PanAmSat relaunches repricing proposal to cut B loan spread by 50 basis points

By Sara Rosenberg

New York, Jan. 6 - PanAmSat Corp. is back with a second attempt to lower pricing on its term loan B to Libor plus 225 basis points from Libor plus 275 basis points, with the difference being that now the company plans on doing an initial public offering of common stock that will be used to reduce leverage, according to a market source.

The new repricing, which was launched via a lender call on Thursday, includes a step down to Libor plus 200 basis points if operating company leverage falls below 41/2x.

PanAmSat had been out with the same repricing proposal late last year; however, the deal was left to die because very few lenders signed off on it. But all of that happened before the Wilton, Conn., satellite provider announced on Dec. 20 that it planned on doing an IPO and to use proceeds to pay down around $700 million of debt, the source explained.

"Now it's a different credit. People seemed more OK with it this time. Pay down takes away a lot of their leverage so [investors] are much more amenable to it," the source said.

According to an S-1 filed with the Securities and Exchange Commission on Dec. 20, net proceeds of $934.3 million from the IPO will be used to repay about $345 million of term loan A debt, to redeem $353.5 million, or 35%, of its $1.01 billion 9% senior notes and to pay $200 million of a dividend payment that stockholders will receive.

Citigroup is the sole lead on the deal.

Consents are due Jan. 21.

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