Idearc softens with call; Low volume rules secondary; Penn National passes after fee bump

By Sara Rosenberg

New York, Aug. 27 - Idearc Inc.'s term loan B had a tumultuous day, with levels dropping considerably early on and then regaining a little of the lost ground by the afternoon, all in response to a private lender call.

The overall cash loan market was once again very quiet, leaving some to describe levels as pretty much unchanged and others remarking that it was too hard to determine the direction of the market because of the lack of volume.

In other happenings, Penn National Gaming Inc.'s amendment proposal was approved by lenders following an increase in the fee that the company was willing to pay for consents, and the company's term loan B held firm in trading with the news.

Idearc bounces around

Idearc's term loan B was all over the place on Thursday, falling off by a couple of points on news of a private lender call and then moving back up off its lows, but still closing out weaker on a day-over-day basis, according to traders.

The term loan B was quoted by one trader at 45¾ bid, 46¾ offered at the end of the day, down from around 49¼ bid, 50 offered on Wednesday night. This trader saw the debt move as low as 44 ½ bid, 46 ½ offered earlier in the Thursday session.

A second trader was quoting the term loan B at 46 bid, 47 offered, down from 49 7/8 bid, 50 ¼ offered on Wednesday night. This trader said that the loan had moved as low as 43½ bid, 45½ offered on Thursday before rebounding slightly.

Details on what was discussed during the private lender call were unavailable.

Idearc is a Dallas-based provider of yellow and white page directories and related advertising products.

Cash market sees little activity

The loan cash market in general saw yet another sleepy day, with little to no trading taking place, according to traders.

"Biggest tone here is the lack of liquidity. Nobody's around. There's no bid out there," one trader said.

"Early on today, a couple of loans were bid a little bit better. When [stock] market softened around noon, things kind of went flat," the trader added.

A second trader went along with the "flat" description of levels on Thursday, but warned that it was hard to get a real for anything as a result of the light trading activity.

Meanwhile, stocks ended up closing the day modestly higher, with Nasdaq better by 3.3 points, or 0.16%, Dow Jones Industrial Average better by 37.11 points, or 0.39%, S&P 500 better by 2.86 points, or 0.28%, and NYSE better by 34.37 points, or 0.51%.

Penn National approved

Penn National Gaming's amendment received the required lender vote to pass after the consent fee was changed to 20 basis points from 10 bps, according to a market source.

Under the amendment, the company is extending the maturity of its revolving credit facility to July 2012 from October 2010.

In connection with the extension, the company expected to increase the size of its revolver to up to $1 billion from $750 million.

Pricing on the extended revolver is Libor plus 275 bps.

Borrowings under the revolver are allowed to be used to repay term loan A borrowings.

Revolver lenders who agreed to a maturity extension are receiving an additional 90 bps on top of the 20 bps consent fee.

The amendment also gives the company permission to extend maturities on its term loan debt in return for higher pricing, but an actual term loan extension was not out at this time.

Penn National changing covenants

Another feature of Penn National Gaming's amendment is that the senior leverage ratio was eliminated and, instead, the company has to comply with a senior secured leverage ratio.

The amendment also allows for the repurchase of term loans at a discount.

There were some revisions, other than the change in fee, made to the actual amendment during the approval process, including dropping proposed covenant carve-outs related to $600 million of new projects and replacing them with straight covenant room of 0.75 times, versus the 1.0 times cushion implied by the carve-outs.

In addition, the Most-Favored-Nation protection was reinstated on the $700 million incremental basket.

Deutsche Bank acted as the lead bank on the amendment.

Penn National B loan steady

Penn National Gaming's term loan B was basically unchanged in the secondary market even with the news that the amendment was a success, according to a trader.

On Thursday, the term loan B was quoted at 97 ½ bid, 98 ½ offered, unchanged on the day and pretty much in line with where it was all week, the trader remarked.

Penn National Gaming is a Wyomissing, Pa.-based owner and operator of gaming and pari-mutuel properties.

Portion of BWIC trades

Talk was that about 85% of the $268 million Bid Wanted In Competition (BWIC), for which bids were due on Wednesday, ended up trading, according to a trader.

The BWIC was comprised of mostly par names.

The names included in the BWIC were mostly middle-market type stuff.

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