MGM launches with lower pricing; Resorts, St. John Knits cut spreads; Telcordia, National Dairy break

By Sara Rosenberg

New York, March 15 - Metro-Goldwyn-Mayer Inc.'s $4 billion credit facility (B1/B+) has received so much positive feedback that the syndicate actually cut price talk prior to talking to investors at Tuesday's retail bank meeting. Meanwhile, Resorts International Inc. shifted some funds and reverse flexed/revised price talk on its term loans, and St. John Knits International Inc. cut spreads on its credit facility as well.

In the secondary, Telcordia Technologies Inc.'s new credit facility freed up for trading with the term loan B somewhat active in the high par context. National Dairy Holdings LP also broke with the term loan B seen trading in the 101s.

MGM's facility was launched into general syndication with opening price talk of Libor plus 225 basis points on both the $1.05 billion six-year term loan A and the $2.7 billion seven-year term loan B, according to a market source. Prior to the meeting, the term loan A was talked at Libor plus 250 basis points and the term loan B was talked at Libor plus 275 basis points.

Opening price talk on MGM's $250 million five-year revolver remained at the previously expected level of Libor plus 250 basis points. The revolver has a commitment fee of 50 basis points.

"Great meeting," the source said about the retail launch. "[It] will go very well."

A meeting for senior managing agents was already held on Feb. 24.

So far, Sumitomo Mitsui Banking Corp., BNP Paribas, Bank of New York, Bank of Montreal, SG Cowen and Union Bank of California have all signed on to senior managing agent roles on the deal, a sellside source told Prospect News.

In addition, Bank of America, Citigroup and Royal Bank of Scotland all signed as agents to the deal, the sellside source said.

"All of the SMA's had to commit something like at least $100 million and there are how many of them? This thing is going to be a blowout," the sellside source added.

JPMorgan and Credit Suisse First Boston are joint lead arrangers on the deal, with JPMorgan listed on the left.

Proceeds will be used to help fund the acquisition of MGM by a consortium led by Sony Corp. of America and equity partners, Providence Equity Partners Inc., Texas Pacific Group and DLJ Merchant Banking Partners.

MGM is a Los Angeles-based entertainment content company.

Resorts shifts funds, cuts spreads

Resorts International, an affiliate of Colony Capital LLC, shifted $50 million from its second-lien term loan into its first-lien term loan, reverse flexed pricing on the first-lien term loan and revised price talk lower on the second-lien term loan, according to a market source.

The first-lien term loan B (B2/B+) is now sized at $635 million, up from $585 million, and is priced with an interest rate of Libor plus 250 basis points, down from opening talk of Libor plus 325 basis points, the source said.

Meanwhile, the second-lien term loan (B3/B-) is now sized at $350 million, down from $400 million, and price talk was revised to Libor plus 600 basis points, down from initial price talk of Libor plus 700 basis points, the source added.

Both term loans were oversubscribed by the end of the actual launch day, which took place on March 3. In fact, prior to the bank meeting the first-lien term loan was talked in the Libor plus 325 to 350 basis points range but the syndicate opted to launch it at the low end of talk because of the apparent strong investor interest.

Resorts International's $1.06 billion credit facility also contains a $75 million revolver (B2/B+).

Deutsche Bank and Goldman Sachs are joint bookrunners on the deal, with Deutsche the left lead.

Proceeds will be used to help fund Colony Capital's acquisition of four casinos - two properties from Harrah's Entertainment Inc. and two properties from Caesars Entertainment Inc.

Colony, a Los Angeles-based real estate investment fund, will acquire Harrah's East Chicago and Harrah's Tunica for about $627 million and Caesars' Atlantic City Hilton and Bally's Tunica for about $612 million.

St. John Knits reverse flexes

St. John Knits reduced pricing on its $210 million seven-year term loan and $45 million five-year revolver to Libor plus 250 basis points from Libor plus 300 basis points, according to a market source.

Furthermore, a step down was added to the term loan under which pricing will drop to Libor plus 225 basis points if leverage falls below 23/4x, the source added.

JPMorgan is the lead bank on the $255 million credit facility (B+) that will be used to refinance outstanding debt, including redeeming its 12.5% senior subordinated notes due 2009.

St. John Knits is an Irvine, Calif., elegant knitwear clothing company.

Telcordia par plus

Telcordia's $570 million term loan B once again broke for trading, this time with quotes of par 5/8 bid, 101 1/8 offered seen pretty much throughout the entire session, according to a trader.

"It's been pretty stable. There's been some trading but nothing too heavy," the trader said.

The term loan B is priced with an interest rate of Libor plus 275 basis points and contains a step down to Libor plus 250 basis points if leverage falls below 5x. The tranche contains 101 soft call protection.

The company's leveraged buyout financing package has been a primary focus, starting with last week's surprise announcement that all bank loan trades and commitments were being canceled and the $300 million bond deal was being pulled. Both deals had to be remarketed because $20 million to $30 million of first quarter 2005 revenue shortfalls were found caused by delayed closing of $5 million to $10 million of software and equipment sales contracts.

The original bank deal had broken for trading on March 4 with the term loan B opening around 101¼ bid, 101½ offered before moving up to 101½ bid, 101¾ offered during the session.

Loan investors were asked to recommit to the term loan B at Libor plus 225 basis points, up from the Libor plus 200 basis points pricing level that the deal was originally allocated at on March 4. The syndicate had also added a step down in pricing to Libor plus 200 basis points if leverage fell below 5x.

But pricing on the term loan B was raised last Friday as the remarketed $300 million senior subordinated notes offering priced at par to yield 10%. Original pricing on the bond deal that was set on Feb. 25 was par to yield 8 7/8%.

When the Telcordia term loan B first launched around mid-February, the tranche was sized at $520 million but was increased to $570 million after the bond deal was decreased to $300 million from $350 million. Also, initial price talk on the tranche at launch was Libor plus 250 basis points, but the deal reverse flexed to Libor plus 200 basis points during syndication on strong investor interest.

Telcordia's $670 million credit facility (B1/B+) also contains a $100 million revolver.

Proceeds from the credit facility and the bonds were used to help fund the leveraged buyout of Telcordia by Providence Equity Partners and Warburg Pincus for $1.35 billion in cash, which was completed on Tuesday.

JPMorgan, Bear Stearns, Deutsche and Lehman were the lead banks on the credit facility, with JPMorgan the left lead.

Telcordia is a Piscataway, N.J, provider of telecommunications software and services for IP, wireline, wireless and cable.

National Dairy 101 plus

National Dairy's $175 million seven-year term loan B hit the secondary on Tuesday with some market players seeing trades going off at the 101 3/8 level and some saying that the paper was trading closer to the mid-101 context.

The term loan is priced with an interest rate of Libor plus 200 basis points. It was reverse flexed from initial price talk of Libor plus 250 basis points last week.

National Dairy's facility also contains a $75 million six-year revolver with an interest rate of Libor plus 200 basis points. This tranche was also reverse flexed last week with pricing coming down from initial talk of Libor plus 225 basis points.

Wachovia is the lead bank on the $250 million recapitalization deal.

National Dairy is a Dallas operator of dairy processing facilities.

Covanta likely April business

Covanta Energy Corp.'s proposed $1.14 billion credit facility is expected to launch via a bank meeting some time in April - with timing most likely mid-to-late month, according to a market source.

Although, the actual bank meeting is a ways off, the syndicate already began discussions with investors last week about bringing them into the deal early, the source added.

Goldman Sachs and Credit Suisse First Boston are joint lead arrangers on the credit facility, with Goldman the left lead.

The facility consists of a $250 million first-lien term loan, a $100 million revolver, a $340 million letter-of-credit facility and a $450 million second-lien term loan.

Price talk on the tranches is not yet available.

Proceeds will be used to help finance the acquisition of American Ref-Fuel Holdings Corp. and refinance its corporate debt.

Parent company Danielson is acquiring American Ref-Fuel for $740 million in cash and the assumption of debt, which as of Sept. 30, 2004 was $1.2 billion, from DLJ Merchant Banking Partners.

The outstanding senior secured notes issued by MSW Energy Holdings LLC and MSW Energy Holdings II LLC and the outstanding senior notes of Ref-Fuel will, in each case, be assumed as a part of the acquisition.

In addition to the credit facility, Danielson plans on pursuing a $400 million rights offering of common stock to all of its existing shareholders at $6.00 per share to help finance the acquisition.

Covanta is a Fairfield, N.J., renewable energy and waste disposal company. American Ref-Fuel is a Montvale, N.J., owner and operator of waste-to-energy facilities.

Maguire funds, allocations to follow

Maguire Properties Inc.'s downsized $550 million credit facility (Ba2/BB) funded on Tuesday although allocations and trading on the new deal are not expected to surface until Wednesday, according to a market source.

The facility consists of a $450 million five-year term loan with an interest rate of Libor plus 175 basis points and a $100 million four-year revolver with an interest rate of Libor plus 175 basis points and a commitment fee of 50 basis points.

The term loan was originally sized at $480 million but was reduced by $30 million because the company raised more money than was expected in the CMBS market, the source explained.

Also, the revolver and the term loan were launched with opening price talk of Libor plus 200 to 225 basis points, but both tranches were reverse flexed during syndication on strong demand.

The term loan was issued to investors at par, and revolver commitments got an upfront fee of 25 basis points.

Credit Suisse First Boston is the sole lead bank on the deal.

Proceeds from the revolver are being used to refinance the company's existing $100 million revolver.

Proceeds from the term loan are being used to help finance the acquisition of assets from CommonWealth Partners LLC's Fifth Street Properties Portfolio, a portfolio of office properties owned through a partnership with Rockefeller Group International Inc and the California Public Employees Retirement System, for about $1.51 billion.

More specifically, Maguire is buying 10 office properties comprising nearly 5.0 million square feet and four development sites entitled for over 1.5 million square feet of office space. The portfolio is currently 86.4% leased.

In addition to the new bank debt, Maguire will be assuming about $155 million of mortgage financing and will be using the new mortgage financing to help fund the acquisition as well.

Maguire is a Los Angeles-based real estate investment company.

Trico closes

Trico Marine Services Inc. closed on its new $75 million exit facility with an interest rate of Libor plus 525 basis points as part of its emergence from Chapter 11. Bear Stearns Corporate Lending Inc. is administrative agent and revolving credit collateral agent for the new facility, and The Bank of New York is term loan collateral agent.

The facility consists of a $55 million five-year term loan and a $20 million revolver. The term loan has call protection of 103 for the first two years, 102 in year three, 101 in year four and par thereafter.

The Houston-based provider of marine support services made a prepackaged bankruptcy filing on Dec. 21 in the U.S Bankruptcy Court for the Southern District of New York.

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