Venetian Casino, Roundy's dominate primary activity; WorldCom still focus of secondary

By Sara Rosenberg

New York, May 8 - Primary activity in the bank loan market Wednesday consisted of Venetian Casino Resorts LLC's refinancing and Roundy's Supermarkets' second round bank meeting. In the secondary, people remain focused on WorldCom, which has been moving its way upwards after hitting a trading low of 93 last week.

Venetian Casino Resorts LLC, a subsidiary of Las Vegas Sands Inc., launched its new $375 million senior secured credit facility to refinance existing debt Wednesday, according to market sources. Goldman Sachs and Scotiabank are the lead banks on the deal. The new loan is expected to close during the second quarter of 2002.

The loan consists of a $250 million six-year term B with an interest rate of Libor plus 350 basis points, a $75 million five-year revolver with an interest rate of Libor plus 300 basis points and a $50 million delayed draw term A with an interest rate of Libor plus 300 basis points, according to market sources. Basically all assets secure the facility.

There will not be an official bank meeting for the deal, according to market sources. However, there was a lender call on Wednesday and investors are invited to the roadshow for the mortgage notes.

Roundy's Supermarket held its second round bank meeting for its $340 million credit facility. A first round bank meeting for existing lenders was held on April 22. Bear Stearns and CIBC are co-leads for the offering. The credit facility is hoped to close by the end of May or early June, according to the syndicate, depending on whether proxy issues in regards to the leveraged buyout by Willis Stein & Partners work out.

"It's a traditional LBO," a fund manager said. "There's a new management team coming in and I wasn't particularly overwhelmed or impressed with the team."

Furthermore, according to the fund manager, collateral for the bank loan deal is not as impressive as originally thought. Previously, there had been talk that the company owned a lot of its stores, setting Roundy's apart from most of its competitors, the fund manager said. However, it turns out that Roundy's does not own most of its stores.

According to the fund manager, Roundy's upcoming high-yield deal is more attractive than the bank loan. The company anticipates beginning a roadshow for $200 million of senior subordinated notes in the early part or middle of the week of May 15.

"I understand they have commitments already (for the bank loan paper). I'm sure the deal will do fine," the fund manager added.

"There was good attendance and good phone coverage," a syndicate source said. The main concern at this point is the release of ratings for the deal. Neither Moody's Investors Service nor Standard & Poor's have released ratings. However, according to the source, they are expected to be announced within a week. The source explained that until the Roundy's offering is rated, investors are hesitant to commit.

The pro rata portion is currently oversubscribed, according to the source, but allocations have not yet been determined.

The Pewaukee, Wis. food wholesaler and retailer's loan consists of a $250 million seven-year term B loan with an interest rate of Libor plus 300 basis points and a $90 million five-year revolver with an interest rate of Libor plus 325 basis points. The initial commitment fee on the revolver is 25 basis points. Interest rates are established through a pricing grid based on ratings. Currently, it is anticipated that the deal will be rated BB-/Ba3, according to a market professional. If these ratings are not obtained, the interest rates may be changed. Upfront fees for the pro rata portion are 75 basis points for a commitment of $20 million, 62½ basis points for a commitment of $15 million and 50 basis points for a commitment of $10 million, the professional added. A fee of 10 basis points is being charged for the term B, even though it was originally priced at par, the syndicate source said.

In the secondary, WorldCom jumped up to trade around 95 based on rumors of plans to renew its credit line and/or get a new loan. The company's bank loan was trading at 97 last week and then it dove to 93 after "some guy ran an auction," a trader said. "Now it's on a comeback." Otherwise "it was an uneventful day," the trader added.

Coming up in primary activity Thursday, MGM Studios is scheduled to hold a bank meeting for retail investors regarding its $1.5 billion credit facility. Bank of America, JPMorgan Chase and Fleet are co-lead arrangers. The loan is expected to close at the end of May or early June.

The loan consists of a $600 million six-year term B with an interest rate of Libor plus 300 basis points, a $600 million five-year revolver with an interest rate of Libor plus 275 basis points and a $300 million five-year term A with an interest rate of Libor plus 275 basis points, according to a syndicate source.

The stocks and assets of the Santa Monica, Calif. developer, producer and distributor of films and television shows, secure the loan. Proceeds will be used to refinance the company's previous $1.5 billion credit facility.

According to the syndicate source, approximately five or six commitments have been received ahead of the retail launch. The syndicate has been placing phone calls to institutions over the past week and a half.

Also on Thursday are meetings for Boyd Gaming and the Borgata. Boyd's meeting is for a $500 million loan (Ba1/BB) consisting of a $400 million five-year revolver at Libor plus 250 basis points and a $100 million five-year term B at Libor plus 250 basis points. The Borgata's meeting is for a $187.5 million term B (B+) at Libor plus 400 basis points. CIBC is the lead bank on both gaming deals.

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