Press Ganey breaks; GM, Chrysler rebound; Tropicana under pressure; Capella stronger; LCDX inches up

By Sara Rosenberg

New York, March 4 - Press Ganey Associates Inc.'s credit facility freed up for trading on Tuesday, with levels on the term loan quoted right around the original issue discount price, and General Motors Corp. and Chrysler Financial Services LLC both regained lost ground as the market had time to digest the February sales numbers that came out recently.

In other news, Tropicana Entertainment LLC's opco term loan continued to feel weaker in trading as the recent court events with bondholders have some loan investors questioning how long it will take for them to get paid down with proceeds from proposed asset sales.

Also, Capella Healthcare's first-lien term loan B moved higher during its second day of trading and LCDX 9 popped at the end of the day on equities' comeback.

Press Ganey allocated its credit facility on Tuesday afternoon and then proceeded to break the deal for trading, with the term loan bid around the discount price at which it was sold, according to a trader.

The $200 million first-lien term loan was quoted at 98 bid, 99 offered from the break until the close, the trader said.

Pricing on the term loan is Libor plus 400 basis points, and the debt was sold to investors at an original issue discount of 98.

Press Ganey's $220 million credit facility also includes a $20 million revolver that is priced at Libor plus 400 bps, with a 50 bps unused fee.

Lehman Brothers and GE Capital are the lead banks on the deal that was mostly marketed towards banks, with Lehman the left lead.

Proceeds will be used to help fund Vestar Capital Partners's acquisition of a majority interest in the company from American Securities Capital Partners, LLC.

Other financing will come from $100 million of mezzanine debt priced at 12½% that was led by Lehman and ICG, and Vestar and management are contributing over 50% in equity.

First-lien leverage is around 3.8 times, and leverage through the mezzanine is around 5.75 times.

Press Ganey is a South Bend, Ind.-based provider of quality improvement services to hospitals and health care facilities.

GM, Chrysler move higher

General Motors and Chrysler Financial saw positive movement on their bank debt as investors had time to come to terms with the February sales numbers that the companies released on Monday, according to a trader.

General Motors's term loan was quoted at 87½ bid, 88½ offered, up from previous levels of 87 bid, 88 offered, the trader said. Prior to the sales numbers coming out, the term loan was quoted at 87½ bid, 88½ offered.

Chrysler Financial, a provider of financial services for vehicles in the NAFTA region, saw its first-lien term loan quoted at 86½ bid, 87½ offered, up from 86 bid, 87 offered, the trader continued. Prior to Chrysler LLC's sales being announced, the debt was quoted at 86¼ bid, 87¼ offered.

Meanwhile Ford Motor Co., which also released sales figures on Monday, saw its term loan remain unchanged at 84¾ bid, 85¼ offered, the trader added. Prior to the sales results, the debt was quoted at 85 bid, 86 offered.

On Monday, General Motors, a Detroit-based automaker, reported February sales of 270,423 vehicles, down 13% from February 2007.

Chrysler LLC, an Auburn Hills, Mich.-based automaker, reported total February sales of 150,093 units, down 14% from the same period last year.

And, Ford, a Dearborn, Mich.-based automaker, reported total sales of 196,681 for the month of February, down 7% compared to the same period last year.

Tropicana opco loan retreats

Tropicana Entertainment's opco term loan once again felt like it was being met with some pressure during market hours as investors continued to react to the outcome of the company's court case with bondholders, according to a trader.

The trader said that the term loan was quoted at 96½ bid, 97½ offered, down from 97 bid, 98 offered on Monday. However, on Monday, there were some traders that were quoting this debt at 96¾ bid, and some quoting it as wide as 96½ bid, 98 offered.

Last month, Tropicana received a notice of default and acceleration on its 9 5/8% notes as a result of the New Jersey Casino Control Commission's refusal to renew its license to operate the Tropicana Casino and Resort in Atlantic City.

Tropicana disagreed with the bondholders, saying that no default had occurred and therefore, the acceleration was invalid.

The dispute was taken to court, and this past Friday, the court rejected all but one of the contentions of the bondholders.

The one item that was ruled in favor of bondholders relates to the transfer of title to the assets of Adamar, which the court found to have occurred on Dec. 19.

According to the ruling, this transfer of assets will only be an event of default if it continues for 60 days after receipt of written notice from bondholders.

The first notice from bondholders is dated Jan. 28 and the second notice is dated Feb. 20 - meaning the 60-day cure period for any technical non-compliance has not expired, so no event of default presently exists and the notes can't currently be accelerated.

A forbearance agreement from senior credit facility lenders regarding the Atlantic City license issue was obtained back in December.

The Atlantic City property is up for sale. The company is also planning on selling its casino property in Evansville, Ind., and its Vicksburg, Miss., casino. Proceeds from all of these sales are expected to be applied toward repaying outstanding senior credit facility debt.

"Concerned when the sales will go through," the trader said in explanation of why the opco term loan is trading lower following the court ruling. "A lot of uncertainty. Not really changing peoples' view of will it get sold, it's when. It's a horizon issue."

Tropicana Entertainment is a Fort Mitchell, Ky.-based gaming entertainment provider.

Capella trades up

Capella Healthcare's first-lien term loan B gained some ground during its second day in the secondary market on no particular news, according to a trader.

The term loan B was quoted at 94¼ bid, 95¼ offered, up from Monday's closing levels of 94 bid, 95 offered, the trader said. The debt broke for trading on Monday at 93¼ bid, 94 offered.

The term loan B is priced at Libor plus 350 bps, with a 3.25% Libor floor for life. The paper was sold to investors at an original issue discount of 93. It also carries 101 soft call protection for one year.

Capella is a Franklin, Tenn., for-profit hospital company.

LCDX strengthens

LCDX 9 spent most of Tuesday trading in a context that was basically unchanged from previous levels; however, late day, the index moved higher as equities rebounded, according to a trader.

The index was quoted at 91.90 bid, 92.05 offered, up from around 91.60 bid, 91.75 offered on Monday, the trader said.

"It traded up a little at the end of the day when equities popped a little. [Equities] still down marginally from start to finish but up drastically from intraday lows," the trader said.

Dow Jones Industrial Average closed down 45.10 points, or 0.37%, S&P 500 closed down 4.59 points, or 0.34%, and NYSE closed down 78.94 points, or 0.88%. Meanwhile, Nasdaq closed up 1.68 points, or 0.07%.

As for the loan cash market, according to the trader, "a lot of things were unchanged, pretty light volume again today."

Au Bon Pain closes

LNK Partners and management completed their buyout of Au Bon Pain, according to a news release.

To help fund the transaction, Au Bon Pain got a new $108 million credit facility, consisting of a $30 million revolver and a $78 million term loan B, with both tranches priced at Libor plus 450 bps, with an original issue discount of 99 and a 4% Libor floor.

CapitalSource acted as the lead bank on the deal.

Intermediate Capital Group provided the junior debt for the buyout and more than $100 million of fresh equity was invested in the company.

Leverage is around 4.0 times through the mezzanine financing and senior leverage is around 3.0 times.

Au Bon Pain is a Boston-based fast casual restaurant.

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