First Data dips; casinos get more active; Clear Channel steady to lower; Smurfit launches loan

By Stephanie N. Rotondo and Sara Rosenberg

Portland, Ore., Jan. 13 - The distressed debt market "opened up strong," a trader said Wednesday. But by all accounts, the marketplace ended the session largely mixed.

First Data Corp.'s bonds were on the lower side, according to traders. Still, the bonds were one of the day's most actively traded.

Investor interest in casinos started to ramp up, according to sources, following news out Tuesday regarding improved revenues in Nevada. Harrah's Entertainment Inc. and MGM Mirage were both active in trading.

Meanwhile, there was no news out to explain a rush on Clear Channel Communications Inc.'s debt. The notes ended up slightly lower to unchanged on the day.

And Smurfit-Stone Container Corp. launched its new term loan Wednesday, giving new details about the discounted debt.

First Data debt dips

First Data's 9 7/8% notes due 2015 were among the "top five most active" credits, according to a trader.

The bonds were seen losing ground, however, ending with a 91 handle, compared with levels around 93 bid, 94 offered on Wednesday.

"They have been dropping down 1 to 2 points a day for the last three days," the trader said.

Another trader saw about $25 million of the 9 7/8% notes move, closing around 93. He also saw the 10.55% notes due 2015 at 87.5, on "$20-odd million" trading, and the 11¼% notes due 2016 at 88 7/8, with about $10 million changing hands. He deemed those levels "a teeny bit lower."

On Wednesday, the Atlanta-based payment processor announced that it had inked a four-year agreement with International Bank of Qatar.

That news followed a report Tuesday showing an increase in consumer spending transactions in December. The company saw those improve by 8% for the month.

Casinos get more active

The gaming sector was "a little busier," a trader said, just one day after Nevada posted its first gain in revenues in almost two years.

The trader said about $20 million of Harrah's Entertainment's 5 5/8% notes due 2015 traded at 64 bid, 65 offered. The 6½% notes due 2016 were also trading around that level, he said, on about $10 million traded.

However, he called both issues essentially unchanged on the day.

At another desk, MGM Mirage's 6 5/8% notes due 2015 were seen 2 points better at 87 bid.

Another source said the revenue "noise" had resulted in more bids for gaming names. However, he was "not sure if that's being chased yet."

For the month of November, gambling revenue gained 4% year over year, to $873.2 million. More than half of those revenues came from the Las Vegas Strip, where both Harrah's and MGM are located.

In that region alone, revenues improved by 8.3% to $473.8 million.

Clear Channel steady to lower

Clear Channel Communications' bonds were also among the day's most active, according to a market source.

The source saw $25 million of the 10¾% notes due 2016 changing hands, ending slightly cheaper at 78 bid, 78.5 offered.

The 11% notes due 2016 were also active, finishing the session around 74.5.

There was no news out on the San Antonio-based multimedia company.

Smurfit launches loan

Smurfit-Stone Container held a bank meeting on Wednesday to kick off syndication on its proposed $1.2 billion six-year term loan, and in connection with the launch, the original issue discount was announced, according to market sources.

The term loan is being offered to investors at a discount of 98.5, the source said.

Price talk on the term loan is Libor plus 500 basis points with a 2% Libor floor, and there is 101 soft call protection for two years.

JPMorgan, Deutsche Bank and Bank of America are the lead banks on the exit financing deal.

In addition to the term loan, the company plans on getting a new $650 million revolver, sources said.

Smurfit-Stone is a Chicago-based manufacturer of paperboard and paper-based packaging.

Big West amends new loan

Big West Oil LLC announced some revisions to its term loan on Wednesday morning and moved up the commitment deadline to 12:30 in the afternoon from the original Jan. 21 date as a result of strong demand, according to a market source.

Under the changes, the Libor floor on the $360 million five-year term loan is now 2.5%, down from initial talk of 3%, the source said.

Also, the original issue discount was tightened to 97 from initial talk of 96, the source continued, while the actual spread on the loan was left unchanged at Libor plus 950 bps.

And, lastly, 101 soft call protection for one year was added to the term loan, the source remarked.

On top of the term loan, Big West Oil will also be obtaining a $75 million three-year asset-backed loan revolver.

Bank of America is the lead bank on the deal that will be used for exit financing.

Total leverage will be in the area of 2.9 times.

Big West Oil, a wholly owned subsidiary of Flying J Inc., is a Salt Lake City-based complex high conversion refinery.

The facility employs about 130 people, has a total capacity of 35,000 barrels per day and refines a combination of Utah, Wyoming and Canadian crude oils into high-quality motor fuels and other specialty chemicals, including superior wax products.

Six loan oversubscribed

Six Flags Theme Parks Inc.'s term loan is already about 1½ times oversubscribed as it has been very well received by investors and there are still a lot of people working on the deal, market sources told Prospect News on Wednesday.

"Think that largely got done with pre-petition audience," one source added.

The $680 million six-year term loan is being talked at Libor plus 425 bps with a 2% Libor floor and an original issue discount of 99.

Amortization on the term loan is quarterly installments of 0.25% with the rest due at maturity.

Six Flags' $830 million credit facility (B1), which just launched with a bank meeting on Jan. 7, also includes a $150 million five-year revolver that is being talked at Libor plus 425 bps with a 150 bps undrawn fee, a 2% Libor floor and an original issue discount of 98.

JPMorgan, Bank of America, Barclays and Deutsche Bank are the joint bookrunners and joint lead arrangers on the Six Flags deal.

Covenants contained in the credit agreement include a maximum senior secured leverage covenant, a minimum consolidated interest coverage covenant and a maximum consolidated capital expenditures covenant.

Mandatory repayments are required from 100% of any debt incurred at Six Flags Theme Parks Inc., 25% of debt at Six Flags Operations Inc. and Six Flags Inc. when the Six Flags Theme Parks leverage ratio is above a level to be agreed and 100% of asset sale proceeds. Also, on an annual basis, commencing with the fiscal year ending Dec. 31, 2010, the company will be required to sweep 50% of its excess cash flow to prepay the term loan.

Proceeds from Six Flags' credit facility will be used to repay $1.147 billion of pre-petition bank debt upon the company's emergence from Chapter 11. The revolver will also be available for general corporate purposes.

At close $88 million is expected to be drawn under the revolver.

The company's bankruptcy plan also contemplates the entrance into a new $150 million credit facility from Time Warner Inc. that will be available for draw on May 14 of each year for five years.

Pricing on the loan is Libor plus 525 bps (100 bps higher than the exit facility) with a 2.5% Libor floor.

Proceeds will be used to fund puts exercised by LP unit holders above $10 million in 2010, $12.5 million in 2011 and $15 million thereafter.

Following emergence, the company expects total leverage to be 3.6 times based on projected 2009 cost adjusted EBITDA of $206 million.

Six Flags is a New York-based regional theme park company.

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