Harrah's rises on paydown; Huntsman selling down term loan; Essar Steel amendment passes

By Sara Rosenberg

New York, Sept. 8 - Harrah's Operating Co. Inc.'s term loans headed higher on Tuesday following news that the company is going to issue some notes and use all of the proceeds to repay some bank debt.

Meanwhile, on the new deal front, Credit Suisse and Deutsche Bank launched syndication of the $500 million term loan that they provided to Huntsman Corp. earlier in the summer as part of their settlement agreement.

In other news, Essar Steel Algoma Inc. received enough consents from lenders to pass its credit facility amendment that waives covenants in return for increased pricing, a paydown and an amendment fee.

Harrah's trades up

Harrah's saw its term loan debt gain some ground during the trading session as the company revealed that it will repay a portion of its term loan and revolving credit facility borrowings with proceeds from a bond offering, according to traders.

One trader had the term loan B-3 quoted at 81¾ bid, 82½ offered, up from Friday's levels of 79¾ bid, 80¾ offered.

And, a second trader had all of the company's term loan B's quoted at 81½ bid, 82½ offered, up from 80 bid, 80½ offered on Friday.

Harrah's said on Tuesday morning that it will issue $720 million of senior secured notes due 2017 in a private offering, and all proceeds will go towards the paydown of loans.

The notes will be issued under the same indenture governing the 11¼% senior secured notes due 2017 that were issued on June 10.

Harrah's is a Las Vegas-based provider of branded casino entertainment.

Windstream holds steady

Windstream Corp.'s term loan was firm on Tuesday as news emerged that the company is buying Lexcom Inc. using borrowings under its existing credit facility and cash on hand, according to a trader.

The term loan B was quoted at 96½ bid, 97½ offered, unchanged on the day, the trader said.

Through this transaction, Windstream will add about 23,000 access lines, 9,000 high-speed internet customers and 12,000 cable TV customers.

Windstream expects the transaction will be accretive to free cash flow in the first year, following the closing after expected annual synergies of about $5 million in operating and capital expenditure savings.

The $141 million cash acquisition is expected to close in the fourth quarter, subject to necessary approvals from federal and state regulators and Lexcom shareholders.

Windstream is a Little Rock, Ark.-based provider of phone, high-speed internet and high-definition digital TV services. Lexcom is a Lexington, N.C.-based provider of integrated telecommunications, phone and video services.

Huntsman loan being sold

Credit Suisse and Deutsche Bank launched on Tuesday a $500 million term loan that was given to Huntsman on June 23 as part of a settlement agreement in connection with the terminated merger agreements with Basell and Hexion Specialty Chemicals Inc., according to a market source.

Pricing on the seven-year senior secured term loan is Libor plus 225 basis points.

The original issue discount is still to be determined, the source added.

Books are expected to close by the end of the week.

Proceeds were used by Huntsman to repay some of its outstanding debt and enhance liquidity.

In addition to the term loan, the banks supplied Huntsman with a $600 million unsecured note that is priced at 5.5%.

Credit Suisse and Deutsche Bank each provided $550 million of the debt financing.

Following the news of the term loan launch, Huntsman's existing term loan B was unchanged in the secondary market at 92½ bid, 93½ offered, a trader remarked.

Huntsman is a Salt Lake City, Utah-based manufacturer and marketer of differentiated chemicals.

Essar Steel gets approved

Essar Steel Algoma's credit facility amendment received enough lender support by Friday's 5 p.m. ET consent deadline to pass, according to a market source.

The success of the amendment was already expected as of last week based on the velocity in which signature pages were being received.

Under the amendment, the company eliminated the leverage and interest coverage ratio requirements for four quarters through the quarter ending June 30, 2010, increased pricing on the term loan to Libor plus 650 basis points and added a 1.5% Libor floor to the tranche.

The company is required to pay down $50 million of its term loan debt by Dec. 31 or it will pay a 7% fee on the amount of outstanding loans.

Lenders received a 50 bps amendment fee.

UBS is the administrative agent on the credit facility.

Essar Steel Algoma is a Sault Ste. Marie, Ont.-based steel producer.

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