Regal Cinemas' new term loan D seen at 101; market quiet but optimistic

By Paul A. Harris

St. Louis, Aug. 26 - As the run-up to Labor Day continued Tuesday the quest for news tended to be met with laughter and lament, as sources reported a market becalmed for the most part by vacationing investors.

One late summer attraction, however, was Regal Cinema Inc.'s term loan D, led by Lehman Brothers and Credit Suisse First Boston.

The Centennial, Colo. theater circuit operator's paper was seen on secondary market screens at 101, according to a trader who spoke late in the session.

The $523.1 million six-year loan (Ba2/BB-), which was reportedly in the market at Libor plus 225 basis points, lately flexed up to Libor plus 250 basis points, according to a source who added that allocations went out late in the week of Aug. 18.

In addition to the interest rate flexing up, there was also some controversy about wording.

"Here was an amendment for an add-on to the term loan and it got fairly contentious," one investor commented.

"Some of the lenders felt that at the last second they slipped in some language that was not very sporting of them to put in. Basically it allowed the company to issue new debt and take out the existing debt without a vote. It has gotten some people incredibly agitated."

Meanwhile, a buy-side source told Prospect News that Per-Se Technologies Inc., the Atlanta-based company that sells business services to healthcare providers, might require an interest-rate infusion.

The $175 million credit facility (B2/B+), via Bank of America and Wachovia, is heard to be comprised of a $50 million three-year revolver at Libor plus 350 basis points and a $125 million five-year term B at Libor plus 400 basis points.

"The deadline is (Tuesday) but they are not there yet," said the source, adding that there is speculation that Per-Se will have to increase pricing and/or add call protection.

Market sources were quick to add that the Per-Se situation appears to be credit specific - a function of its business sector and its credit rating.

Elsewhere names and timing emerged on DRS Technologies' $350 million of new debt, to finance its acquisition of Integrated Defense Technologies, which will be led by Bear Stearns and Wachovia Securities.

The company previously told Prospect News that it expects to bring the financing in at a blended interest rate of 5½%, with the term loan expected to get done at 4½% to 5% and the bonds at 7½% to 8%.

Both the notes and the loan are expected to come into the market during the first two weeks of September, according to a market source.

The market which DRS Technologies and other debt issuers can anticipate post-Labor Day should be a healthy one, according to a portfolio manager who added that the late summer economic numbers would seem to be supportive of a healthy leveraged loan market.

"I think it's going to continue to be a strong market until there is some sort of a shock to the system," added the source.

One trader contacted late Tuesday by Prospect News turned out empty pockets, saying that there was absolutely no wind to fill the sails of the bank loan market.

However this source also anticipates a healthy market post-Labor Day.

"The consumer products and food companies have held up well," commented the trader. "The cable and telecom names have come back down to earth, a little bit.

"The new issue calendar is not looking all that spectacular right now."

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