NRG up; Strategic Partners sets talk; CIT tweaks; Ferro, Evertec, Pet Supplies firm launches

By Sara Rosenberg

New York, Aug. 2 - NRG Energy Inc.'s bank debt was stronger in trading on Monday as the company released earnings and the market in general felt firm, and Ford Motor Co.'s term loan B-1 bounced around with upgrade news and the completion of its Volvo Car Corp. sale.

Over in the primary market, Strategic Partners came out with price talk on its credit facility as the deal was presented to lenders during the session, and CIT Group Inc. reduced the spread on its term loan due to strong demand.

Also, Ferro Corp., Evertec and Pet Supplies Plus all announced launches for this week for their proposed credit facilities.

NRG Energy moves higher

NRG Energy's bank debt saw an improvement in trading after second-quarter results were announced, and levels were also helped by the overall strength in the secondary, according to a trader.

The non-extended term loan was quoted at 96¾ bid, 97¼ offered, up from 96¼ bid, 96¾ offered, and the non-extended letter-of-credit facility was quoted at 95½ bid, 96 offered, up from 95 bid, 95½ offered, the trader said.

In addition, the company's extended term loan was quoted at 98 7/8 bid, 99 3/8 offered, up from 98½ bid, 99 offered, and the extended letter-of-credit facility was quoted at 97 1/8 bid, 97 5/8 offered, up from 96¾ bid, 97¼ offered, the trader continued.

NRG earnings results

For the second quarter, NRG Energy reported net income of $210 million, or $0.81 per diluted common share, compared to net income of $432 million, or $1.56 per diluted common share, last year.

Total operating revenues for the quarter were $2.133 billion, compared to $2.237 billion in the second quarter of 2009.

Adjusted EBITDA, excluding mark to market, for the quarter was $693 million, compared to $747 million in the previous year.

And, the company had $3.5 billion of liquidity as of June 30, including $2.168 billion of available cash, which increased by $355 million from the end of the first quarter.

NRG revises outlook

Also on Monday, NRG Energy said that it adjusted its full-year 2010 outlook as a result of stronger year-to-date results.

Adjusted EBITDA, excluding mark to market, guidance for the year was increased to a range of $2.45 billion to $2.55 billion.

Additionally, the company's free cash flow, excluding mark to market, guidance was increased to a range of $816 to $916 million.

NRG is a Princeton, N.J.-based owner and operator of power generation portfolios.

Ford seesaws

Ford's term loan B-1 moved around in trading as the company's ratings were upgraded by Standard & Poor's and the sale of Volvo was completed, according to a trader.

The term loan B-1 was quoted at 97 bid, 98 offered late in the day versus 97 bid, 97¼ offered on Friday, but it reached a high of 97½ bid, 98¼ offered during the session before coming back in, the trader said.

On Monday, S&P raised its Ford's corporate credit rating to B+ from B- and senior secured credit facility to BB from B-, with a positive outlook.

"The upgrade reflects our reassessment of Ford's business risk profile to weak from vulnerable, and its financial risk profile to aggressive from highly leveraged," S&P credit analyst Robert Schulz said in the rating release.

Ford wraps Volvo sale

On top of the upgrade, Ford revealed that it completed the sale of Volvo and related assets to the Zhejiang Geely Holding Group Co. Ltd., which is expected to result in a paydown.

The total purchase price was $1.8 billion, including a $200 million note and the balance in cash, with the cash portion subject to customary purchase price adjustments at closing.

On Monday, Geely issued the note and paid $1.3 billion in cash to complete the sale. The estimated purchase price adjustments used at closing are expected to be finalized and settled following the final true-up of the purchase price adjustments later this year.

Under the terms of Ford's credit facility, about $300 million of the net cash proceeds from the sale must be used to repay outstanding term loan borrowings.

Ford is a Dearborn, Mich.-based automotive company.

Strategic Partners sets talk

Moving to the primary, Strategic Partners held a bank meeting on Monday to kick off syndication on its proposed $205 million credit facility (B1/B), and in connection with the launch, price talk was announced, according to market sources.

Both the $30 million revolver and the $175 million term loan are being talked at Libor plus 600 basis points with a 1.75% Libor floor and an original issue discount of 98, sources said.

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

And, prior to the bank meeting, GE Capital and Union Bank of California signed on as documentation agents.

Strategic Partners being acquired

Proceeds from Strategic Partners' credit facility will be used to help fund the buyout of the company by BAML Capital.

Other funding for the transaction will come from $75 million of mezzanine debt.

Leverage through the credit facility is 3.3 times and total leverage is 4.6 times.

Strategic Partners is a Chatsworth, Calif.-based designer and manufacturer of medical, school and footwear uniforms.

CIT Group reverse flexes

CIT Group cut pricing on its $3 billion five-year term loan to Libor plus 450 bps from guidance at launch of Libor plus 475 bps to 500 bps as the deal has seen a lot of interest from lenders, according to a market source.

Prior to launch, the loan was being whispered at Libor plus 500 bps.

Everything else on the non-amortizing loan was left unchanged, including the 1.75% Libor floor, the original issue discount of 98, and the call protection of 102 in year one and 101 in year two, the source said.

Bank of America, Morgan Stanley and Deutsche Bank are the lead banks on the deal and are still asking for commitments to be in by Tuesday.

CIT Group refinancing debt

Proceeds from CIT Group's term loan, along with $1 billion of cash on hand, will be used to repay the company's existing $4 billion in first-lien term debt.

The existing debt is split between a roughly $1.5 billion tranche 1 that is priced at Libor plus 1,000 bps with a 3% Libor floor and a roughly $2.5 billion tranche 2 that is priced at Libor plus 750 bps with a 2% Libor floor.

Lenders under the tranche 1 and tranche 2 are being offered the option to roll into the new term loan, with tranche 1 lenders being offered a 225 bps rollover fee and tranche 2 lenders being offered a 200 bps fee.

Originally, the company's first-lien debt was sized at $7.5 billion, but $750 million was prepaid during the first quarter, $2.3 billion was prepaid during the second quarter and about $450 million was prepaid just after the second quarter ended.

CIT Group is a New York-based provider of financing to small businesses and middle-market companies.

Ferro timing surfaces

Ferro has firmed up timing on the launch of its $350 million revolving credit facility with the scheduling of a bank meeting for Tuesday, according to a market source.

Previously, it was known that the deal would be early August business, but a specific date had been unavailable.

PNC Bank is the lead bank on the deal that will be used to help fund the refinancing of an existing credit facility.

Other funds for the refinancing will come from $250 million of senior notes that will also be used to repay the company's $172.5 million of 6.5% convertible senior notes due 2013.

Ferro is a Cleveland-based supplier of technology-based performance materials for manufacturers.

Evertec sets launch

Evertec has scheduled a bank meeting for Thursday to launch its proposed $400 million senior secured credit facility, according to a market source.

The facility consists of a $50 million revolver and a $350 million term loan.

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

Proceeds from the credit facility will be used to help fund Apollo Management LP's acquisition of 51% of the company from Popular Inc.

Evertec plans notes

In addition to the credit facility, Evertec plans on selling $225 million of notes for its acquisition, and $165.75 million of equity will round out the financing package.

The notes are backed by a commitment for a $225 million senior unsecured bridge loan.

Closing is expected in the third quarter.

The joint venture is valued at about $900 million. As part of the transaction, Popular, a San Juan. P.R., bank, transferred its merchant acquiring and processing and technology businesses to Evertec.

Evertec processes 1.1 billion transactions annually in the Caribbean and Latin America.

Pet Supplies launching

Another deal set to launch with a bank meeting on Thursday is Pet Supplies Plus' proposed $120 million credit facility, according to a market source.

The facility consists of a $15 million revolver, an $85 million term loan and a $20 million delayed-draw term loan, with all tranches talked at Libor plus 525 basis points with a 1.75% Libor floor and an original issue discount of 98, the source said.

BNP Paribas and Societe Generale are the lead banks on the deal that will be used to help fund the buyout of the company by Irving Place Capital.

Pet Supplies Plus is a Farmington Hills, Mich.-based pet supplies store chain.

Ntelos closes

In other news, Ntelos Inc. closed on its $125 million incremental term loan (Ba3/BB) due August 2015 that is priced in line with the existing term loan at Libor plus 375 bps with a 2% Libor floor, according to a news release.

The loan was sold at an original issue discount of 993/4, after being tightened from 991/2.

JPMorgan acted as the lead bank on the deal that will be used, along with revolver borrowings and cash on hand, to fund the acquisition of One Communications Corp.'s FiberNet business for about $170 million.

Completion of the acquisition is anticipated to occur in the fourth quarter, subject to regulatory approvals.

Ntelos is a Waynesboro, Va.-based provider of wireless and wireline communications services.

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