Graham cuts term loans' pricing; Culligan breaks; Calpine rallies on bond, convertible clearing

By Sara Rosenberg

New York, Sept. 28 - Graham Packaging Co. LP made a second change to its credit facility, this time lowering pricing on both term loan tranches as price talk on the bonds came out. Also, in primary happenings, a number of deals have started shifting their launch timelines with many deals lining up for the October calendar.

Also grabbing market players' attention Tuesday was Culligan US' strong break into the secondary as the term loan traded north of par and Calpine Corp.'s second-lien one point jump after the company's convertible and bond deals priced.

Graham Packaging reverse flexed its $1.45 billion term loan B (B2/B) to Libor plus 250 basis points from Libor plus 275 basis points and its $350 million second-lien term loan C (Caa1/CCC+) to Libor plus 425 basis points from price talk of Libor plus 475 to 500 basis points, according to a market source.

Furthermore, the first-lien term loan contains a step down to Libor plus 225 basis points once the company issues public equity and leverage is less than 4.75x, the source said.

Both term loans were very well received by the bank loan market and are oversubscribed.

The pricing modifications seemed to occur simultaneously with the emergence of 8½% to 8¾% price talk on the company's proposed senior notes offering - once again showing a meaningful connection between this bond deal and the bank deal that was first noticed when Graham increased the size of its term B on Monday by $100 million in connection with decreasing the size of the senior notes offering by the same amount.

Pricing on the $250 million revolver (B2/B) was left unchanged at Libor plus 275 basis points, the source added.

Deutsche Bank, Citigroup and Goldman Sachs are the lead banks on the deal, with Deutsche left lead.

Proceeds from the credit facility, combined with proceeds from the $625 million bond deal, will be used to help fund the acquisition of Owens-Illinois Inc.'s Plastic Container business for about $1.2 billion and to fund tender offers for Graham's $250 million of 8¾% senior subordinated notes due 2008, $75 million of floating-rate subordinated term securities due 2008, and $169 million of 10¾% senior discount notes due 2009.

Closing of the acquisition is subject to regulatory approval and other customary conditions.

Graham Packaging is a York, Pa., designer, manufacturer and seller of blow-molded plastic containers.

Culligan trades above 101

Culligan's term loan saw a nice entrance into the secondary with quotes of 101¼ bid, 101¾ offered and trading occurring within that context throughout market hours, according to traders.

The $215 million seven-year term loan is priced with an interest rate of Libor plus 250 basis points.

Culligan's newly allocated $325 million credit facility (B1/B+) also contains a $110 million six-year revolver with an interest rate of Libor plus 250 basis points.

Originally, the term loan was sized at $225 million and priced at Libor plus 275 basis points but was downsized and reverse flexed during syndication. The revolver, meanwhile, was upsized during syndication from $100 million.

Bank of America, BNP Paribas and Citigroup are the lead banks on the deal that will be used to help fund Clayton, Dubilier & Rice Inc.'s acquisition of Culligan from Veolia Environnement SA for $610 million.

Culligan is a Northbrook, Ill., manufacturer and distributor of water treatment products and bottled water.

Calpine up

Calpine's second-lien term loan was quoted at 88 bid, 89 offered, up about a point on the day, as people were happy to see that the "bond deal cleared," according to a trader.

The San Jose, Calif., power company priced $785 million of 9 5/8% first-priority senior secured notes due 2014, offered at 99.212%.

Calpine also priced $725 million of unsecured convertible notes due 2014, offered at 83.9%.

Proceeds from the bonds will be used to redeem or repurchase existing debt through open-market purchases. Proceeds from the convertibles will be used to redeem in full its High Tides I and High Tides II preferred securities, to repurchase about $100 million of its High Tides III preferred securities and to repurchase other existing debt through open-market purchases.

These offerings will not only help liquidity and take care of some upcoming maturities but have also managed to give investors more confidence in the company's ability to access the capital markets and follow through on what it previously said it would attempt to do.

Centennial Puerto Rico timing shifts

The bank meeting to launch Centennial Puerto Rico Cable TV Corp.'s proposed credit facility is now scheduled to take place during the week of Oct. 25 as opposed to sometime in mid-October, with the change in timing resulting from "scheduling conflicts," according to a market source.

Details on the size and structure of the credit facility are still not available but will hopefully come to light soon, the source added.

TD Securities is the sole lead bank on the deal that will be used to help finance Hicks, Muse, Tate & Furst Inc.'s acquisition of the company from Centennial Communications Corp. for about $155 million in cash.

Hicks, Muse, Tate & Furst will also be using equity to finance the transaction, which is anticipated to close in early 2005 subject to FCC review and regulatory approval.

As indicated by the company name, Centennial Puerto Rico Cable operates a digital cable television system serving southern and western Puerto Rico.

RCN now October business

RCN Corp.'s proposed $460 million exit financing facility has been reclassified as October business, not September business as was previously anticipated, according to a market source. Deutsche Bank is the sole lead arranger and bookrunner on the deal.

The facility consists of a $285 million seven-year term loan priced at Libor plus 400 basis points, a $25 million five-year letter-of-credit facility priced at 4% with a 50 basis point commitment fee and a $150 million 71/2-year second-lien facility priced at Libor plus 800 basis points, according to filings with the Securities and Exchange Commission.

The term loan amortizes at a rate of 1% during the first six years with the remaining balance due in quarterly installments in the seventh year. The second-lien facility does not have any amortization requirements.

The Princeton, N.J., broadband company filed a prepackaged Chapter 11 case in the U.S. Bankruptcy Court for the Southern District of New York on May 27 after reaching agreement with its senior secured lenders and an ad hoc committee of holders of its senior notes on a debt restructuring. A joint plan of reorganization and a disclosure statement was filed on Aug. 20. RCN expects to emerge from Chapter 11 in the fourth quarter.

Texas Genco also for October

The status on Texas Genco's launch has been updated to sometime in mid-to-late October from fourth quarter business, according to sources. However, details on the facility, including size and structure are still unavailable.

Goldman Sachs, Deutsche Bank and Morgan Stanley are lead banks on the deal, with Goldman listed on the left.

Proceeds, combined with proceeds from a proposed bond deal, will be used to help fund GC Power Acquisition LLC's acquisition of Texas Genco from CenterPoint Energy Inc. for about $3.65 billion in cash.

GC Power Acquisition LLC is a newly formed entity owned in equal parts by affiliates of The Blackstone Group, Hellman & Friedman LLC, Kohlberg Kravis Roberts & Co. LP and Texas Pacific Group.

The transaction, subject to customary regulatory approvals, will be accomplished in two steps. The first step, expected to be completed in the fourth quarter of 2004, involves Texas Genco's purchase of the 19% of its shares owned by the public for $47 per share, followed by GC Power Acquisition's purchase of a Texas Genco unit that will be formed to own its coal, lignite and gas-fired generation plants.

The second step, which is expected to take place in the first quarter of 2005 following receipt of approval by the Nuclear Regulatory Commission, GC Power Acquisition will complete the acquisition of Texas Genco, the principal remaining asset of which will then be Texas Genco's interest in the South Texas Project nuclear facility.

Texas Genco is a Houston wholesale electric power generating company.

Intelsat moved to November

The launch of Intelsat Ltd.'s $650 million credit facility is now anticipated to take place in November, not October, according to a market source, who guessed that the delay could have something to do with necessary regulatory approvals.

Although a structure on the facility has not yet emerged, it is expected that a large chunk of the total amount will be term loan debt.

Deutsche Bank, Credit Suisse First Boston and Lehman Brothers are the lead banks on the deal, with Deutsche listed on the left.

Proceeds, combined with proceeds from a proposed bond offering, will be used to help fund Zeus Holdings Ltd.'s leveraged buyout of Intelsat.

Zeus, a company formed by a consortium of funds advised by Apax Partners, Apollo Management, Madison Dearborn Partners and Permira, will acquire Intelsat, a Pembroke, Bermuda-based satellite communications company, in a transaction valued at about $5 billion, including about $2 billion of existing net debt.

Bradley Pharmaceuticals closes

Bradley Pharmaceuticals Inc. closed on its new $125 million five-year credit facility, consisting of a $50 million revolver and a $75 million term loan that carry an interest rate of Libor plus 250 basis points. Wachovia Securities was the lead bank on the deal.

Originally the deal was launched with a $25 million revolver, but the tranche was upsized during syndication.

Borrowings are available for general corporate purposes, including possible future acquisitions. Proceeds were also used to repay Bradley's $50 million bridge credit facility.

"Bradley Pharmaceuticals is pleased with the new credit facility that provides increased flexibility and resources to continue the company's growth," said Daniel Glassman, president and chief executive officer, in a company news release.

Bradley Pharmaceuticals is a Fairfield, N.J., specialty pharmaceutical company that acquires, develops and markets prescription and over-the-counter products.

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