LS Power; Amerigroup set talk; Hawker Beechcraft, Travelport break; Transeastern heads lower

By Sara Rosenberg

New York, March 27 - LS Power Group and Amerigroup Corp. came out with price talk on their new credit facilities as both deals were launched with bank meetings during Tuesday's market hours.

Over in the secondary market, Hawker Beechcraft Corp.'s credit facility freed up for trading with the strip of institutional bank debt quoted atop par and Travelport Holdings Ltd.'s PIK loan freed up as well, with levels wrapped right around 97.

Also in trading, Transeastern's bank debt softened up as it reacted to the recent weakness in the bonds of its parent company, Technical Olympic USA Inc.

LS Power released price talk on its first- and second-lien credit facility in connection with launching the deal to investors with a bank meeting on Tuesday, according to a buyside source.

The $150 million revolver (BB-), $700 million first-lien term loan (BB-) and $165 million synthetic letter-of-credit facility (BB-) were all launched with talk of Libor plus 200 basis points, and the $300 million second-lien term loan (B) was launched with talk of Libor plus 425 bps, the source said.

JPMorgan, Barclays and Lehman Brothers are the lead banks on the $1.315 billion credit facility.

Proceeds will be used to fund the acquisition of six U.S. natural gas-fired power plants from Mirant Corp.

The U.S. plants being purchased are Zeeland (903 MW), West Georgia (613 MW), Shady Hills (469 MW), Sugar Creek (561 MW), Bosque (546 MW) and Apex (527 MW), constituting a total of 3,619 MW.

LS Power is a fully integrated investor, developer and management team focused on the power sector.

Amerigroup guidance emerges

Also revealing price talk on Tuesday was Amerigroup, as it held a bank meeting at the W Hotel in New York to kick off syndication on its credit facility, according to a market source.

Both the $50 million revolver and the $150 million synthetic letter-of-credit facility were presented to lenders with talk of Libor plus 200 bps to 225 bps, the source said.

Goldman Sachs and Wachovia are the lead banks on the $200 million five-year senior secured credit facility (Ba3/BB).

Originally, the credit facility was expected to carry a total size of $240 million, with the synthetic letter-of-credit facility anticipated at $190 million and the revolver anticipated at $50 million.

However, last week, the synthetic letter-of-credit facility was downsized to $150 million as a result of the company's sale of $240 million in 2% convertible senior notes as opposed to $200 million in convertibles as was originally planned.

Proceeds from the facility, along with the convertibles, will go toward the settlement of the company's Illinois qui tam litigation.

Amerigroup is a Virginia Beach, Va., managed health care company.

Hawker Beechcraft frees to trade

Switching to the secondary market, Hawker Beechcraft's credit facility broke for trading, with the strip of term loan and synthetic letter-of-credit facility debt quoted at par ¼ bid, par ½ offered, according to a trader.

Both the $1.3 billion covenant-light seven-year term loan and the $110 million covenant-light seven-year pre-funded synthetic letter-of-credit facility are priced at Libor plus 200 bps with a step down to Libor plus 175 bps at corporate ratings of B1/B+.

During syndication, the term loan was upsized from $1.2 billion after the company downsized its high-yield bond offering by $100 million, the synthetic letter-of-credit facility was downsized from $250 million, and pricing on both tranches was reverse flexed from original talk at launch of Libor plus 225 to 250 bps with the addition of the step.

At one point during syndication, pricing of Libor plus 175 bps was attempted on the two institutional loan tranches but investors dropped out of the book, making the syndicate move pricing back to the initial flex levels.

Hawker Beechcraft's $1.81 billion credit facility (Ba3/BB-) also includes a $400 million six-year revolver priced at Libor plus 200 bps with a 50 bps commitment fee.

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

Proceeds were used to help fund the recently completed acquisition of the company by Onex Corp. and GS Capital Partners from Raytheon Co.

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

Travelport breaks

Another deal to hit the secondary on Tuesday was Travelport Holdings, with its new $1.1 billion five-year dollar- and euro-denominated senior unsecured payment-in-kind term loan (Caa1/CCC+) quoted at 96½ bid, 97½ offered, according to a trader.

The PIK loan is priced at Libor plus 700 bps for the first 18 months, Libor plus 750 bps for months 19 through 30 and Libor plus 800 bps for months 31 through maturity.

The loan was sold to investors with an original issue discount of 97. During syndication, the discount was sweetened from 99.

Credit Suisse and UBS acted as the joint lead arrangers on the deal, Lehman as co-syndication agent, and Citigroup, Deutsche Bank, Goldman Sachs, JPMorgan and Morgan Stanley were additional joint bookrunners.

Proceeds from the loan, which the completion of was announced on Tuesday by the company, were used to pay a dividend to shareholders.

Travelport is a Parsippany, N.J.-based travel distribution services company.

Transeastern bank debt weakens

Transeastern's bank debt dropped in trading during Tuesday's session in sympathy with the recent beating that the bonds of its parent company, Technical Olympic, have been taking, according to a trader.

The Transeastern bank debt closed out the day at 98¼ bid, 99¼ offered, down about half a point from previous levels, the trader said.

Meanwhile, Technical Olympic's revolver was quoted really wide at 95 bid, 99½ offered on Tuesday, unchanged from where it was seen during the previous session, a fund manager added.

Transeastern is a homebuilding joint venture of Technical Olympic and Falcone Group.

CKE closes

CKE Restaurants Inc. closed on its new $320 million credit facility (Ba2/BB) consisting of a $200 million five-year revolver and a $120 million six-year term loan, according to a company news release.

Both the revolver and the term loan are priced at Libor plus 150 bps.

BNP Paribas acted as the lead arranger and administrative agent on the deal. Citigroup acted as syndication agent.

Proceeds were used to refinance existing debt.

CKE is a Carpinteria, Calif., owner, operator and franchiser of quick-service and fast-casual restaurants.

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