PanAmSat, Rainbow Media, Standard Aero break; Calpine steadies; Qwest trades up

By Sara Rosenberg

New York, Aug. 18 - PanAmSat Corp., Rainbow Media Enterprises Inc. and Standard Aero all broke for trading on Wednesday, with PanAmSat seen around the par area and Rainbow Media and Standard Aero seen closer to the 101 area. Also, Calpine Corp.'s second-lien bank debt stabilized with investors comfortable at current trading levels and Qwest Corp. headed higher on the heels of the bonds improving.

PanAmSat's institutional term loan was quoted at par bid, par ¼ offered pretty steadily throughout the day, according to traders.

"People got full on allocations. Most people got what they wanted in the primary so it's staying around those levels but it is trading," one trader said.

"It traded but you would think [as] such a big deal it would have traded more," a second trader added.

The $1.66 billion seven-year term loan B is priced with an interest rate of Libor plus 275 basis points. Originally, the tranche was sized at $1.86 billion but was reduced by $200 million last week as the buyout sponsors were able to negotiate a $200 million reduction in the total purchase price due to recent satellite trouble. Also, at launch the syndicate went out with pricing of Libor plus 250 basis points on the tranche, but the spread was later increased following wider-than-expected pricing on a bond deal.

PanAmSat's $2.71 billion credit facility (Ba3/BB+) also contains a $250 million five-year revolver with an interest rate of Libor plus 250 basis points and a 50 basis points commitment fee, and an $800 million five-year term loan A with an interest rate of Libor plus 250 basis points. Pricing and sizing of these tranches was unchanged throughout syndication.

Investors had been waiting for allocations on PanAmSat for a while now, but the process had been lengthened by an unexpected satellite shutdown. Although the satellite operated normally on its backup system, the unfortunately timed hitch gave the buying group a chance to negotiate a lower transaction price, leaving the syndication process in a holding pattern until a new agreement was reached.

Under the newly reached agreement Kohlberg Kravis Roberts & Co. LP, The Carlyle Group and Providence Equity Partners Inc. paid about $2.6 billion for The DirecTV Group's equity interest in PanAmSat. The acquisition closed Wednesday, according to a company news release.

Citigroup and Credit Suisse First Boston are the joint lead arrangers and joint bookrunners on the Wilton, Conn., satellite operator's deal, with Citigroup listed on the left. Bear Stearns, Lehman Brothers and Bank of America are co-documentation agents.

Rainbow Media wraps around 101

Rainbow Media's $600 million term loan C was quoted at par 7/8 bid, 101¼ offered consistently during market hours, according to a trader.

The term loan is priced with an interest rate of Libor plus 275 basis points.

Rainbow Media's $950 million credit facility (B+) also contains a $350 million revolver with an interest rate of Libor plus 250 basis points.

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

Proceeds will be used by the Jericho, N.Y., cable programming company to refinance existing debt.

Standard Aero tops 101

Standard Aero's term loan B was quoted at 101 1/8 bid, 101 3/8 offered on the break but then headed down to 101 bid by late day, according to a fund manager.

"Allocations were pretty small. They had $1.5 billion in the book for the $325 million term loan B," the fund manager added.

The institutional term loan is priced with an interest rate of Libor plus 250 basis points with a step down to Libor plus 225 basis points if leverage falls below 5x. Originally, the tranche was priced at Libor plus 275 basis points but was recently reverse flexed with the addition of the step down on strong demand. Also, the tranche was initially sized at $260 million but was increased during the first week of August as the company opted to downsize its bond deal.

The $375 million credit facility (B2/B+) also contains a $50 million six-year revolver with an interest rate of Libor plus 275 basis points.

JPMorgan and Lehman Brothers are joint lead arrangers on the deal, with JPMorgan listed on the left. Credit Suisse First Boston is documentation agent.

Proceeds, combined with proceeds from the bond offering, will be used to help fund The Carlyle Group's acquisition of the Standard Aero division from Dunlop Standard Aerospace Group for about $670 million. The acquisition is expected to close this month.

Standard Aero is a provider of turbine engine maintenance, repair and overhaul for aircraft engines and industrial gas turbines.

Calpine stabilizes

Calpine's second-lien bank debt traded around 83 to 83 3/8 in Wednesday's market, with levels pretty much unchanged from Tuesday, but, unlike Tuesday, buyers were actually seen on the name as opposed to just sellers, according to a trader.

"It's good to see that people are buying it at these levels," the trader added.

Sellers flooded the market on Tuesday as investors reacted negatively to the company's announcement that it would repay its first-lien debt only to replace it with a larger portion of first-lien debt. Basically, the San Jose, Calif., power company plans to repay the amount outstanding under its existing $500 million of first-lien debt using proceeds from the sale of its Canadian natural gas reserves and petroleum assets and, following the repayment, expects to issue up to approximately $700 million of new first-lien debt.

Qwest up

Qwest Corp.'s fixed-rate bank debt was higher by about a point on the day with quotes of 97 bid, 97½ offered, according to a trader.

"The bonds were better today so we're running their coattails," the trader explained.

On Wednesday, the Denver telecommunications company announced that it signed a two-year contract to provide Spirit Cruises LLC with voice and data services.

Ply Gem downsizes

Ply Gem Industries Inc. downsized its incremental term loan to $111 million from $141 million in connection with the $30 million upsizing to its bond offering, according to a market source.

The term loan is priced with an interest rate of Libor plus 275 basis points, in line with existing pricing being that the company is just layering on the new debt.

The $135 million add-on to the company's 9% notes of 2012 priced at 100.25 on Wednesday.

"It's historically cheap subordinated capital, so it's a good time to take advantage of it," the market source said in explanation of the decision to up the bond size and lower the bank loan size.

Ply Gem's incremental senior secured credit facilities (B1) deal also contains a $20 million five-year incremental revolver with an interest rate of Libor plus 250 basis points.

UBS Securities and Deutsche Bank are joint lead arrangers on the deal, with UBS left lead. JPMorgan is a co-manager.

Proceeds from the bank and bond deals will be used to help fund the acquisition of MW Manufacturers Inc. from Investcorp for about $320 million in cash. Investment vehicles associated with Caxton-Iseman Capital Inc., the New York-based private equity firm that acquired Ply Gem in February, have agreed to make an additional cash investment in Ply Gem to support the transaction as well.

Completion of the acquisition, which is expected to occur by the end of August, is subject to customary closing conditions.

Ply Gem is a Kearney, Mo., manufacturer and distributor of products for use in the residential new construction, do-it-yourself and professional renovation markets. MW is a Rocky Mount, Va., manufacturer of vinyl, clad-wood, vinyl-wood, wood and composite window and patio door products.

Environmental Systems reworked

Environmental Systems Products Holdings Inc. tweaked its approximately $105 million 41/2-year term loan B repricing by increasing the proposed interest rate to Libor plus 350 basis points from Libor plus 325 basis points and adding soft call protection of 101 in year one that guarantees investors that the loan would not reprice for one year.

Currently, the term loan carries an interest rate of Libor plus 450 basis points.

Credit Suisse First Boston is the sole lead arranger and bookrunner on the deal.

Environmental Systems Products is an East Granby, Conn., vehicle emissions and safety testing company.

R.H. Donnelley cuts overall loan size

R.H. Donnelley Corp. reduced the size of its credit facility by $50 million to $2.5925 billion (Ba3/BB) through the upsizing of its term loan A by $200 million and the downsizing of its term loan B by $250 million, according to a market source.

On Tuesday, rumors were floating around that there was some sort of size shift to the deal but speculation had the full $250 million coming out of the B being placed into the A.

Pricing on the now $699.5 million term loan A remained at Libor plus 200 basis points and pricing on the now $1.718 billion term loan B remained at Libor plus 225 basis points, the source added.

"It's cheaper this way," the source said regarding the structural changes. "Cost of capital is lower to have more A than B. The deal is pretty much all set."

As for the $50 million reduction in size, "they don't need it," the source said.

No changes were said to have taken place to the $175 million revolver, which carries an interest rate of Libor plus 200 basis points and an undrawn fee of 37.5 basis points. The revolver is expected to be undrawn at closing.

JPMorgan and Bear Stearns are the lead banks on the equally underwritten deal, with JPMorgan listed on the left. Deutsche Bank is also a lead on the deal. Citigroup and Goldman Sachs are co-documentation agents.

Proceeds from the term loans will be used to fund the acquisition of SBC Communications Inc.'s directory publishing business in Illinois and Northwest Indiana for $1.42 billion in cash. The transaction is expected to close in the third quarter subject to regulatory approval and certain closing conditions.

Basically, through this transaction, the company is gaining about $1.4 billion in incremental bank debt, extending the maturity of the term loan A and the term loan B by one year each, decreasing pricing on the term loan A to Libor plus 200 basis points from Libor plus 225 basis points and removing the fixed charges covenant that is found in the existing credit agreement.

Following the acquisition, R.H. Donnelley expects to have pro forma 2004 consolidated adjusted revenue of about $1 billion and EBITDA of about $586 million, assuming a Jan. 1, 2004 close.

Total leverage immediately following the transaction will be about 5.8 times pro forma adjusted 2004 EBITDA.

R.H. Donnelley is a Cary, N.C., yellow pages publisher and directional media company.

Newspaper Holdings revolver reduced

Newspaper Holdings decreased the size of its in-market seven-year revolving credit facility to $150 million from $200 million, according to a syndicate document. The size of the seven-year term loan B was unchanged at $400 million, and pricing on both tranches remained at Libor plus 175 basis points.

Wachovia is the lead bank on the community newspaper publisher's refinancing deal.

NES closes

NES Rentals Holdings Inc. closed on its $575 million credit facility consisting of a $275 million six-year second-lien term loan (B3/B), a $200 million five-year asset-based term loan and a $100 million five-year asset-based revolver, according to a company news release.

The second-lien term loan is priced with an interest rate of Libor plus 600 basis points and has call protection of 102 in year one and 101 in year two.

Bank of America and Bear Stearns were the lead banks on the deal, with Bank of America listed on the left.

Proceeds were used to replace the exit credit facility put in place when NES emerged from bankruptcy in February.

"NES has secured a new capital structure to meet the increasing demand for quality rental services in today's growing marketplace," said Andrew Studdert, chief executive officer, in the release. "Since emerging from bankruptcy in February, we have executed measures to achieve greater operational efficiency and to strengthen NES' financial position and leadership. This financing is a major step in further positioning NES to capitalize on improving economic activity, support a renewed customer focus and achieve sustainable growth.

"The new financing represents a significant milestone and takes advantage of a competitive lending market. NES now has secured greater financial flexibility than was available at the time of the emergence."

"The new credit facilities eliminate the significant debt reduction requirements that were necessary under the exit facility. NES now has improved liquidity for operational flexibility, fleet reinvestment and a long-term capital structure," added NES' chief financial officer, Michael Milligan, in the release.

NES Rentals is a Chicago equipment rental company to industrial and construction end-users.

N.E.W. Customer Service closes

N.E.W. Customer Services Inc. closed on its $110 million credit facility consisting of a $10 million revolver and a $100 million five-year term loan, according to a company news release. CIBC was the lead bank on the deal.

Proceeds were used to help fund the acquisition of a significant equity interest in N.E.W. by TH Lee Putnam Ventures, Freeman Spogli and management.

N.E.W. Customer Service is a Sterling, Va., provider of extended service plans, buyer protection services and product support for businesses and consumers.

Goodyear closes

The Goodyear Tire & Rubber Co. closed on its $680 million term loan due September 2007 (B1/B+) with an interest rate of Libor plus 450 basis points and is secured by a third lien on current company assets. The tranche was initially launched with a size of $500 million.

JPMorgan was the lead bank on the Akron, Ohio, tire company's deal that replaces the $680 million senior secured U.S. revolver, which was set to mature on April 30, 2005.

Proceeds will be used to support letters of credit or for borrowings on a revolving basis. About $500 million of the new facility will be used initially to support already existing letters of credit.

"Improving our credit profile is a key component of the company's turnaround strategy," said Richard J. Kramer, executive vice president and chief financial officer, in a company news release. "This includes refinancings to extend maturities, potential asset sales and, ultimately, increased equity funding."

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