Masonite breaks, reduces bridge size; MGM breaks; Billing Services nearly full; Cellnet filling up fast

By Sara Rosenberg

New York, April 6 - Masonite International Inc. allocated its $1.525 billion credit facility (B2/BB-) early Wednesday afternoon, with the term loan B freeing up for trading in the lower-101 context. Furthermore, Masonite decided to pare back on the amount of bridge loan debt it would get, reducing the size of the tranche by $55 million.

Metro-Goldwyn-Mayer Inc.'s $4 billion credit facility (B1/B+) also allocated and freed up for trading on Wednesday, with the term loan B wrapping around mid-par by day's end.

In the primary, Billing Services Group LLC's newly launched $150 million credit facility saw its books near fulfillment by early afternoon at price talk levels that first emerged at the Wednesday bank meeting. And, Cellnet's $380 million credit facility was also met with good demand as investors were throwing in orders during and after its launch.

Masonite's $1.175 billion term loan B opened in the secondary on Wednesday at 101 bid, 101½ offered but levels danced around as "everybody" was trading the paper, according to a fund manager.

"It traded at 101½ a little bit and then it came back in. It's now in the 101 [bid] to 101 3/8 [offered] type of range," the fund manager said at the end of the day.

As for allocations, "they were OK, not great," the fund manager said. "We got just under 50% of what we put in for. Of course I don't know how everybody else did."

The term loan B is priced with an interest rate of Libor plus 200 basis points. Pricing on the tranche had been reverse flexed from Libor plus 225 basis points in late March.

Masonite's downsized bridge loan also freed up for trading, although not much activity took place on the tranche by mid-afternoon, according to the fund manager who said that he was offered a position in the paper at around par.

"It looks like some lead banks who are involved in the bridge loan are trying to sell off some of it," the fund manager said.

On Wednesday morning, accounts were told that Masonite decreased the size of its bridge loan to $770 million from $825 million. The $55 million of proceeds that was removed from the deal was going to be used to repay some subordinated debt that exists at the company. With the downsizing, this subordinated will no longer be repaid, the fund manager explained.

The 18-month bridge loan, which has a 10-year final maturity, carries an initial interest rate of Libor plus 600 basis points. Pricing increases by 50 basis points every three months, with a cap at 11%.

The bridge loan replaced the company's previously planned $825 million two-part bond deal that was postponed due to unfavorable bond market conditions.

As was previously reported, price talk on the bond offering was said to have widened out considerably from initial price talk levels, with the $300 million eight-year senior floating-rate tranche (B3/B-) seeing demand at Libor plus 400 basis points, compared to initial price talk in the Libor plus 325 basis points area, and the $525 million 10-year senior subordinated notes (Caa1/B-) seeing demand at 10%, compared to initial price talk in the 9% to 9¼% range.

Deutsche Bank Securities, UBS Investment Bank and Scotia Capital are the lead banks on the bridge loan. They were also acting as joint bookrunners on the bond deal.

Scotia Capital (left lead and administrative agent) and Deutsche are co-lead arrangers on the $1.525 billion credit facility, with Deutsche and UBS the co-syndication agents, and SunTrust and Bank of Montreal agents.

In addition to the term loan B, Masonite's credit facility also contains a $350 million revolver. The revolver is priced with an interest rate of Libor plus 250 basis points.

Proceeds from the bridge loan and the credit facility were used to help fund Kohlberg Kravis Roberts & Co.'s acquisition of Masonite, a Mississauga, Ont.-based building products company. The LBO was completed on Wednesday.

MGM starts trading

Metro-Goldwyn-Mayer Inc.'s credit facility hit the secondary on Wednesday, with levels on the term loan B seen closing out the day at par ¼ bid, par ¾ offered and levels on the term loan A closing out the day at par 1/8 bid, par 5/8 offered, according to a trader.

"It's down a touch from the open but most of the trading happened in this context," the trader added.

Both the $2.7 billion seven-year term loan B and the $1.05 billion six-year term loan A are priced with an interest rate of Libor plus 225 basis points. Prior to the company's general syndication bank meeting in mid-March, the term loan A was talked at Libor plus 250 basis points and the term loan B was talked at Libor plus 275 basis points, but the syndicate actually cut price talk prior to launch because the deal had received so much positive feedback.

MGM's facility also contains a $250 million five-year revolver with an interest rate of Libor plus 250 basis points and a commitment fee of 50 basis points. Pricing on this tranche came at originally expected levels.

JPMorgan and Credit Suisse First Boston are joint lead arrangers on the deal, with JPMorgan listed on the left.

Senior managing agents include Sumitomo Mitsui Banking Corp., BNP Paribas, Bank of New York, Bank of Montreal, SG Cowen and Union Bank of California. Agents on the deal include Bank of America, Citigroup and Royal Bank of Scotland.

Proceeds from the credit facility will be used to help fund the acquisition of MGM by a consortium led by Sony Corp. of America and equity partners, Providence Equity Partners Inc., Texas Pacific Group and DLJ Merchant Banking Partners.

MGM is a Los Angeles-based entertainment content company.

Billing Services sets talk

Billing Services launched its deal with opening price talk levels of Libor plus 300 basis points on the $95 million term loan (B+) and Libor plus 700 basis points on the $45 million second-lien term loan (B-) at Wednesday's meeting, according to a market source.

And, the term loans were "almost subscribed" at those opening pricing levels a little after mid-day, the source added.

Goldman Sachs is the sole lead bank on the $150 million credit facility that contains a $10 million revolver in addition to the two term loans.

Proceeds from the facility will be used to refinance existing debt and make a dividend payment.

Billing Services, an Abry Partners portfolio company, is a Glenview, Ill., provider of outsourced billing solutions to the telecommunications industry.

Mapco launch well attended

Mapco Express Inc.'s Wednesday bank meeting saw "good attendance with lots of early interest" on its newly launched $205 million credit facility (B+), according to a market source.

However, it's "too early for commitments from lenders not familiar with the company," the source added.

Mapco's facility consists of a $40 million five-year revolver talked at Libor plus 225 basis points and a $165 million six-year term loan talked at Libor plus 275 basis points.

Lehman is the sole lead bank on the deal, but Bank Leumi and SunTrust have joined as agents.

Proceeds will be used to refinance existing debt and to fund a small dividend to the parent company.

Mapco is a Franklin, Tenn., convenience store and wholesale petroleum distribution company.

Cellnet sees strong demand

Cellnet's $380 million credit facility was greeted with a positive reception from the loan market as investors like, among other things, the company's business and financial profile, according to a market source.

"People are throwing in orders. Even during the bank meeting people were throwing in orders. [There's] good momentum. [It's} in good shape," the source said.

"They have 15- to 20-year contracts so revenue and cash flow are predictable and stable. The majority of their contracts mature outside of the debt maturities so you know exactly what you're looking at in terms of financials. [And], it's a high-margin business - roughly 35% EBITDA margins," the source added.

Cellnet's facility consists of a $30 million revolver talked at Libor plus 225 basis points, a $200 million seven-year term loan talked at Libor plus 275 basis points and a $150 million eight-year second-lien term loan talked at Libor plus 500 basis points.

The second-lien term loan contains call protection of 102 in year one and 101 in year two.

Both term loans are being offered to investors at par. The upfront fee on the revolver is 75 basis points for any size commitment.

Morgan Stanley and Goldman Sachs are the lead banks on the dividend recapitalization deal, with Morgan Stanley the left lead.

Cellnet is an Atlanta provider of automated meter reading and distribution automation solutions to the utility industry that was purchased by management and GTCR Golder Rauner LLC in July 2004.

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