Texas Competitive plummets with fall in gas prices; Crown Castle, Summit talk surfaces

By Sara Rosenberg

New York, Jan. 12 - Texas Competitive Electric Holdings Co.'s extended and non-extended term loans saw a sizeable drop in trading on Thursday as the price of natural gas continued to fall and supply in the debt appears to be outweighing demand.

Also in the secondary market, Delta Air Lines' term loans were flat to a little better as rumors were circulating that the company may try to consolidate with bankrupt AMR Corp., although some guys are finding the idea of a merger unrealistic.

Moving to the primary, Crown Castle Operating Co. and Summit Materials LLC came out with official price talk on their deals, which were presented to lenders during the session, and Morton's Restaurant Group Inc. and PennantPark Investment Corp. launched at previously outlined guidance.

Texas Competitive retreats

Texas Competitive, a Dallas-based energy company, saw its term loans weaken on Thursday as low natural gas prices, coupled with a lot of supply, caused bids to back up, according to traders.

One trader was quoting the extended term loan at 61 bid, 62 offered, down from 63 bid, 63½ offered, a second trader was seeing it at 60 bid, 61 offered, down about a point and a half on the day, and a third trader was quoting it at 60½ bid, 61½ offered, down from 63¼ bid, 64 offered.

Meanwhile, the non-extended term loan was quoted by one trader at 65¾ bid, 66¾ offered, down from 67¾ bid, 68¼ offered, by a second trader at 65½ bid, 66½ offered, down from around 67 bid, 68 offered, and by a third trader at 65¾ bid, 67 offered, down from 67¾ bid, 68¾ offered.

"[There's] a lot of pent supply over the past week, maybe dealer supply. [Loans] really accelerated down because of gas. Gas is $2.70 - almost at 2009 levels," one trader added.

According to government data, the pressure on natural gas prices is coming from higher-than-average seasonal temperatures along with continued high storage levels and consistent production.

Delta fairly steady

Delta Air Lines' debt was unchanged to stronger as reports surfaced that the company may be considering putting in an acquisition bid for Fort Worth, Texas-based AMR, which filed for Chapter 11 in November, according to a trader.

The Atlanta-based airline company's term loan B due 2017 was quoted at 95¼ bid, 96¼ offered, in line with Wednesday's levels, while the term loan due 2016 was quoted at 91½ bid, 93½ offered, up from 91¼ bid, 93¼ offered, the trader said.

"Overall, people are starting to find more value in airlines, " the trader said regarding why the 2016 paper was higher. "Delta is in a good spot. Doing well as an airline.

"[But], Delta has yet to really consolidate with Northwest. Too many hurdles [for AMR merger]. Antitrust issues. I don't think any airline guy is taking that headline seriously right now," the trader added.

Crown Castle guidance

Over in the primary, Crown Castle held a bank meeting on Thursday morning in New York to kick off syndication on its proposed $3.1 billion senior secured credit facility (Ba3/B+/BB+), and in connection with the event, price talk was announced, according to a market source.

The $1 billion five-year revolver and $500 million five-year delayed-draw term loan A that can be drawn on or before April 1 are both being talked at Libor plus 250 basis points and are being offered with upfront fees of 25 bps for a $25 million commitment and 37.5 bps for more than $25 million. The term A has a 50 bps delayed-draw fee.

Meanwhile, the $1.6 billion seven-year term loan B is being talked at Libor plus 325 bps with a 1% Libor floor, an original issue discount of 99, and 101 soft call protection for one year, the source remarked.

Bank of America Merrill Lynch, RBS Securities Inc. and Morgan Stanley & Co. LLC are leading the deal that is expected to close this quarter, with Bank of America left lead on the B loan and RBS left lead on the pro rata.

Crown Castle buying NextG

Proceeds from Crown Castle's credit facility will be used to fund the roughly $1 billion acquisition of NextG Networks Inc. and to refinance existing revolver and term loan borrowings. The revolver has about $251 million outstanding and the term loan has about $619 million outstanding.

Any remaining proceeds from the transaction will be available for general corporate purposes, including acquisitions and purchases of shares of common stock.

Lenders are being asked to get their commitments in for the credit facility by Jan. 20.

NextG, a Milpitas, Calif.-based provider of outdoor distributed antenna systems, is being bought from a group of investors led by Madison Dearborn Partners and includes Accel Partners, Redpoint Ventures and Meritech Capital Partners.

Crown Castle is a Houston-based owner, operator and leaser of towers and other infrastructure for wireless communications.

Summit releases talk

Summit Materials came out with price talk as well, launching its $400 million seven-year term loan B on Thursday at Libor plus 500 bps with a 1.25% Libor floor, an original issue discount of 99 and 101 soft call protection for one year, according to market sources.

The company's $550 million credit facility (B1/BB-) also includes a $150 million five-year revolver.

Bank of America Merrill Lynch, Citigroup Global Markets Inc., UBS Securities LLC, Barclays Capital Inc., Credit Suisse Securities (USA) LLC and Deutsche Bank Securities Inc. are leading the deal that will be used to refinance existing debt.

Summit Materials is based in Washington, D.C. The company acquires and grows heavy-side building materials companies in the aggregates, ready-mix concrete, cement, asphalt paving and construction industries.

Morton's launches

Also holding a bank meeting on Thursday was Morton's Restaurant Group, with its $205 million senior secured credit facility (BB-) launching in line with earlier talk at Libor plus 725 bps with a 1.5% Libor floor, according to a market source.

The facility consists of a $15 million 41/2-year revolver and a $190 million five-year term loan. As was previously reported, original issue discount talk on the term loan is 97.

The term loan ended up coming to market with a slightly smaller size than the $200 million amount that was outlined by the company in filings with the Securities and Exchange Commission.

However, the expected pricing on the facility that was disclosed in the filings matches the official talk.

Morton's being acquired

Proceeds from Morton's credit facility and cash on hand will be used to fund its buyout by Tilman J. Fertitta's wholly owned company Fertitta Morton's Restaurants Inc. for $6.90 per share through a tender offer that expires on Jan. 31.

Leverage through the credit facility will be in the low 3.0 times context.

Lead bank Jefferies & Co. is seeking commitments Jan. 26.

Closing on the transaction is expected in early February, subject to the tender of a majority of shares, the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and other customary conditions.

Morton's is a Chicago-based operator of company-owned upscale steakhouses.

PennantPark comes to market

PennantPark Investment launched its $325 million three-year revolver as well at expected talk of Libor plus 275 bps with a 50 bps unused fee, according to a market source. The facility has a one-year term out period.

SunTrust Robinson Humphrey Inc. is the lead bank on the deal that will be used to refinance an existing $315 million revolver, and at close, about 70% plus of the new deal will be funded.

The facility will be governed by advance rates against investments.

PennantPark is a New York-based investment company that has elected to be treated as a business development company. As of Sept. 30, the company's portfolio totaled around $830 million.

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