Delta rallies in strong market; TXU, First Data trade up; NCI Building pricing emerges

By Sara Rosenberg

New York, Sept. 15 - Delta Air Lines Inc.'s second-lien term loan posted a sizeable gain on Tuesday as the cash market in general was stronger, and other airline names saw an improvement as well, including UAL Corp., AMR Corp. and Northwest Airlines Inc.

The improvement in the secondary market affected more than just the airline sector with names like Texas Competitive Electric Holdings Co. LLC and First Data Corp. also trading better.

In other news, NCI Building Systems Inc. revealed price talk, along with other details, on its amended and restated term loan B as the company held a bank meeting during market hours to launch the transaction to investors.

Delta jumps higher

Delta's second-lien term loan was noticeably better during the trading session as cash names across the board were up. Delta, however, seemed to be one of the bigger movers of the day, according to a trader.

The second-lien term loan was quoted at 85¼ bid, 86¼ offered, up about four points on the day, the trader said.

"Just seems like a lot of technicals," the trader said in explanation of the bank debt's momentum.

Delta is an Atlanta-based airline company.

Other airlines up, too

Delta wasn't the only airline name to benefit from the overall stronger market tone as UAL, AMR and Northwest all gained ground as well, a trader remarked.

UAL, a Chicago-based airline company, saw its term loan move up by about 2½ points to 68 bid, 69 offered, the trader said.

AMR, a Fort Worth, Texas-based scheduled passenger airline, saw its term loan gain about ¾ of point to 95¾ bid, 96¾ offered, the trader continued.

And, Northwest, an Eagan, Minn.-based airline company, saw its term loan move to 96½ bid, 97½ offered, up a quarter of a point on the day, the trader added.

TXU, First Data rise

There were other names on Tuesday - away from airlines - that strengthened simply on market technicals, including the usual suspects like Texas Competitive and First Data, according to traders.

Texas Competitive, a Dallas-based energy company, saw its term loan B-1 and B-2 quoted at 77¾ bid, 78¼ offered, up three quarters of a point, and its term loan B-3 quoted at 77 1/8 bid, 77 5/8 offered, up a half a point, traders said.

And, First Data, a Greenwood Village, Colo.-based provider of electronic commerce and payment services, saw its term loan B-1 and B-3 quoted at 86½ bid, 87½ offered, up a quarter of a point on the day, traders added.

NCI releases pricing

Switching to the primary market, NCI Building Systems held a bank meeting on Tuesday to launch its $150 million amended and restated term loan B to lenders, and in connection with the launch, pricing on the deal was announced, according to an 8-K filed with the Securities and Exchange Commission.

The amended term loan B will be priced at Libor plus 500 basis points with a 2% Libor floor, and beginning with fiscal second quarter 2012, pricing will increase by 25 bps on the first day of each fiscal quarter unless the aggregate principal amount of the loan has been reduced by $3.75 million.

All previous term loan payments, other than the scheduled 1% amortization payments, will be credited for the pricing calculation.

In addition, as part of the amendment and restatement, the term loan B maturity will be pushed out to five years from closing, whereas currently it is set to expire on June 18, 2010.

NCI getting revolver

As was previously reported, NCI is also in the final stages of concluding an agreement for a new $125 million five-year asset-based revolving credit facility that is expected to be undrawn at closing.

The term loan B amendment is requesting permission to subordinate existing liens on the working capital assets to allow for the new revolver.

Security for the amended term loan B will be a first-priority interest in substantially all of the material property, plant and equipment of the company, substantially all other assets not encumbered by a first-priority interest from the revolver, and a second-priority interest in all assets in which the revolver maintains a first-priority interest.

In return for the amendment, lenders are being offered a 200 bps amendment fee.

Signature pages from investors are due on Sept. 29.

NCI receiving investment

Completion of NCI's asset-based revolver and the term loan B amendment and restatement are conditions of an agreement the company reached with Clayton, Dubilier & Rice Inc., under which Clayton will invest $250 million in the company through the purchase of newly issued convertible participating preferred shares.

Proceeds from the equity investment will be used to repay at par the $143.3 million of term loan B debt that is not being amended and restated and to help redeem existing convertible notes.

At the close of the transaction, the company anticipates having about $63 million of cash on its balance sheet.

NCI said in the 8-K that with the participation of all existing term loan B lenders, it will be able to take the steps necessary to establish a capital structure that will sustain it through the current business cycle.

Although the company is working on completing this restructuring, it is also requesting that lenders vote in favor of an in-court restructuring plan through which the company would seek to effect the Clayton investment if the conditions to complete the out-of-court restructuring are not met.

NCI is a Houston-based manufacturer of metal products for the nonresidential building industry.

Grande Communications closes

Grande Communications closed on its $122.5 million credit facility that consists of an $18.7 million revolver and a $103.8 million term loan.

Pricing on the facility is Libor plus 675 bps with a 3% Libor floor and an original issue discount of 97.

During syndication, the revolver was downsized from an originally anticipated amount of $25 million.

Societe Generale and SunTrust acted as the lead banks on the deal that was obtained as part of a recapitalization, under which ABRY Partners purchased a majority stake in the company.

Proceeds from the facility, along with equity, were used to redeem all of the company's outstanding 14% senior secured notes due 2011 and to pay off certain outstanding capital lease obligations.

Grande Communications is a San Marcos, Texas-based provider of high-speed internet, local and long-distance telephone and digital cable services.

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