Penn National dips on numbers; Freescale up with amendment; IMS, Harbor Freight talk emerges

By Sara Rosenberg

New York, Feb. 4 - Penn National Gaming Inc. saw its term loan slide in trading on Thursday after the company released quarterly results that fell short of previous guidance, while Burger King Holdings Inc.'s term loan B held firm on its earnings news.

Also in trading, Freescale Semiconductor Inc.'s term loan was stronger as the company launched a credit facility amendment that would extend the maturity in return for higher pricing and allow for the sale of notes, and Broadlane freed up for trading.

And, over on the new deal front, IMS Health Inc. and Harbor Freight Tools revealed price talk on their new deals as both transactions were officially presented to lenders in the afternoon.

Penn National softens

Penn National Gaming's term loan headed lower during the trading session following the company's fourth-quarter earnings announcement, which showed performance below estimates, according to traders.

The Wyomissing, Pa.-based gaming company's term loan was quoted by one trader at 97¾ bid, 98½ offered, down from 98½ bid, 99 offered, and by a second trader at 97 7/8 bid, 98¾ offered, down from 98¼ bid, 99¼ offered.

For the fourth quarter, the company reported a net loss of $355.4 million, or $4.54 per diluted share, compared to a net loss of $378.6 million, or $4.77 per share, in the prior year. Guidance for the quarter had been for net income of $17.5 million, or $0.16 per diluted share.

Net revenues for the quarter were $555.8 million, compared to $571.1 million in the 2008 fourth quarter. Guidance for the quarter's revenues had been $577.2 million.

And, EBITDA for the quarter was $120.9 million, versus $119.2 million last year. Guidance for the quarter had been $130.2 million.

Penn National provides guidance

In addition, Penn National came out will guidance for the 2010 first quarter and full year, including net income for the quarter of $24.9 million, or $0.23 per diluted share, and for the full year, net income of $107.7 million, or $1 per share.

Net revenues for the first quarter are expected to be $596.7 million and for the full year, $2.433 billion.

And, EBITDA for the first quarter is being guided at $137.9 million and for the full year at $563 million

"Penn National's fourth-quarter operating results reflect reductions in consumer spending in almost every market and while customer visit levels are off only modestly, we're continuing to see less spend per visit. We have undertaken extensive analysis of gaming trends, which indicate that regional gaming spending declines are slowing," said Peter M. Carlino, chairman and chief executive officer, in a news release.

"However, at this time, these trends generally do not support expectations of 2010 revenues exceeding 2009 levels and these expectations are reflected in our guidance," Carlino added.

Burger King holds steady

Also coming out with earnings on Thursday was Burger King, but its term loan B was basically flat on the day as the company showed minimal improvements on a year-over-year basis, according to a trader.

The term loan B was quoted at 99¼ bid, par ¼ offered, unchanged on the day, the trader said.

For the second quarter of fiscal 2010, Burger King reported net income of $50.2 million, or $0.37 per share, compared to net income of $44.3 million, or $0.33 per share, in the previous year.

Income from operations was $88.2 million, up 2% from $86.2 million in the fiscal 2009 second quarter.

And, revenues for the quarter were $645.4 million, up 2% from $634.1 million in the same quarter last year.

Burger King EBITDA increases

Burger King also said on Thursday that its adjusted EBITDA for the quarter was $115.5 million versus $109.9 million in the fiscal 2009 second quarter.

"The industry and our brand continued to experience weak consumer spending as global unemployment levels remained high," said Officer John W. Chidsey, chairman and chief executive officer, in a news release.

"However, we continue to tactically respond to the current consumer need for extreme affordability with our value promotions while remaining focused on managing the brand for the long-term and investing in the future," Chidsey added.

Burger King is a Miami-based fast food hamburger chain.

Freescale rises on amendment

Freescale Semiconductor's term loan gained some ground in trading as the company held a call at 2 p.m. ET to launch an amendment to its credit facility, according to traders.

The term loan was quoted by one trader at 92¼ bid, 93¼ offered, up from 90¾ bid, 91½ offered, and by a second trader at 92 bid, 94 offered, up from 90¾ bid, 91¾ offered.

Under the amendment proposal, the term loan maturity would be extended to Dec. 1, 2016 from Dec. 1, 2013.

And, pricing on the extended debt would be Libor plus 425 bps, compared to Libor plus 175 bps on the existing loan.

Freescale looking to sell notes

In addition, Freescale's amendment would allow for the issuance of $750 million senior secured notes that would be used to repay bank debt - with 85% of the proceeds paying down term loans and 15% paying down revolver borrowings.

The amendment would also permit the company to sell additional senior secured notes to be secured on a pari passu basis with the obligations under the senior secured credit facility, so long as the net cash proceeds from any such issuance are used to prepay bank debt at par.

JPMorgan is the left lead bank on the amendment.

Lenders are being offered a 25 bps amendment fee.

Late last year, the company did attempt to amend its facility to allow for the issuance of secured and unsecured debt to reduce term loan debt dollar for dollar, and to gain the ability to amend and extend its credit facility at a later date. The amendment, however, did not get enough approvals to pass.

Freescale is an Austin, Texas-based designer and manufacturer of embedded semiconductors for the automotive, consumer, industrial and networking markets.

Broadlane breaks

Broadlane's credit facility hit the secondary market on Thursday, with the term loan quoted slightly higher than the original issue discount price at which it was sold during syndication, according to a trader.

The $180 million term loan was quoted at 99 bid, no offers, the trader said.

Pricing on the term loan is Libor plus 400 bps with a 2% Libor floor, and it was sold at an original issue discount of 981/2.

Broadlane's $195 million credit facility (B2/BB-) also includes a $15 million revolver priced at Libor plus 400 bps with a 2% Libor floor as well.

Jefferies and UBS are the lead banks on the deal that will be used to refinance bank and mezzanine debt.

Broadlane is a Dallas-based technology-oriented health care services company.

IMS sets talk

Switching to the primary market, IMS Health held a bank meeting with a 1:30 p.m. ET start time at the St. Regis in New York to launch its proposed $2.275 billion senior secured credit facility (Ba3/BB) to U.S. investors, and in connection with the launch, price talk was announced, according to sources.

The $2 billion term loan and the $275 million revolver are being talked at Libor plus 350 basis points to 375 bps with a 1.75% Libor floor, sources said.

Lenders are being offered the term loan at an original issue discount in the 98½ to 99 area and the revolver at a discount of 98, sources said.

This official talk is fairly close to the unofficial guidance that has been floating around since last week, which had the term loan somewhere in the mid-to-high Libor plus 300 bps context, with a Libor floor in the 1.75% to 2% area floor and an original issue discount in the 98 to 99 range.

IMS gives lenders till next week

Lenders were asked to throw in their orders towards IMS' credit facility by Feb. 12.

Of the total term loan amount, about $750 million is expected to be U.S. dollars and about $750 million is expected to be euros. The remaining $500 million is expected to be held by left lead bank Goldman Sachs.

Goldman Sachs, Bank of America, Barclays, HSBC and RBC are the lead banks on the deal that was already launched to European investors on Jan. 28.

After the initial commitment letter was obtained from Goldman, the company amended the document to insert commitments from Bank of America, Barclays, HSBC and RBC of $250 million each towards the term loan and $50 million each towards the revolver.

INS being acquired

Proceeds from IMS' credit facility will be used to help fund the buyout of the company by TPG Capital and the CPP Investment Board in a transaction valued at $5.2 billion, including the assumption of debt.

Under the acquisition agreement, IMS shareholders will receive $22 in cash per share of common stock.

The buyout is also expected to be funded with $2.793 billion in equity and $1 billion of senior unsecured notes that are backed by a commitment for a $1 billion senior unsecured term loan.

The notes will not be sold in the high-yield market since Goldman Sach's mezzanine fund has decided to invest in them.

Completion of the transaction is expected to occur by the end of the first quarter of 2010, subject to approval of IMS shareholders, regulatory approvals and customary closing conditions. A shareholder meeting to vote on the buyout is set to take place on Feb. 8.

IMS is a Norwalk, Conn.-based provider of market intelligence to the pharmaceutical and health care industries.

Harbor Freight talk surfaces

Another deal to launch on Thursday afternoon was Harbor Freight Tools' credit facility and during the 3 p.m. ET conference call, price talk was announced, according to a market source.

The $40 million revolver due in 2015 is being talked at Libor plus 325 bps and the $494 million term loan due in 2016 is being talked at Libor plus 350 bps, the source said.

Both tranches include a 2% Libor floor.

The term loan is being offered to investors at an original issue discount of 991/4, the source added.

Prior to launch, investors had been expecting the term loan to be talked in the Libor plus low-300 bps area with a small Libor floor.

Harbor Freight lead bank

Credit Suisse is the lead bank on Harbor Freight's $534 million credit facility that will be used to refinance existing debt.

The term loan amortizes at a rate of 1% per year with a bullet due at maturity.

Financial covenants include a leverage ratio, an interest coverage ratio and capital expenditures limitations.

Harbor Freight Tools is a Camarillo, Calif.-based tool and equipment catalog retailer.

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