Sorenson, Rhodes break; Movie Gallery bounces around; Commonwealth talk emerges; Crown shifts funds

By Sara Rosenberg

New York, Nov. 10 - Sorenson Communications allocated its new credit facility, with the first-lien term loan spending most of the day trading in the low-101s and the second-lien term loan spending most of the day trading in the low-102s. Rhodes Homes allocated as well, with its first-lien term loan trading right around par and its second-lien term loan trading in the upper-99s.

Meanwhile, Movie Gallery Inc.'s bank debt fell off immediately after poor third-quarter numbers were released, but recouped most of its losses by day's end.

In primary doings, price talk on Commonwealth Brands Inc. and Pinnacle Entertainment Inc. emerged as syndication on both deals has officially begun. And, Crown Holdings Inc. moved some funds out of its U.S. term loan and into its euro term loan.

Sorenson's credit facility freed up for trading on Thursday, with both the $405 million first-lien term loan and the $160 million second-lien term loan opening at par ½ bid but quickly moving up from there, according to a market source.

By midday, the first-lien term loan was being quoted in the 101 bid, 101¼ offered context and the second-lien term loan was being quoted in the 102 bid, 102½ offered context, the source said.

The first-lien term loan is priced with an interest rate of Libor plus 300 basis points and contains a step down to Libor plus 275 basis points, effective upon the company achieving total leverage inside of 61/4x. The pricing step down was added during syndication as the tranche was adequately oversubscribed with about $640 million in orders.

The second-lien term loan is priced with an interest rate of Libor plus 700 basis points. During syndication, pricing was reverse flexed from Libor plus 725 basis points as the tranche was close to two times oversubscribed with about $300 million in orders.

The second-lien loan contains, and has since launch, call protection of 102 in year one and 101 in year two.

Sorenson's $585 million credit facility also contains a $20 million revolver.

Leverage through the first lien will be 3.9x and leverage through the second lien will be 5.4x.

Bank of America and Royal Bank of Scotland are joint leads arrangers on the deal, with Bank of America on the left.

Proceeds from the credit facility will be used to help fund GTCR Golder Rauner LLC's acquisition of Sorenson Communications from the Sorenson family. The transaction is scheduled this month.

Sorenson Communications is a Salt Lake City-based provider of video relay services and equipment for the deaf and hard-of-hearing community.

Rhodes around par

Rhodes Homes' credit facility also freed for trading on Thursday, with the $425 million five-year first-lien term loan B (Ba3/B+) quoted at 99¾ bid for $2 million, par ¼ offered for $2 million on the open and throughout the rest of the session, according to a buyside source.

The $75 million 51/2-year second-lien term loan (B1/B-) was quoted at 99½ bid for $2 million, par offered for $2 million on the open and also remained quoted at those levels throughout the session, the buyside source added.

The first-lien term loan is priced with an interest rate of Libor plus 325 basis points and contains soft call protection of 102 in year one and 101 in year two. During syndication, the tranche was downsized from $450 million, pricing was flexed up from Libor plus 275 basis points, the soft call was added and an original issue discount of 99.5 (down from par) was incorporated into the deal.

The second-lien term loan is priced with an interest rate of Libor plus 750 basis points and contains call protection of 103 in year one, 102 in year two and 101 in year three. During syndication the tranche was downsized on two occasions, first to $125 million from $150 million and then again to $75 million. Pricing on the tranche was flexed up from Libor plus 600 basis points, and, like with the first lien, an original issue discount of 99.5 (down from par) was incorporated into the deal.

Credit Suisse First Boston is the lead arranger on the $500 million facility that will be used by the Las Vegas-based homebuilder to refinance existing debt, fund future development and land acquisition costs and fund an approximately $100 million dividend.

Movie Gallery stumbles

Movie Gallery's bank debt dropped off by about a point after third-quarter financials were announced, but then levels headed back up to end the day basically unchanged, according to a trader.

The bank debt opened the day around 96½ bid, 97½ offered and then moved to 97¼ bid, 98 offered by late in the session, the trader said. On Wednesday, Movie Gallery's bank paper went out around 97½ bid, 98 offered.

For the quarter, the Dothan, Ala., video rental company reported revenues of $572.4 million and a net loss of $12.5 million, or $0.39 per share.

In addition, the company said that it anticipates that the cumulative weakness of movie releases in the second and third quarters of 2005 will continue to adversely impact its fourth-quarter results, and the softness in the video game business will not help either. Movie Gallery currently anticipates revenues in the fourth quarter between $675 million and $705 million.

Blockbuster pressure mounts

Blockbuster Inc.'s term loan B continued to feel sector pressure on Thursday, and Movie Gallery's third-quarter results only helped to drive that downward momentum, according to a trader.

The term loan B was quoted at 97 bid, 97¾ offered, down about a half a point on the day, the trader said. On Wednesday, a different trader had the term loan B going out at 97¾ bid, 98¼ offered.

However, it hasn't been all bad for Blockbuster this week. On Tuesday, the term loan B traded up to 98¼ bid, 98½ offered as the company announced plans to issue a minimum of $100 million in a cumulative convertible perpetual preferred stock offering - a condition to the effectiveness of the company's Nov. 4 loan amendment.

Under the amendment, Blockbuster got more leeway under financial covenants through 2007 and in return, pricing on the company's bank debt was increased by 50 basis points.

The interest rate on the term loan B was raised to Libor plus 400 basis points and the interest rate on the term loan A was raised to Libor plus 375 basis points, the buyside source said.

Blockbuster is a Dallas-based provider of in-home movie and game entertainment.

Commonwealth sets price talk

Commonwealth Brands released price talk of Libor plus 250 basis points on its $600 million term loan B as the deal launched via a bank meeting Thursday, according to a market source.

Deutsche Bank and Lehman Brothers are the lead banks on the credit facility, with Deutsche the left lead.

Commonwealth's $620 million credit facility also contains a $20 million revolver.

Proceeds from the facility will be used to help fund the refinancing of all the company's existing debt, which includes outstanding bank and bond debt.

The refinancing is expected to be completed by year-end.

Commonwealth Brands is a Bowling Green, Ky., cigarette manufacturer.

Pinnacle spread guidance

Pinnacle Entertainment came out with opening price talk of Libor plus 225 basis points on all three tranches contained in its $750 million credit facility (BB-) as the deal is now in the official syndication process, according to a market source.

The facility consists of a $450 million five-year revolver, a $200 million six-year term loan and a $100 million delayed-draw term loan that is available for 18 months with a six-year final maturity.

Ticking fees on the delayed-draw term loan is 75 basis points for the first 12 months and 100 basis points thereafter, the source said.

Lehman Brothers and Bear Stearns are joint lead arrangers on the deal that launched with a bank meeting in Las Vegas on Wednesday. Lehman is the left lead.

Proceeds will be used to refinance existing bank debt and to fund development of the company's casino projects in St Louis.

Pinnacle Entertainment is a Las Vegas-based owner and operator of gaming entertainment facilities.

Crown moves funds

Crown Holdings shifted $85 million out of its U.S term loan and into its euro term loan - bringing the total U.S. term loan size down to $165 million and bringing the total euro-denominated term loan size up to an equivalent of $335 million, according to a market source.

"I guess they were able to raise more money in the European market than they had originally expected," the source said.

Pricing on both term loans remained at Libor plus 150 basis points.

Crown's $1.3 billion equivalent credit facility (Ba2/BB-) also contains an $800 million revolver with an interest rate of Libor plus 150 basis points.

Deutsche Bank and Lehman Brothers are the lead banks on the deal that will be used to fund the tender for any and all of Crown European Holdings SA's outstanding notes.

Crown Holdings is a Philadelphia-based packaging company.

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