Hawker Beechcraft upsizes; MR Default tweaks deal; Freeport-McMoRan breaks

By Sara Rosenberg

New York, March 15 - Hawker Beechcraft Corp. increased the size of its covenant-light credit facility in response to a downsizing of its bond deal, and MR Default Services upsized its delayed-draw loan, reduced pricing on all tranche, and added step downs to its funded and delayed-draw term debt.

In secondary happenings, Freeport-McMoRan Copper & Gold Inc.'s credit facility freed up for trading with the term loan B quoted in the low pars and term loan A quoted in the 99s.

Hawker Beechcraft upsized its seven-year term loan by $100 million after downsizing its high-yield bond offering by the equivalent amount, according to a fund manager.

The term loan now carries a size of $1.3 billion, up from $1.2 billion, while price talk was left unchanged at Libor plus 225 basis points to 250 bps, the fund manager said.

The company's now $1.95 billion (up from $1.85 billion) covenant-light credit facility (Ba3/BB-) also includes a $400 million revolver and a $250 million pre-funded synthetic letter-of-credit facility, with both of these tranches talked at Libor plus 225 bps to 250 bps as well.

The revolver has a 50 bps commitment fee.

Credit Suisse, Goldman Sachs and Lehman are the lead banks on the deal, with Credit Suisse the left lead.

Proceeds from the credit facility, along with the $1.1 billion of bonds and sponsor equity, will be used to fund the acquisition of Raytheon Aircraft Services, Ltd., the aviation division of Raytheon Co., by Onex Corp. and GS Capital Partners.

Hawker Beechcraft is a Wichita, Kan., manufacturer of business jet, turboprop, piston-driven and military training aircraft.

MR Default reworks deal

MR Default made a round of changes to its credit facility on Thursday, including upsizing the delayed-draw tranche, reverse flexing pricing on the entire deal and adding a leverage-based step down to the term loan paper, according to a market source.

Under the new structure, the delayed-draw term loan is now sized at $50 million, up from $30 million, with the extra proceeds available for further acquisitions, the source said.

In addition, pricing on the $10 million revolving credit facility, $110 million term loan B and the delayed-draw loan was reduced to Libor plus 300 bps from original talk at launch of Libor plus 325 bps, the source continued.

And, lastly, a pricing grid was added to the funded and delayed-draw term loans under which the spread can drop to Libor plus 275 bps when total leverage is less than 4.0 times, the source added.

RBS Securities is the lead arranger and bookrunner on the now $170 million (up from $150 million) credit facility.

Proceeds will be used to refinance exiting debt and to fund acquisitions.

MR Default, formerly known as MR Processing, is a Roswell, Ga., provider of outsourced foreclosure and bankruptcy processing services. Great Hill Partners is the sponsor.

Cargo price talk

Cargo Holdings International, Inc. launched its $215 million credit facility on Thursday with the $50 million six-year funded term loan and the $50 million six-year final maturity delayed-draw term loan talked at Libor plus 225 bps and the $115 million five-year revolver talked at Libor plus 200 bps, according to a market source.

The two term loans are contemplated to carry a step down to Libor plus 200 bps based on the company meeting a leverage test, the source added.

SunTrust is the lead bank on the deal.

Proceeds will be used to support the purchase and modification of aircraft. The company is reconfiguring the aircraft from passenger to cargo.

Cargo Holdings is an Orlando, Fla., provider of diversified airport-to-airport transportation services, cargo aircraft management and cargo aircraft-related logistical support.

Aero sets talk

Aero Products International Inc. announced price talk of Libor plus 400 bps on both tranches under its $60 million credit facility as the deal was launched with a bank meeting on Thursday, according to a market source.

Tranching on the facility is comprised of a $10 million revolver and a $50 million term loan.

General Electric Capital Corp. is the lead bank on the deal, which will be used to refinance existing debt.

Aero Products, an Investcorp portfolio company, is a Schaumburg, Ill.-based manufacturer of high quality, air-filled bedding products.

Realogy ups price talk

Realogy Corp. increased price talk on its institutional bank debt to Libor plus 250 bps to 275 bps from original talk at launch that was in the Libor plus 225 bps area, according to a buyside source.

The institutional debt is comprised of a $1.45 billion funded term loan, a $1.22 billion delayed-draw term loan and an $850 million synthetic letter-of-credit facility.

The company's $4.27 billion senior secured credit facility (Ba3/BB) also includes a $750 million revolver.

JPMorgan, Credit Suisse, Bear Stearns and Citigroup are the bookrunners on the deal, with JPMorgan and Credit Suisse the joint lead arrangers.

Proceeds from the credit facility will be used to help fund the leveraged buyout of the company by Apollo Management, LP in a transaction valued at about $9 billion, including the assumption or repayment of $1.6 billion of net debt and legacy contingent and other liabilities of about $750 million.

The delayed-draw tranche will be available to fund purchases of the company's 6.15% senior notes due 2011, 6½% senior notes due 2016 and floating-rate senior notes due 2009, which may be put upon a change of control and ratings downgrade to non-investment grade.

The principal amount of the delayed-draw tranche will be determined at closing to reflect the remaining total principal amount of the existing senior notes after any tender offer, redemption or discharge that may be done prior to closing.

The company also plans to issue $3.65 billion in high-yield notes comprised of a $2 billion senior unsecured notes offering, a $750 million senior unsecured pay-in-kind toggle notes offering and a $900 million senior subordinated notes offering.

There is also a commitment for a $1.062 billion receivables securitization facility in case the company's existing receivables securitization cannot be amended and continued.

Other leveraged buyout financing will come from a $1.99 billion equity commitment.

Realogy is a Parsippany, N.J., real estate franchisor.

Freeport frees to trade

Over in the secondary, Freeport-McMoRan's credit facility allocated and broke for trading, with the $7.5 billion seven-year term loan B (Ba2/BB+/BB) quoted at par 1/8 bid, par 3/8 offered and the $2.5 billion five-year term loan A (Ba2/BB+/BB) quoted at 99 5/8 bid, 99 7/8 offered, according to a trader.

The term loan B is priced at Libor plus 175 bps and the term loan A is priced at Libor plus 150 bps.

Freeport-McMoRan's $11.5 billion senior secured credit facility also includes a $500 million five-year revolver (Baa3/BB+/BBB-) available to Freeport and PT Freeport Indonesia and a $1 billion five-year revolver (Ba2/BB+/BB), with both of these tranches priced at Libor plus 150 bps with a 37.5 bps commitment fee.

JPMorgan and Merrill Lynch are the lead banks on the deal that will be used, along with $6 billion of bonds, to refinance Freeport's existing credit facility and help fund the acquisition of Phelps Dodge Corp. for $25.9 billion in cash and stock.

The combined copper, gold and molybdenum mining, exploration and production company will retain the Freeport-McMoRan name and be based in Phoenix.

Kelson trades up

Kelson Holdings LLC's second-lien term loan started to come back a little on Thursday after spending the last few days in somewhat of a downward spiral due to market technicals, according to a trader.

The second-lien PIK loan ended the session at 97½ bid, 98 offered, up from Wednesday's closing levels of 96 bid, 96¾ offered.

Kelson, a company wholly owned by Harbinger Capital Partners, is a holding company established for the management and ownership of certain power plants.

American Cellular closes

American Cellular Corp. closed on its new $1.05 billion senior secured credit facility (B1/B-/B+) consisting of a $900 million seven-year funded term loan B, a $75 million seven-year delayed-draw term loan and a $75 million five-year revolver, according to a company news release.

The term loan B and delayed-draw term loan are priced at Libor plus 200 bps with a step down to Libor plus 175 bps effective when both Moody's Investors Service and Standard & Poor's upgrade the corporate ratings, and the revolver is priced at Libor plus 225 bps.

The term loan B and the delayed-draw term loan both carry 101 soft call protection for one year.

During syndication, the term loan B was upsized from $700 million as the company decided to cancel its $425 million senior notes offering and only tender for 75% of its $900 million 10% senior notes due 2011 as opposed to 100% of the notes.

Furthermore, pricing on the term loan B and the delayed-draw was reverse flexed from original talk of Libor plus 225 bps with the addition of the ratings-based step down, as opposed to a leverage-based step down, the soft call protection was added to the tranches and the incurrence-based secured leverage test under the loans was changed to 5.5 times from 4.5 times.

The only change made to the revolver during syndication was to the maintenance secured leverage covenant, which was increased to 5.5 times from 4.5 times.

Lehman and Morgan Stanley acted as the joint lead arrangers on the deal, with Lehman the left lead.

In addition to funding the notes repurchase, proceeds from the facility were used to refinance the company's existing senior secured credit facility.

American Cellular is a subsidiary of Dobson Communications Corp., an Oklahoma City-based provider of wireless phone services to rural markets.

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