GGP term A dips on repricing; LifeCare hurt by hurricane worries; Express Scripts nets early orders

By Sara Rosenberg

New York, Sept. 6 - General Growth Properties Inc.'s (GGP) term loan A traded lower Tuesday as a repricing attempt for the company's pro rata bank debt surfaced. And, LifeCare Holdings Inc.'s bank debt, which has spent the last couple of sessions grinding lower because of hurricane concerns, ended Tuesday higher when compared to the open but remained a ways off from fully recovering losses.

In the primary, Express Scripts Inc.'s all pro rata credit facility has already received two relatively large orders even though the deal is not set to launch into syndication until Wednesday.

General Growth Properties' term loan A dropped into the lower-par region from around 101 as news surfaced that the company launched a repricing of its pro rata bank debt that would take spreads down by 50 basis points.

The term loan A was quoted at par 3/8 bid, par ½ offered following the news as compared to levels of 101 bid, 101¼ offered prior to the news, according to one trader. However, according to a second trader, the term loan A was not quite so high before, citing prior levels at par ¾ bid, 101 offered.

Under the repricing proposal, the company is looking to take the spread on both its term loan A and its revolver down to Libor plus 175 basis points from Libor plus 225 basis points, the trader said.

Around two months ago, the company completed a similar repricing for its $2 billion term loan B, taking the institutional spread down to Libor plus 175 basis points from Libor plus 225 basis points. The term loan B became non-callable for one year for repricing purposes only as a result of the amendment.

However, it took General Growth Properties two attempts to get the term loan B repricing done. The first try was launched without the help of underwriters with the only incentive offered to lenders being a 10 basis point consent fee in return for approvals.

The second try, which as mentioned above was successful, had the help of four underwriters - Credit Suisse First Boston, Lehman Brothers, Wachovia and Bank of America. But it took the addition of the non-call provision to get the deal to completion.

Trading on the term loan B, as can be expected, was unaffected by Tuesday's pro rata repricing announcement, with quotes seen at 101¼ bid, 101½ offered, the trader added.

General Growth Properties is a Chicago-based regional shopping mall real estate investment trust.

LifeCare falls on Katrina concerns

LifeCare's term loan B bounced around throughout the session and, in fact, has spent the last couple of days sliding lower and lower as investors are worried over the impact that hurricane Katrina may have had on the company.

On Tuesday, the paper opened at 98 7/8 bid, 99 3/8 offered, headed all the way down to 98¾ bid, 99¼ offered, and then headed back up to 99¼ bid, 99 5/8 offered where it closed out the session, according to a trader.

By comparison, last Thursday it was trading at par 1/8 bid, par 5/8 offered before moving to 99½ bid, par offered on Friday of last week.

When the $255 million seven-year term loan B freed up for trading on Aug. 9, it was quoted at 101 bid, 101¼ offered.

"They have three facilities in the New Orleans region. Those three were obviously affected by Katrina. Business Interruption Insurance should cover some if not all of it. But hurricane concerns pushed it lower," a market source explained.

LifeCare is a Plano, Texas, operator of long-term acute hospitals.

Northwest descends on downgrade

Northwest Airlines Corp.'s term loan B bank debt dropped by half a point during Tuesday's session as Standard & Poor's downgraded the company's corporate credit rating to CCC- from CCC+.

The term loan B was quoted at 98½ bid, 99 offered at the close Tuesday compared to previous levels of 99 bid, 99½ offered, according to a trader.

S&P pointed to fuel and labor issues as the drivers behind the downgrade.

"Northwest is managing through a strike by its mechanics well, but dramatically increased fuel expense and delays in securing needed concessions from other unions have deepened losses and are eroding its liquidity," said credit analyst Philip Baggaley in the release. "The company foresees a loss of $350 million to $400 million in the third quarter, normally its strongest period, and unrestricted cash had declined to $1.7 billion at Aug. 31, from $2.14 billion at June 30, 2005."

In addition, Northwest has suggested a continuing need to restructure its debt and lease obligations to improve future liquidity, raising the possibility that such moves might involve distressed debt exchanges that S&P would consider a selective default, the rating agency added.

Express Scripts gets commitments

Express Scripts has received commitments from two banks for its proposed $2.2 billion credit facility ahead of Wednesday's bank meeting that will officially launch the deal into syndication, according to a market source.

"JP and Scotia each committed $125 million already," the source said, adding that the deal should have no problem getting done.

The facility consists of a $600 million five-year revolver and a $1.6 billion five-year term loan A, with both tranches talked at Libor plus 75 basis points.

Credit Suisse First Boston and Citibank are joint lead arrangers on the deal.

Proceeds will be used to finance the acquisition of Orlando, Fla.-based pharmaceutical company Priority Healthcare Corp. in a cash transaction for $28 per share, or $1.3 billion.

The transaction is expected to close in the fourth quarter, subject to customary closing conditions, approval of Priority's stockholders and the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act.

Express Scripts is a St. Louis-based independent pharmacy benefits manager.

Kodak filling up

Eastman Kodak Co.'s $1.5 billion seven year institutional term loans - $1 billion funded at close and $500 million delayed draw - has attracted a nice amount of orders already since launching last Wednesday, with a "good portion" of the tranche committed, according to a market source.

All of the term loan debt is talked at Libor plus 175 basis points and is being offered at par. The delayed-draw portion of the term loan carries a commitment fee of 150 basis points and is delayed draw until June 2006.

Kodak's $2.7 billion credit facility also contains a $1.2 billion five-year revolver talked at Libor plus 150 basis points. Upfront fees are 100 basis points for $100 million commitments, 75 basis points for $75 million commitments, 50 basis points for $50 million commitments and 37.5 basis points for $25 million commitments.

Commitments are due Sept. 15.

Citigroup Global Markets Inc. is the lead arranger on the deal.

Borrowings under the revolver, which will replace the company's existing $1.225 billion five-year revolver expiring in July 2006, will be available for general corporate purposes.

Term loan proceeds will be used to repay existing company debt primarily arising out of the acquisition of Creo, which was completed on June 15.

Kodak is a Rochester, N.Y.-based digital imaging products, services and solutions company.

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