Loan portfolio goes up for sale; Psychiatric Solutions up on revised guidance; HealthSouth rallies

By Sara Rosenberg

New York, Jan. 3 - News of a relatively large portfolio being up for sale hit the market on Tuesday, catching the eye of many investors as there are 200 plus, primarily par names, contained in the portfolio.

In other primary doings, Psychiatric Solutions Inc.'s term loan was buoyed by the news that the company raised guidance for 2006 and HealthSouth Corp.'s bank debt rallied as investors are expecting current financials to be filed soon.

A $400 million plus portfolio was put up for sale on Tuesday containing about 250 issuers that are primarily considered to be par names, according to a market source.

Bids on the portfolio are due at 11 a.m. ET Wednesday, the source added.

Psychiatric Solutions trades up

Psychiatric Solutions' term loan gained about an eighth of a point in trading on Tuesday as the company increased its guidance for 2006 earnings per diluted share, according to a trader.

The term loan closed the session quoted at par ¾ bid, 101¼ offered, up from opening levels of par 5/8 bid, 101 1/8 offered, the trader said.

On Tuesday, the company announced that the acquisition of Wellstone Regional Hospital, a 100-bed inpatient psychiatric facility in Jeffersonville, Ind., for $18 million, and the completion of its previously announced acquisition of Atlantic Shores Hospital, a 72-bed psychiatric inpatient facility in Fort Lauderdale, Fla., from GEO Care Inc.

And, based on the completion of these two transactions, the company revised its guidance for 2006 earnings per diluted share higher to a range of $2.20 to $2.25 from the previous range of $2.10 to $2.15.

Psychiatric Solutions is a Franklin, Tenn.-based provider of inpatient behavioral health care services.

HealthSouth stronger on filing hopes

Another name that saw a rise in levels Tuesday was HealthSouth as its unsecured term loan gained about three quarters of a point primarily driven by improved performance in the company's bonds, which was sparked by the expectation that current financials will be filed shortly, according to a trader.

The anticipation of a near-term filing was created by the company as, during its 2005 annual meeting of stockholders that was held last week, HealthSouth said that it expects being in the position to file its 2005 form 10-K in a timely manner in the first quarter of 2006 and intends to hold its 2006 annual meeting of stockholders during the second quarter of 2006.

There is also a whisper out in the market that the company may attempt some sort of a global refinancing after the financials are completed, which would push the call protected bank debt to premium levels, However, this refinancing is still "only a whisper" and does not even qualify as a rumor yet, the trader said, adding that the refi noise probably had little to do with Tuesday's bank debt performance.

The term loan currently carries call protection of 102, which will later on drop to 101 and then par, and contains pricing of Libor plus 500 basis points.

HealthSouth's bank debt closed out the session quoted at 101 bid, 101¾ offered, up from opening levels of par ¼ bid, par ¾ offered.

HealthSouth is a Birmingham, Ala.-based provider of outpatient surgery, diagnostic imaging and rehabilitative health care services.

Babcock & Wilcox anticipates tweaks

The Babcock & Wilcox Co. is expecting to reverse flex pricing on its six-year pre-funded letter-of-credit facility, while at the same time increasing the size of the tranche, as it is four times oversubscribed, according to a market source.

The letter-of-credit facility is anticipated to be upsized to $200 million from $150 million and pricing is expected to drop to Libor plus 275 basis points from original price talk of Libor plus 300 basis points, the source said.

However, a few commercial banks are finishing up their work on the deal this week and the syndicate needs to allow these banks to finish before it goes out with final revised pricing and tranche sizes, the source explained.

The company's $250 million five-year revolver and $250 million six-year delayed-draw term loan are expected to remain unchanged in terms of size and pricing, which is currently set at Libor plus 300 basis points, the source added.

The revolver contains a 50 basis point commitment fee.

Allocations on the deal are anticipated to go out next week, once all banks have finished up work on the facility and final structure has been announced.

Credit Suisse First Boston is leading the $650 million exit financing credit facility (B1/B+), and JPMorgan, Wachovia and Scotia have signed on as agents.

Babcock & Wilcox is the Barberton, Ohio-based subsidiary of McDermott International that designs, supplies and services power generation systems and equipment.

EaglePicher closes

EaglePicher Inc. closed on its $345 million senior secured debtor-in-possession financing facility that is convertible into an exit financing facility upon court approval of a plan of reorganization, according to a company news release.

The facility consists of a $70 million "first-out" revolver with an interest rate of Libor plus 250 basis points, a $160 million "second-out" term loan with an interest rate of Libor plus 450 basis points, a $65 million second-lien term loan with an interest rate of Libor plus 900 basis points and a $50 million third-lien term loan.

During syndication, the revolver was upsized from $40 million as a $30 million synthetic letter-of-credit facility was removed altogether from the loan structure, the "second-out" term loan was upsized from $150 million and pricing on the tranche was flexed up from Libor plus 400 basis points, and the second-lien term loan was downsized from $75 million and pricing on the tranche was flexed up from Libor plus 750 basis points.

Goldman Sachs was the lead bank on the deal.

Proceeds were used to repay in full the company's existing bank debt and current DIP financing.

EaglePicher is a Phoenix-based diversified manufacturer.

Mirant closes

Mirant North America LLC closed on its new $1.5 billion exit facility (Ba3/BB-/BB) consisting of a $500 million seven-year term loan with an interest rate of Libor plus 175 basis points, a $200 million pre-funded letter-of-credit facility with an interest rate of Libor plus 175 basis points and an $800 million six-year revolver with an interest rate of Libor plus 225 basis points.

During syndication, pricing on the term loan and pre-funded letter-of-credit facility was reverse flexed from Libor plus 200 basis points.

JP Morgan, Deutsche Bank and Goldman Sachs acted as the lead banks on the deal, with JPMorgan the left lead.

Proceeds from the exit facility are being used to fund intercompany restructuring transactions and help pay claims against the consolidated Mirant Americas Generation LLC debtors.

Mirant is an Atlanta-based power company.

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