SP Newsprint ups OID; Delphi, Hudson break; Hawaiian Telcom down on numbers; Graphic inches up

By Sara Rosenberg

New York, March 31 - SP Newsprint Co. widened the original issue discount guidance on its term loan and is giving lenders till Tuesday to throw in their orders.

Meanwhile, over in the secondary, Delphi Corp. and Hudson Group both allocated and freed their credit facilities up for trading on Monday, with Delphi's first-lien term loan quoted above its discount price and Hudson's first-lien term loan wrapped around its discount price.

In other trading news, Hawaiian Telcom Communications Inc.'s term loan dropped following the release of earnings and Graphic Packaging International Inc.'s new term loan moved a little higher during its second day of trading.

SP Newsprint revised the original issue discount on its $225 million two-year term loan and is hoping to wrap the deal up on Tuesday, according to a market source.

The term loan is now being guided at a discount in the 95 to 96 area, compared to the originally proposed 98 level, the source said.

"I think it will come at the 95 area. It is newsprint after all, not a whole lot you can do," the source remarked.

Price talk on the term loan was left unchanged at Libor plus 600 basis points, with a Libor floor of 4% for life, and call protection of 103 in year one.

The term loan has a one-year extension option if it is reduced to $175 million or less.

SP Newsprint's $275 million credit facility also includes a $50 million three-year asset-based revolver that is talked at Libor plus 250 bps.

There is a one-year debt reserve as part of the deal, meaning that if the company, by some chance, trips a covenant, there would be a default, but there would be funds in escrow so the loan would stay current.

GE Capital is the lead bank on the deal that will be used for acquisition financing.

SP Newsprint is an Atlanta-based operator of newsprint mills.

Delphi frees to trade

Moving to the secondary, Delphi's credit facility broke for trading during market hours, with its $2 billion seven-year first-lien term loan (Ba2) quoted at 93 bid, 94 offered on the open and then tightening up to 93½ bid, 94 offered, where it closed out the day, according to a trader.

The first-lien term loan is priced at Libor plus 575 bps, with a 3.25% Libor floor for life and call protection of 102 in year one and 101 in year two. The paper was sold to investors at an original issue discount of 92.

During syndication, the first-lien term loan was first downsized to $1.7 billion from $3.7 billion when a $2 billion junior first-lien term note to General Motors Corp. was added to the capital structure, which was later removed, and then upsized to $2 billion due to oversubscription.

In addition, pricing on the first-lien term loan was revised from initial talk of Libor plus 450 bps and the original issue discount widened from 96.

Delphi's $6.05 billion exit financing credit facility also includes a $1.4 billion six-year ABL revolver priced at Libor plus 300 bps, with a 150 bps unused fee, and a $2.65 billion eight-year second-lien term loan (B2) priced at Libor plus 695 bps, with a 3.25% Libor floor for life and call protection of 103 in year one and 101½ in year two.

During syndication, the ABL revolver was downsized from $1.6 billion, pricing flexed up from initial talk of Libor plus 250 bps and the unused fee was increased from 50 bps.

Also, during syndication, the second-lien term loan was upsized to $2.825 billion from $825 million when the $2 billion junior first-lien term note was eliminated, and then it was downsized to $2.65 billion when the first-lien term loan was upsized.

Furthermore, at the time of the upsizing, pricing on the second-lien term loan was changed from initial talk of Libor plus 875 bps and a 92 original issue discount was eliminated.

General Motors is taking down the second-lien term loan.

JPMorgan and Citigroup are the lead banks on the deal, with JPMorgan the left lead.

Proceeds from the credit facility will be used to repay the company's debtor-in-possession financing facility, to fund other payments required upon emergence from Chapter 11 and to conduct post-reorganization operations.

Delphi is a Troy, Mich.-based automotive electronics manufacturer.

Hudson Group breaks

Another deal to hit the secondary market on Monday was Hudson Group's credit facility, with first-lien term loan levels seen right around the discount price at which the paper was sold, according to a market source.

More specifically, the $235 million first-lien term loan was quoted at 98½ bid, 99½ offered, the source said.

The first-lien term loan is priced at Libor plus 400 basis points and was sold to investors at an original issue discount of 99.

Hudson Group $295 million first-lien credit facility also includes a $60 million revolver that is also priced at Libor plus 400 bps and was sold at 99.

CIT Group is the lead bank on the deal that will be used to help fund Advent International's buyout of the company.

Other financing for the transaction is coming from a $125 million second-lien term loan that is priced at 13% and was led by hedge fund Magnetar.

Hudson Group is an East Rutherford, N.J.-based travel retail specialist that operates more than 550 newsstands, bookstores, cafes and specialty retail shops in 69 airports and transportation terminals.

Hawaiian Telcom slides with earnings

Hawaiian Telcom's term loan gave up a couple of points during market hours on the heels of fourth quarter and full year 2007 results coming out, according to a trader.

The term loan was quoted at 75½ bid, 77 offered, down from 79 bid, 80 offered on Friday, the trader said.

For the quarter, net income was $109.9 million, primarily attributable to the sale of the company's Directory publishing business, compared to a quarterly net loss of $29.9 million in the same period a year ago.

Operating revenue for the quarter was $116.4 million, $4 million below the prior quarter and 6.6% lower than that of the previous year's fourth quarter.

Fourth quarter operating expenses, exclusive of depreciation and amortization and non-recurring costs, were up 8.3% to $86.8 million when compared with the prior quarter operating expenses of $80.2 million, and up 4.4% when compared with the previous year's fourth quarter.

And, adjusted EBITDA for the quarter was $29.6 million.

For full year 2007, net income was $117.3 million, compared to a net loss of $144.6 million in 2006.

Revenue for the full year totaled $483.7 million, a decline of $19.5 million or 3.9% from 2006.

For the full year, operating expenses, exclusive of depreciation and amortization and non-recurring costs, were $326.3 million, a decrease of 6.0% to 2006.

And, adjusted EBITDA for the year was $157.3 million, up 1% from 2006.

In January, the company prepaid $211 million of its term loan C debt and $50 million of its revolver. As a result of the revolver prepayment, the company requested a permanent reduction in the revolver size to $150 million.

Hawaiian Telcom is a Honolulu, Hawaii-based telecommunications provider.

Graphic Packaging gains ground

Graphic Packaging's new $1.2 billion senior secured term loan traded stronger on Monday possibly because there was a bit more focus on it than there was on Friday, or maybe because people are playing between the old and the new debt, according to market sources.

One source had the paper quoted at 91¾ bid, 92¼ offered and another source had the paper quoted at 91 5/8 bid, 92 1/8 offered. On Friday, the loan broke for trading at 91 bid, 91½ offered and then moved up to 91¼ bid, 91¾ offered, where it closed out the day.

"Some people may be flipping out of the old loan and into the new one. New deal has better yield and better coupon," one source remarked.

The source went on to say that there is also a theory that people are trading in the new loan for the old one since the difference in yield isn't that great: "They're taking their point and a half. Old tranche still trades fairly well."

The new term loan is priced at Libor plus 275 bps and was sold at an original issue discount of 91. The existing $1.055 billion term loan is priced at Libor plus 200 bps. Both the new and the old mature on May 16, 2014.

On Monday, the existing term loan was quoted at 89 bid, 90 offered, sources added.

Graphic Packaging is a Marietta, Ga., paperboard packaging company.

FairPoint closes

FairPoint Communications Inc. completed its acquisition of Verizon Communications Inc.'s landline and certain related operations in Maine, New Hampshire and Vermont.

To help fund the transaction, FairPoint got a new $2.03 billion senior secured credit facility (Ba3/BB+/BB+), consisting of a $200 million six-year revolver priced at Libor plus 275 bps, a $500 million six-year term loan A priced at Libor plus 250 bps, a $200 million seven-year, one-year delayed-draw, term loan priced at Libor plus 275 bps, and a $1.13 billion seven-year term loan B priced at Libor plus 275 bps.

The revolver has a 37.5 bps unused fee and the delayed-draw term loan has a 75 bps unused for six months, stepping up to 125 bps thereafter.

The term loan B has a 3% Libor floor for three years and was sold to investors at an original issue discount of 88. During syndication, the original issue discount on the term loan B was increased from 93 and the Libor floor was added.

Both the term loan B and the delayed-draw term loan have call protection of 102 in year one and 101 in year two against optional prepayments.

The revolver, term loan A and delayed-draw term loan were marketed together. There were two tiers of upfront fees towards the revolver, term loan A and delayed-draw term loan. Senior managing agents committing $60 million got an upfront fee of 5%, while managing agents committing $40 million got an upfront fee of 4%.

Financial covenants under the credit facility include a minimum cash interest coverage ratio of 2.50 to 1.00 and a maximum total leverage ratio of 5.50 to 1.00.

During syndication, improvements were made to the excess cash flow sweep under the entire credit facility that aligned it with regulatory stipulations and change-of-control language was modified so that it became a 95% lender issue as opposed to a majority lender issue.

Lehman Brothers, Morgan Stanley, Bank of America, Deutsche Bank, Wachovia, Merrill Lynch and CoBank acted as the lead banks on the deal, with Lehman the left lead.

FairPoint is a Charlotte, N.C., provider of communications services to rural communities.

Numonyx closes

Numonyx closed on its $550 million four-year senior unsecured credit facility, consisting of a $450 million term loan and a $100 million revolver, according to an 8-K filed with the Securities and Exchange Commission Monday.

Intesa Sanpaolo and Unicredit Banca d'Impresa are the lenders under the deal.

Proceeds were used to help fund the creation of Numonyx by Francisco Partners, STMicroelectronics and Intel.

At the closing, STMicroelectronics contributed its flash memory assets and businesses in NOR and NAND to Numonyx in exchange for a 48.6% equity ownership stake and $155.6 million in long-term subordinated notes.

Intel contributed its NOR assets and certain assets related to PCM resources, while Francisco Partners invested $150 million in cash. Intel and Francisco Partners equity ownership interests in Numonyx are 45.1% in common shares and 6.3% in convertible preferred stock, respectively.

Intel and STMicroelectronics have each provided the loan lenders with a several guarantee of 50% of Numonyx's payment obligations under the credit facility.

Originally, Numonyx was going to get a $750 million credit facility via Goldman Sachs, JPMorgan and Merrill Lynch to help fund its formation.

That credit facility had been launched back in December as a $100 million revolver and a $650 million term loan, with both tranches talked at Libor plus 500 bps to 550 bps. The term loan was being offered at an original issue discount in the range of 97 to 98.

Numonyx is a Switzerland-based semiconductor company, with a focus on supplying flash memory products for a variety of consumer and industrial devices, including cellular phones, MP3 players, digital cameras, computers and other high-tech equipment.

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