Wyndham may finally reach agreement with lenders to extend IRL and revolver

By Sara Rosenberg

New York, May 23 - It now appears as if Wyndham International Inc.'s proposed amendment that has been floating around the market place for months may pass in the week of May 26 as concerns of IRL holders, such as maturing prior to the term loan B and better economic incentives, were addressed and remedied in the newest proposal, according to a market professional.

"I think we've reached an agreement, but it hasn't been announced yet," the professional said. "I think what will happen is the IRL and revolver will mature April 1, 2006. The B loan is due June 30, 2006. Each tranche will get an increase of 100 basis points in spread. The B loan, that 100 basis points will be PIK but IRL and revolver will be cash. We get 50 basis points for the amendment. And there are five unencumbered properties. We got three of those in the collateral package.

"It should pass," the professional continued, adding that it seems as if the required 95% of lenders would approve the amendment. "There will still be two holdouts but those two holdouts amount to less than 5%."

Previously, under the April proposal, which was essentially the same as the February proposal, the company wanted to extend its IRLs and revolver to June 30, 2006 from June 30, 2004.

In return for extending the maturity, IRL holders would have gotten a 2% fee payable at maturity of June 30, 2006 based on the outstanding IRLs at June 30, 2005. Furthermore, from the date that the maturity extension becomes effective, which only occurs once $85 million of the IRLs is paid down, there would have been a 50 basis points payment in kind increase on the coupon. So, IRL holders would have gotten Libor plus 475 basis points plus the additional 50 basis points PIK. Additionally, if the company does not reduce overall debt by at least $100 million in 2004 then another 25 basis points PIK would have been tacked on and the same terms would have applied for 2005 as well. So, the maximum amount that IRL holders would have received was the Libor plus 475 basis points coupon and 100 basis points PIK.

The Dallas hotel enterprise also proposed to give the lenders a security interest in its LaGuardia Airport property, which is worth about $35 million.

The proposed amendment fee payable to the term loan B holders was only 1/8 since they were only voting on the allocation of asset sale proceeds. IRL holders would have received an amendment fee of 25 basis points for signing.

Meanwhile, Affinity Group Inc.'s $175 million credit facility (Ba2/BB-) is now expected to allocate and break for trading on Tuesday, a syndicate source told Prospect News on Friday. Timing on allocations has been somewhat fluid as the deal was previously thought to potentially hit the secondary as early as May 9 and then was hoped to trade at some point during this past week.

When asked what was behind the delay, the syndicate source responded that since there are two agents and people in general have been out of the office the process has taken slightly longer than expected.

The oversubscribed loan consists of a $35 million five-year revolver with an interest rate of Libor plus 350 basis points and a $140 million six-year term loan B with an interest rate of Libor plus 400 basis points.

Oversubscription on the deal was reached during the week of May 5 when a few big tickets came in, a source close to the deal previously said.

FleetBoston and CIBC are the lead banks on the Englewood, Colo. direct marketing company's deal that will be used to repay existing bank debt, repurchase a portion of the notes at Affinity Group Holding, Inc. and fund a shareholder distribution.

Otherwise it was, as expected, an incredibly quiet day in the secondary bank loan market as many people took the day off ahead of the long holiday weekend.

"It's quite dead," a trader said. "I think most everybody booked out yesterday afternoon. Nothing is trading in the Street. Just a few off the run names trading off of retail."

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