Cincinnati Bell cuts spread; Primary Energy Holdings reverse flexes; Pivotol Promontory shifts funds

By Sara Rosenberg

New York, Aug. 18 - Cincinnati Bell Inc. reduced pricing on its term loan Thursday by 25 basis points on strong demand, and Primary Energy Holdings LLC reduced pricing by 50 basis points on all tranches contained in its credit facility.

Meanwhile, Pivotol Promontory shifted some funds out of its second-lien tranche and into its first-lien tranche and at the same time cut pricing on the first lien.

Cincinnati Bell reverse flexed pricing on its $400 million term loan (Ba3) to Libor plus 150 basis points from original price talk at launch of Libor plus 175 basis points, according to a market source.

"I heard it was well oversubscribed. Not much going on. Guys sitting around with cash. It must have gotten a good market reaction to go down to 150," the source said.

The reverse flex is not surprising in this market, another source expressed. "150 is too tight for the rating but the practical effect will be a smaller lift on the break," the source added.

Bank of America is the lead bank on the deal that will be used to fund the approximately $448 million repurchase of the company's outstanding 16% senior subordinated discount notes due 2009.

The company's existing revolver that was completed early this year will remain in place as is. No amendment to the revolver is needed to allow for the new term loan since under the terms of the credit agreement, the company can incur up to $500 million of additional bank debt.

The note repurchase is conditioned on completion of financing.

As a result of lower interest expense, this refinancing, which is expected to close in the third quarter, is anticipated to increase free cash flow by $20 million to $25 million on an annualized basis.

Cincinnati Bell is a Cincinnati-based local exchange and wireless provider.

Primary Energy lowers spread

Primary Energy Holdings reverse flexed pricing on its $150 million credit facility, lowering the spread on its $135 million term loan and its $15 million revolver to Libor plus 275 basis points from Libor plus 325 basis points, according to a market source.

Allocations on the deal could go out as early as Friday, the source said, adding that if the deal does not break at the end of this week, it should definitely break next week.

The facility is being obtained in connection with taking a portion of the company public through an Enhanced Income Securities offering in Canada that priced on Monday.

Royal Bank of Canada and CIBC are joint bookrunners on the Primary Energy Holdings deal, with Royal Bank of Canada the left lead.

Currently and separately, Primary Energy Finance LLC - as was previously reported - has wrapped up syndication of its $150 million term loan B (Ba2/BB-) that carries an interest rate of Libor plus 200 basis points. The term loan was recently increased from $135 million and reverse flexed from Libor plus 300 basis points. The lower pricing reflects the deal receiving better-than-expected ratings.

Lehman Brothers is the lead bank on the Primary Energy Finance deal, with Royal Bank of Canada acting as documentation agent.

Proceeds from the Primary Energy Finance term loan will be used to refinance debt at the portion of the Primary Energy company that is remaining private.

Primary Energy is an Oak Brook, Ill.-based developer, owner and operator of on-site combined heat and power and recycled energy projects.

Pivotol Promontory tweaks deal

Pivotol Promontory moved $25 million out of its second-lien term loan into its first-lien term loan and reverse flexed pricing on the first lien.

The five-year first-lien term loan is now sized at $275 million compared to an original size of $250 million and pricing has been lowered to Libor plus 275 basis points from original price talk of Libor plus 300 basis points, according to a syndicate document.

In contrast, the six-year second-lien term loan is now sized at $75 million compared to an original size of $100 million, the document said. However, pricing on the second-lien tranche remained unchanged at Libor plus 650 basis points.

Credit Suisse First Boston is the lead bank on the deal that will be used to refinance debt and pay a dividend.

Pivotol Promontory is a resort in Utah.

Delphi heads higher

Delphi Corp. was a touch stronger on Thursday, with the revolver quoted at 95 3/8 bid, 95 7/8 offered, compared to levels of 95¼ bid, 95¾ offered at the close of business Wednesday, according to a trader.

The term loan, however, was basically unchanged, to up a quarter on the offer side, at 102¾ bid, 103¾ offered, the trader added.

Delphi is a Troy, Mich., supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology to vehicle manufacturers.

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