Community Health, EPD tweak deals; Syniverse, InterGen, Stolle set talk; Thomson, Hargray break

By Sara Rosenberg

New York, June 27 - Community Health Systems Inc. modified its credit facility on Wednesday, upsizing the funded term loan, downsizing the delayed-draw term loan and lowering pricing on both of these tranches, and EPD Inc. moved some funds out of its second-lien term loan and into its first-lien term loan while firming up pricing at the high end of talk.

Also in the primary, Syniverse Technologies, Inc. and InterGen released guidance on their credit facilities in connection with the deals' Wednesday launches, and Stolle Machinery Co. LLC revealed price talk on its add-on it's getting ready to launch on Thursday.

Moving to the secondary market, Thomson Learning and Hargray Communications Group, Inc. both saw their credit facilities free up for trading.

In other trading news, Movie Gallery Inc. and Blockbuster Inc. both saw their term loan Bs soften after Blockbuster announced plans for an amendment; however, Movie Gallery saw a significant drop and Blockbuster's fall was relatively small.

Community Health Systems came out with some revisions to its credit facility, including upsizing its funded term loan to compensate for a bond downsizing, downsizing its delayed-draw term loan and, as was previously expected by the market, reducing spreads, according to a buyside source.

The seven-year funded term loan is now sized at $6.065 billion, up from $5.7 billion, and pricing was reverse flexed to Libor plus 200 basis points from original talk at launch of Libor plus 225 bps, the source said.

This term loan upsizing is a result of the company decreasing its bond offering to $3 billion from $3.365 billion.

Meanwhile, the seven-year delayed-draw term loan was downsized to $400 million, from $500 million, and pricing on this tranche was also reverse flexed to Libor plus 200 bps from original talk at launch of Libor plus 225 bps, the source added.

Community Health Systems' now $7.215 billion (up from $6.95 billion) senior secured credit facility (Ba3/BB-) also includes a $750 million six-year revolver, with a 50 bps commitment fee.

Credit Suisse and Wachovia are the lead banks on the deal.

Proceeds from the credit facility, along with the bonds, will be used to help fund the acquisition of Triad Hospitals Inc. for $54 per share in cash, or $6.8 billion, including $1.7 billion of existing debt.

The funded term loan will be used to help finance the acquisition and to refinance existing debt, and the delayed-draw term loan and revolver will be used for working capital and general corporate purposes.

Community Health is a Nashville-based operator of general acute care hospitals in non-urban communities. Triad is a Plano, Texas, owner and manager of hospitals and ambulatory surgery centers.

EPD shifts funds, firms spreads

EPD also reworked its credit facility, moving $50 million out of its second-lien term loan and into its first-lien term loan and finalizing pricing at the high end of guidance, according to a market source.

The seven-year first-lien term loan (B1/B+) is now sized at $700 million, up from $650 million, and pricing settled at Libor plus 250 bps from original talk of Libor plus 225 bps to 250 bps, the source said.

On the flip side, the eight-year second-lien term loan (Caa1/CCC+) is now sized at $360 million, down from $410 million, and pricing firmed up at Libor plus 575 bps compared to original talk of Libor plus 550 bps to 575 bps, the source continued.

Call protection on the second-lien term loan is 102 in year one and 101 in year two.

In addition, pricing on EPD's $100 million six-year multi-currency revolver (B1/B+) and $100 million 12-month delayed-draw, with seven-year final maturity, term loan (B1/B+) also firmed up at Libor plus 250 bps, the wide end of original talk of Libor plus 225 bps to 250 bps, the source added.

Lehman Brothers, JPMorgan and Goldman Sachs are the joint lead arrangers and joint bookrunners on the $1.26 billion senior secured deal.

Proceeds will be used to help fund the Carlyle Group's acquisition of EPD, which is the engineered products division of the Goodyear Tire & Rubber Co., in an all-cash transaction valued at $1.475 billion.

EPD is an Akron, Ohio, manufacturer of hoses, conveyor belts and power transmission belts, as well as tank tracks for military and off-road vehicles.

Syniverse talk surfaces

Syniverse held a conference call on Wednesday morning to kick off syndication on its proposed $489 million senior secured credit facility (Ba2/BB), at which time price talk on the transaction was announced, according to a market source.

The $42 million revolver and the $20 million euro-denominated revolver are both being talked at Libor/Euribor plus 200 bps, with pricing tied to a leverage grid, the source said.

The $297 million term loan and the $130 million euro-denominated term loan are both being talked at Libor/Euribor plus 200 bps, with a step down to Libor/Euribor plus 175 bps based on a leverage test that is still to be determined, the source added.

Both term loans are covenant-light.

Lehman Brothers and Deutsche Bank are the joint lead arrangers and joint bookrunners on the deal, with Lehman the left lead.

Proceeds will be used to fund the $290 million proposed acquisition of Billing Services Group Ltd.'s wireless division, a provider of clearing, settlement, payment and financial risk management services for communications service providers, and to refinance Syniverse's existing senior secured credit facility.

When the acquisition was first announced in April, the company had said that financing for the deal would come from $290 million in incremental term loan debt, with this add-on expected to carry an interest rate of Libor plus 200 basis points, in line with existing term loan pricing. At that time, the refinancing of Syniverse's existing bank debt was not mentioned.

Syniverse is a Tampa, Fla., provider of mission-critical technology services to wireless telecommunications companies.

InterGen price talk

InterGen announced price talk of Libor plus 200 bps to 225 bps on both tranches under its proposed $1.55 billion credit facility (BB-) as it was launched with a bank meeting on Wednesday in New York, according to a market source.

Tranching on the deal is comprised of a $750 million revolver and an $800 million term loan B that will be split between U.S. and euro.

A bank meeting to launch the deal for European investors will be held in London on Thursday.

Merrill Lynch, Lehman Brothers and Barclays are the lead banks on the deal, with Merrill Lynch the left lead.

Proceeds will be used to refinance existing debt, to fund a dividend payment and for working capital needs and general corporate purposes.

InterGen is a Burlington, Mass., power generation company.

Stolle guidance emerges

Stolle Machinery released price talk on its $100 million first-lien term loan B add-on (BB-) as the transaction is gearing up for its launch with a conference call on Thursday, according to a market source.

The add-on is being talked at Libor plus 250 bps, in line with existing first-lien term loan B pricing, the source said.

Goldman Sachs is the sole lead bank on the deal, which is structured as an amendment.

Proceeds will be used to repay the company's existing $50 million second-lien term loan at a premium of 102 and to fund a dividend to Littlejohn & Co.

With this incremental debt, the company's first-lien term loan B will carry a total size of $225 million. The company's existing $25 million revolver will remain in place.

Stolle is a Centennial, Colo.-based producer of capital equipment, spare parts and services for the rigid packaging industry.

Helicon retranches, cuts pricing

Helicon made some changes to the tranching of its $85 million credit facility and reverse flexed pricing across the board, according to a market source.

The six-year revolver is now sized at $10 million, up from $7 million, the six-year term loan A is now sized at $10 million, down from $12 million, and the seven-year term loan B is now sized at $65 million, down from $66 million, the source said.

In addition, pricing on the revolver, the term loan A and the term loan B was reduced to Libor plus 300 bps from original talk at launch of Libor plus 325 bps.

TD Securities is the lead arranger and bookrunner on the deal, which will be used to fund the acquisition of Suddenlink Communications, the Virginia cable systems of Cebridge Acquisition, LLC, and to refinance existing debt.

Helicon is a cable operating company with systems in Virginia and West Virginia that offers its products and services under the JetBroadband brand.

Thomson Learning frees to trade

Switching to the secondary market, Thomson Learning's credit facility broke for trading, with the $3.44 billion seven-year term loan B quoted by one trader at 98¾ bid, 99¼ offered and by a second trader at 99 1/8 bid, 99 3/8 offered.

The term loan B is priced at Libor plus 275 bps, carries 101 soft call protection for one year and was sold at an original issue discount of 99.

During syndication, pricing on the term loan B flexed up from Libor plus 250 bps, the soft call was added and the original issue discount was added, with original talk being that it could range from 99 to 991/4.

Thomson Learning's $3.74 billion senior secured credit facility also includes a $300 million six-year revolver priced at Libor plus 275 bps, after flexing during syndication from Libor plus 225 bps when its super-priority status was removed.

The facility has a senior secured leverage ratio covenant of 8.25 times, which was added during syndication as well.

Prior to the changes, the revolver was rated B1/B+ and the term loan was rated B1/B.

RBS Securities, JPMorgan, Citigroup and UBS are the lead arrangers on the deal, with RBS as administrative agent, JPMorgan as syndication agent, and Citi and UBS as co-documentation agents.

Proceeds will be used to help fund the acquisition of Thomson Learning, which is a division of Thomson Corp., by Apax Partners and Omers Capital Partners.

The Stamford, Conn.-based higher education, careers and library reference assets include Wadsworth, Delmar Learning, Gale, Heinle, Brooks/Cole and South-Western.

Hargray breaks

Hargray Communications' credit facility also hit the secondary on Wednesday, with the $210 million first-lien term loan (B1/B) quoted at par 1/8 bid, par 3/8 offered and the $90 million second-lien term loan (Caa1/CCC+) quoted at par ½ bid, 101 offered, according to a market source.

The first-lien term loan is priced at Libor plus 225 bps, and the second-lien term loan is priced at Libor plus 500 bps.

During syndication, the first-lien term loan was upsized from $195 million and the second-lien term loan was downsized from $95 million.

Hargray's $325 million credit facility also includes a $25 million revolver (B1/B) that is priced at Libor plus 225 bps.

Bank of America and RBC Capital are the joint bookrunners on the deal, which will be used to help fund Quadrangle Capital Partners' acquisition of the company.

Hargray is based in Hilton Head Island, S.C., and provides telecommunication services in southeastern South Carolina and northeastern Georgia.

Movie Gallery, Blockbuster weaken

Also in trading, Movie Gallery and Blockbuster both saw their term loan Bs slide lower on Wednesday, but while Movie Gallery saw a large drop on Blockbuster's amendment news, Blockbuster saw only a minimal decline that was mostly passed off as a result of general market weakness, according to traders.

Movie Gallery's term loan B ended the day at 85 bid, 87 offered, down from previous levels of 90 bid, 92 offered, one trader said.

"Blockbuster is trying to get an amendment done, The numbers there are really [bad] so it pushed Movie Gallery down," the trader added.

Meanwhile, Blockbuster's term loan B did not fall nearly as much, with levels going out at 99¾ bid, par ¼ offered, down from par bid, par ½ offered, a second trader remarked.

"It's not really because of the amendment. More because of market softness," the trader said. "Cash was off a pretty good amount this morning. Especially covenant-light deals, they were down a half to three-quarters. Those things have since crept their back up ending down only a quarter to an eighth. There's a lot of volatility across the board in all different markets. Everyone is on the edge right now and that's kind of what's driving the market.

"LCDX ended at 98.15 bid, 98.25 offered, up from 98 bid, 98.10 offered. It traded as low as 97½ but rallied back with the rest of the market," the trader added.

On Wednesday, Blockbuster said in an 8-K filing with the Securities and Exchange Commission that it will seek an amendment to modify the consolidated EBITDA, fixed charge coverage and leverage ratio requirements under its credit facility.

The proposed amendment would change the consolidated EBITDA covenant such that the trailing four-quarter requirement would range from $140 million for the period ending July 1, 2007 to $165 million for the period ending Jan. 6, 2008, and from $180 million for the period ending April 6, 2008 to $250 million for the period ending Jan. 4, 2009.

As for the fixed charge coverage and leverage ratios, applicability would be deferred from fiscal 2008 to fiscal 2009.

The company said that it needs the amendment as a result of significant investments in its online business and to provide it with the necessary flexibility to grow its share of the overall rental market by maximizing the opportunities presented by the growing online rental industry as well as the challenging in-store industry.

Movie Gallery is a Dothan, Ala., video rental company. Blockbuster is a Dallas-based provider of in-home movie and game entertainment.

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