Universal Orlando OID emerges; Rite Aid sets price; TNS sees interest; Penn National dips

By Sara Rosenberg

New York, Oct. 21 - Universal Orlando came out with original issue discount guidance on its term loan B as the deal was presented to lenders during Wednesday's market hours.

In other news, Rite Aid Corp. finalized the price at which it sold its tranche-4 term loan add-on to investors and allocated the debt, and TNS Inc.'s proposed credit facility has been seeing some interest from potential lenders ahead of its Thursday launch.

Over in the secondary market, Penn National Gaming Inc.'s term loan lost some ground following the company's release of quarterly earnings that fell short of previous guidance, and estimates for the full year were lowered.

Universal Orlando OID talk

Universal Orlando held a conference call on Wednesday to start syndication on its $975 million credit facility and in connection with the launch, the original issue discount on the term loan B was revealed, according to a market source.

The $900 million five-year term loan B was shown to lenders at a discount of 98, the source said.

As was previously reported, spread talk on the term loan B is Libor plus 425 basis points with a 2.5% Libor floor.

The company's credit facility also includes a $75 million four-year revolver that is also talked at Libor plus 425 bps with a 2.5% Libor floor.

Universal Orlando lead banks

Universal Orlando's credit facility is being completed via joint lead arrangers and bookrunners JPMorgan and Bank of America, and Barclays, Deutsche Bank, Goldman Sachs and Morgan Stanley are bookrunners as well.

Proceeds from the facility will be used to help fund the redemption of notes.

The company is looking to redeem its 11¾% senior notes due in 2010, its 8 3/8% senior notes due in 2010 and its floating-rate senior notes due in 2010.

Other funds for the redemptions will come from a $400 million senior unsecured notes offering and a $225 million senior subordinated notes offering.

Universal Orlando is an Orlando, Fla.-based owner and operator of theme parks.

Rite Aid term loan prices

Rite Aid's incremental $125 million tranche-4 term loan due June 2015 ended up being issued to investors at a price of 103, in line with previous market speculation, according to a market source.

Pricing on the add-on is Libor plus 650 basis points with a 3% Libor floor, and there is call protection of 105, 103, 101 - the same terms that are included in the existing tranche-4 loan.

With the allocation of the term loan add-on, the tranche-4 was seen in the secondary market at 104 1/8 bid, 104 5/8 offered, compared to Tuesday's levels of 104 bid, 104¾ offered, a trader remarked.

"[The] market tightened because there's more liquidity in it now with the incremental allocating. More people are interested in it," the trader added.

Rite Aid increasing revolver

In addition to the term loan add-on, Rite Aid is doing a $175 million senior secured revolver add-on priced at the same level as the existing revolver at Libor plus 450 bps with a 3% Libor floor.

Proceeds from the additional term loan and borrowings under the upsized revolver will be used to help repay and cancel the company's accounts receivable securitization facilities that currently have $475 million drawn.

Other funds for the refinancing will come from $270 million of senior secured notes.

Upon successful completion of the transactions, the company will have refinanced all of its September 2010 debt maturities.

Citigroup is the left lead bank and a bookrunner on the incremental bank debt, and Bank of America, Wells Fargo and Goldman Sachs are joint bookrunners as well.

Rite Aid is a Camp Hill, Pa.-based drugstore chain.

TNS nets attention

TNS' proposed credit facility has already been attracting some interest as the deal has been "getting a lot of reverse inquiry" ahead of the Thursday bank meeting that will take place to officially start the syndication process, according to a market source.

"Very apparent that accounts have cash. Certainly different from [the company's] March launch," the source said.

Back in March, the company came to market with a $250 million incremental term loan that was later downsized to $230 million. This loan priced at Libor plus 600 bps with a 3.5% Libor floor and 101 soft call protection for one year. Investors were offered the loan at an original issue discount of 90.

By comparison, TNS' new deal includes a $325 million six-year term loan B that is talked at Libor plus 400 bps with a step-down to Libor plus 350 bps if corporate ratings are upgraded to 4-B status and leverage is below 1.5 times.

There is a 2% Libor floor on the term loan B and an original issue discount of 981/2.

TNS also getting revolver

TNS' proposed $400 million credit facility also includes a $75 million five-year revolver that is talked at Libor plus 400 bps with a 2% Libor floor.

SunTrust is the lead bank on the credit facility that will be used to refinance existing bank debt, including the March term loan. Specifically, the existing senior credit facility that is being taken out consists of a $15 million undrawn revolver and $363.5 million in term loan debt.

SunTrust has committed to provide up to $40 million of the new revolver and $15 million of the new term loan.

"TNS' strong creditworthiness and today's lower interest rate environment offer the potential to secure financing terms more favorable than those carried by our current facilities, and we are exploring this potential," said Dennis L. Randolph, Jr., executive vice president and chief financial officer, in a news release.

"We are pursuing this refinancing on a best-efforts basis and will complete a financing assuming we receive terms we consider to be optimal for the company and its shareholders," Randolph added.

TNS is a Reston, Va.-based provider of business-critical, cost-effective data communications services for transaction-oriented applications.

Penn National slides

In more loan happenings, Penn National's term loan softened in trading on Wednesday as the company came out with third-quarter numbers that fell short of expectations and guidance for the year was reduced, according to market sources.

The term loan was quoted by one source at 96½ bid, 97¼ offered, down from 97 bid, 97½ offered, and by a second source at 96 bid, 97 offered, down a half a point on the day.

For the third quarter, Penn National reported net income of $21.4 million, or $0.20 per diluted share, compared to net income of $147.5 million, or $1.69 per diluted share, last year. Guidance for net income had been $37.7 million, or $0.35 per diluted share.

Net revenues for the quarter were $620.4 million versus $617.9 million in the 2008 third quarter. Guidance for revenues had been $651.4 million.

And, EBITDA for the quarter was $144.3 million, compared to $150.1 million in the previous year. Guidance for EBITDA had been $162.1 million.

Penn National lowers guidance

Also on Wednesday, Penn National provided guidance for the full year, including a revised net income estimate of $107.9 million, or $1.01 per diluted share, compared to previous guidance of $135.7 million, or $1.27 per diluted share.

Net revenues for the full year are now projected to be $2.39 billion, compared to a previous estimate of $2.46 billion.

And, full-year EBITDA is now expected to be $575.1 million, compared to prior guidance of $609.5 million.

Penn National is a Wyomissing, Pa.-based owner and operator of gaming and pari-mutuel properties.

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