PharmaNet expected to sweeten pricing; Calpine up with numbers; Stressed names see demand

By Sara Rosenberg

New York, May 8 - PharmaNet Development Group Inc.'s in-market credit facility is anticipated to undergo some changes in an attempt to build momentum on the book, with a pricing increase seen as the likely outcome.

Moving to the secondary market, Calpine Corp.'s term loan was stronger on Friday as the company posted positive earnings results and Avis Budget Group Inc.'s term loan B continued to tick higher.

Also, stressed/distressed loans, including Dollar Thrifty Automotive Group Inc., Chrysler Financial Services LLC, R.H. Donnelley Corp. and Dex Media West, appeared to find a firm tone in trading on better buyers.

PharmaNet may tweak deal

Market talk is that PharmaNet Development Group's $95 million five-year credit facility could see changes before it wraps as a result of the syndication process going somewhat slowly, a source told Prospect News on Friday.

The current expectation is that pricing on the deal will end up getting increased so as to attract more investors.

Whether this potential pricing change would affect spread, Libor floor and/or original issue discount is still unclear, but the thought is that it will most likely affect the actual spread, the source continued.

At the April bank meeting that was held to launch the deal, the $20 million revolver and the $75 million term loan A were both presented to lenders with talk of Libor plus 600 basis points with a 3% Libor floor and an original issue discount of 97.

PharmaNet deadline extended

Commitments towards PharmaNet's credit facility had originally been due on Friday, but according to the source, that deadline has been extended to an undetermined date.

The source went on to say that the banks will definitely still be selling the facility during the week of May 11.

Meanwhile, another source revealed that any changes to the deal may be announced as early as Tuesday.

Both banks and institutional lenders have been approached about this deal.

Jefferies and CIT are the co-lead arrangers and co-bookrunners on the credit facility that will be used to refinance convertibles, with Jefferies the left lead.

PharmaNet is a Princeton, N.J.-based drug-development services company.

Calpine better on earnings

Over in trading happenings, Calpine's term loan gained some ground following the company's release of quarterly financials that showed an improvement in net income and adjusted EBIDTA, according to a trader.

The term loan was quoted at 90 bid, 90¾ offered, up from 88¼ bid, 89¼ offered, the trader said.

For the first quarter, Calpine reported net income of $32 million, or $0.07 per diluted share, compared to net loss of $214 million, or $0.44 per diluted share, in the prior year.

Operating revenues for the quarter were $1.7 billion, down from $2 billion in the first quarter of 2008.

And, adjusted EBITDA for the quarter increased 10% to $331 million, compared to $301 million in the same period of last year.

Calpine reaffirms guidance

In addition, on Friday Calpine reaffirmed its 2009 full-year guidance, which includes expected adjusted free cash flow guidance of $400 to $500 million.

According to the trader, this expected free cash flow may have also helped out term loan levels since it may have created a "belief that they're going to pay something down."

Adjusted EBITDA for the full year is guided in the range of $1.6 billion to $1.7 billion.

The company's cash flows provided by operating activities in the first quarter showed an improvement from last year's first quarter, moving to $80 million from an outflow of $340 million.

This improvement in cash flows was due in large part to a year-over-year decrease of $244 million in cash paid for interest, primarily as a result of the repayment of the second-priority debt in 2008.

Lastly, liquidity during the first quarter remained strong at $2.2 billion.

Calpine is a San Jose, Calif.-based power company.

Huntsman holds steady

Also coming out with first-quarter results on Friday was Huntsman Corp., but its term loan seemed unaffected by the news of a nearly $300 million loss as levels were seen at 85 bid, 86 offered, basically unchanged from 85 bid, 87 offered on Thursday, according to a trader.

Specifically, for the first quarter, Huntsman had a net loss of $290 million, or $1.24 loss per diluted share, compared to net income of $7 million, or $0.03 per diluted share, for the same period in 2008

Revenues for the first quarter were $1.693 billion, a decrease of 33% compared to $2.54 billion for the first quarter of 2008.

And, adjusted EBITDA from continuing operations for the first quarter was $50 million, compared to $188 million for the same period last year.

Also, as of March 31, the company had $1.115 billion of combined cash and unused borrowing capacity, consisting of $473 million cash and $642 million available borrowings under its credit facilities.

Huntsman is a Salt Lake City, Utah-based manufacturer and marketer of differentiated chemicals.

Avis up again

Avis' term loan B was once again seen moving higher in the secondary market as positive sentiment from the company's better-than-expected earnings results remained, according to a trader.

The term loan B was quoted at 60 bid, 63 offered, up from Thursday's closing levels of 59 bid, 62 offered, the trader said. Early in the day Thursday, the bank debt had been at this 60 bid, 63 offered level, but it had slipped a little lower prior to the close. On Wednesday morning, the B loan was quoted at 50 bid, 52 offered.

Late Wednesday, the company came out with first-quarter numbers, including net loss of $45 million, or $0.44 per share, compared to net loss of $12 million, or $0.11 per share, in the same period last year. Analyst estimates on per share net loss had been around $0.63 per share.

Total company EBITDA was negative $9 million, compared to positive $31 million in the first quarter of 2008. Excluding unusual items, EBITDA for the quarter was negative $3 million.

Avis is a Parsippany, N.J.-based provider of vehicle rental services.

Demand strong for stressed debt

In more secondary news, there was better buying interest for stressed/distressed type names on Friday, pushing levels in those names higher, according to a trader.

For example, Dollar Thrifty, a Tulsa, Okla.-based renter and leaser of vehicles, saw its revolver quoted at 33 bid, up from 31 bid on Thursday, the trader said.

Chrysler Financial, a provider of financial services for vehicles, saw its first-lien term loan quoted at 81 bid, 82 offered, up from 80 bid, 81 offered.

R.H. Donnelley, a Cary, N.C.-based Yellow Pages and online local commercial search company, saw its term loan quoted at 72½ bid, 74½ offered, up from 71 bid, 73 offered.

And, Dex Media West, a Cary, N.C.-based publisher of Yellow Pages and White Pages directories, saw its term loan quoted at 73½ bid, 75½ offered up from 72 bid, 74 offered, the trader continued.

"Think there was further interest in distressed loans. Buyers out there don't want to miss the boat. Thought switched from 'The world is ending' to 'We might actually have a survivable economy when we're done,' " the trader added.

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