Tuesday, with both deals' institutional tranches seeing lots of activity, although the size of the Innophos trades were relatively small being that allocations on the oversubscribed deal were small. Meanwhile, in the primary market, Journal Register reverse flexed its term loan B and added a step down.

Venetian's term loan B broke for trading Tuesday morning, with quotes starting off at par 7/8 bid, 101 3/8 offered, moving up to 101½ bid, 102 offered, and then settling in around 101 bid, 101 3/8 offered, according to traders.

Upon first hitting the secondary, the paper was "moving around quickly and trading relatively well," a trader said.

"It was all over the place," a second trader added. But, once it hit the 101½ bid level, "it was a little rich," the trader said in explanation of why levels came off their highs before day's end.

The $665 million term loan B is priced with an interest rate of Libor plus 250 basis points with a step down to Libor plus 225 basis points based on leverage. Originally, the tranche was sized at $655 million and went out with price talk of Libor plus 250 to 275 basis points, but it was upsized and reverse flexed during syndication.

Venetian's $1.01 billion senior secured facility (B1/B+) also contains a $115 million 18-month delayed-draw term loan A due in 2009 (upsized from $90 million during syndication), a $125 million revolver due in 2009 and a $105 million six-month delayed-draw term loan B due in 2011. Pricing on all of these tranches is Libor plus 250 basis points with a step down to Libor plus 225 basis points as well.

The delayed-draw term loan A has a 150 basis points unused fee, and the delayed-draw term loan B has a 75 basis points unused fee.

It's no surprise that the deal came in at the low end of talk being that it had received a nice amount of orders right after the bank book was posted a few days before the launch and was oversubscribed pretty much immediately after the July 19 bank meeting.

In fact, the deal was getting so much interest from investors that the syndicate had to shut down the books early, pushing the deadline up by a couple of days to last Friday from some time this week.

Some factors working in favor of the deal are the ratings, the collateral package and it being a known credit that people like.

Goldman Sachs is the sole lead arranger and bookrunner on the deal, as well as syndication agent. Bank of Nova Scotia is the administrative agent on the loan.

Proceeds will be used by the Las Vegas hotel and casino to refinance existing debt and to finance construction of the new Palazzo casino resort project.

Closing on the credit facility is expected to take place this month.

Innophos activity high, volume low

Innophos' term loan saw a "lot of activity" upon breaking into the secondary market Tuesday "but not a lot of volume" because of small allocations, according to a trader who placed the paper at par ¾ bid, 101 offered at the end of the day.

The paper first broke into the market at par ¾ bid, 101¼ offered and then backed off to par ½ bid, par 7/8 offered before finally ending up at closing levels, the trader added.

The $220 million term loan is priced with an interest rate of Libor plus 225 basis points and contains a step down to Libor plus 200 basis points depending on leverage. Originally, the tranche was priced at Libor plus 250 basis points but was reverse flexed during syndication on strong demand, at which the step down was added as well.

Innophos' $270 million credit facility (B1/B+) 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.

Journal Register lowers pricing

Journal Register Co. officially lowered pricing on its $350 million eight-year term loan B on Tuesday; reverse flexing the tranche to Libor plus 150 basis points from Libor plus 175 basis points, according to a market source. Furthermore, a step down was added to Libor plus 125 basis points if leverage falls below 41/2x.

Speculation on the reverse flex has recently been floating around the market with many anticipating the move to take place this week.

Pricing on the $425 million 71/4-year revolver and the $275 million 71/4-year term loan A was unchanged at Libor plus 125 basis points, the source added.

JPMorgan is the lead bank on the deal.

Proceeds from the $1.05 billion senior credit facility (Ba2/BB+) will be used to fund the acquisition of 21st Century Newspapers Inc. and to refinance existing debt.

Under the acquisition agreement, Journal Register will pay $415 million in cash to acquire 21st Century Newspapers from affiliates of Kelso & Co., Goldman Sachs Capital Partners and Frank Shepherd, chairman and chief executive officer of 21st Century Newspapers. The transaction, which is expected to close in the third quarter, is subject to applicable governmental approvals.

Leverage is going to be in the 5¼ to 5½ times range at close based on the expected close date, the Trenton, N.J., newspaper publishing company previously disclosed.

Qwest fall continues

Qwest Communications International Inc.'s bank debt continued to slide with the fixed-rate paper quoted at 96 bid, 97 offered, compared to 97¾ bid, 98¼ offered at close Monday, and the floating-rate paper quoted at 101¾ bid, 102¾ offered, down about 1¾ point since Monday morning, according to a trader.

"The fixed rate is following the pari 8 7/8% bonds," the trader said, adding that the drop still seems to be in reaction to a weekend Barron's article that called Qwest the least of a bargain when compared to AT&T and MCI.

Qwest is a Denver telecommunications company.

Dobson down on earnings

Dobson Communications Corp. also suffered in Tuesday's secondary loan market, with the paper dropping by about a point on earnings numbers that came out after close Monday. The disappointing earnings led to fears about other cellular companies, such as Centennial Communications Corp. (Centennial Cellular) which fell off by about three quarters of a point only to regain some of its losses before the end of the day.

Dobson's bank debt was quoted at 99 bid, 99 3/8 offered, according to a trader.

For the second quarter, the Oklahoma City-based company reported a net loss applicable to common shareholders of $15.9 million, or $0.12 per share, compared to net income applicable to common shareholders of about $224.4 million, or $2.49 per share, during the same period last year. EBITDA was $85.7 million, compared with $70.5 million for the second quarter in 2003. And, total revenue was approximately $252.4 million compared to total revenue of $143.5 million last year.

However, based on results for the first half of the year, Dobson revised its outlook for the remainder of 2004, lowering EBITDA expectations for the second half to the $166 million to $176 million range. As a result, full-year EBITDA is now expected to be in the $335 million to $345 million area as opposed to previous guidance of $390 million to $425 million.

In reaction to Dobson's downward revision, Centennial investors panicked, pushing the bank debt down to 99¼ bid, 99¾ offered in early trading hours, according to the trader. But, by the end of the day, some of the worries subsided ahead of the Wall, N.J.-based wireless company's upcoming earnings release, and the bank debt regained some ground, moving up to 99½ bid, par offered, to close about half a point lower from Monday's levels.

Bain auction won by Wachovia

Bain Capital held an auction for a $250 million portfolio on Tuesday, according to a market source. Wachovia walked away the winner beating out the seven other dealers that were invited to participate in the transaction.

"I don't think [Wachovia] went out and got bids from guys. I think they won by about 20 basis points. Everybody else went out and got bids and came in around the same levels. I think [Wachovia is] ramping up CLOs so they're just using this to thicken the CLOs," the source said.

Berry Plastics closes

Berry Plastics Corp. closed on its amended and restated credit facility that consists of a $365.5 million term loan and a $100 million revolver, according to a 10-Q filed with the Securities and Exchange Commission on Monday.

Proceeds from the term loan were used to repay the balance under the previous term loans in what was essentially a repricing move.

The new term loan carries an interest of Libor plus 225 basis points, 25 basis points lower than the previous term loan. Furthermore, the tranche contains a step down to Libor plus 200 basis points based on leverage.

JPMorgan and Goldman Sachs were the lead banks on the deal that closed on Monday, with JPMorgan listed on the left.

Berry is an Evansville, Ind., maker of injection-molded plastic products.

Blount closes

Blount Inc. closed on its $419.9 million amended and restated credit facility on Monday, according to a company news release. General Electric Capital Corp. was the lead bank on the deal.

The facility consists of a $265 million six-year term loan B (B2/B+) with an interest rate of Libor plus 300 basis points, a $100 million five-year revolver (B2/B+), a $50 million 61/2-year non-amortizing second-lien term loan (B3/B-) with an interest rate of Libor plus 500 basis points and a $4.9 million six-year Canadian term loan (B2/BB) with an interest rate of Libor plus 300 basis points.

Initially the deal was launched with the term B sized at $240 million and talked at Libor plus 325 to 350 basis points, the revolver sized at $125 million and the second-lien term loan talked at Libor plus 550 basis points, but sizes and pricing were modified during syndication.

The company got the amended and restated credit facility in connection with a $125 million common stock sale and a $175 million note offering that were part of a full recapitalization. Proceeds from the transactions will be used to refinance existing debt.

Blount is a Portland, Ore., international manufacturing and marketing company that operates in the outdoor products, lawnmower and industrial and power equipment segments.

© 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.