Belden & Blake new deal oversubscribed by Friday afternoon

By Sara Rosenberg

New York, June 25 - Belden & Blake Corp.'s Friday bank meeting was a huge success as the credit facility was, to no surprise, already "way oversubscribed" by early afternoon as investors continued to show their support for the transaction and its low first-lien leverage multiple, according to a market source.

The oversubscription could have been anticipated being that the deal was already half spoken for earlier in the week before even launching to retail investors.

Furthermore, price talk surfaced on the $170 million deal (B2) with the $30 million revolver talked at Libor plus 275 basis points, the $40 million letter-of-credit facility talked at Libor plus 275 basis points and the $100 million term loan "whisper" talked at Libor plus 275 to 300 basis points, the source added.

Goldman Sachs is the sole lead bank on the deal.

Leverage on a first-lien basis is 1½ times.

Proceeds, combined with proceeds from a $192.5 million senior secured notes offering that kicked off via a roadshow on Thursday, will be used to help fund Belden's merger with an affiliate of Carlyle/Riverstone Global Energy & Power Fund II LP.

Carlyle/Riverstone, through its new partnership with Capital C Energy LLC, entered into a cash merger agreement to acquire all of the outstanding stock of Belden & Blake.

As part of the merger, Belden & Blake began a tender offer and consent solicitation to purchase for cash any and all of its outstanding $225 million 9 7/8% senior subordinated notes due 2007.

The tender offer, which is subject to, among other things, closing of the merger and funding, expires on July 15.

Belden & Blake is a Canton, Ohio, oil and gas producer. Capital C is a Houston-based company that seeks to accumulate a portfolio of domestic oil and gas assets.

PlayCore sparks inquiries

PlayCore Inc.'s $145 million credit facility sparked investor interest upon launching on Friday with strong attendance seen both in person and on the phone. Although there was lots of dialogue from investors on the various tranches as they do their credit work, no orders were actually received by late day, according to a market source.

It "went great" and had "very large attendance," the source said regarding the meeting. "A lot of investor dialogue since [the deal was] launched on all tranches. Investors are focusing on year-end leverage statistics, which are very moderate. [There is] good visibility because third quarter you get big orders from schools. Consumer business is big in the second quarter. They're working off their seasonal peak right now."

The facility consists of a $15 million five-year revolver with an interest rate of Libor plus 500 basis points at the operating company level, a $50 million five-year first-lien term loan with an interest rate of Libor plus 500 basis points at the operating company level, a $40 million six-year second-lien term loan with an interest rate of Libor plus 900 basis points at the operating company level and a $40 million 61/2-year third-lien term loan with a fixed rate of 18%, split into 5% cash and 13% PIK, at the holding company level.

All term loans are being offered at par. Investors receive 100 basis points upfront for revolver commitments.

Leverage multiple include 3.7x second-lien debt at the operating company, 1.7x first-lien debt at the operating company and 5.7x total debt at the holding company, the source said.

Credit Suisse First Boston is the sole lead arranger and bookrunner on the deal.

Proceeds will be used by the Chattanooga, Tenn., playground equipment manufacturer to refinance existing debt.

Wyndham up on asset sales

Wyndham International Inc.'s bank debt was higher on Friday as news emerged that the company entered into a definitive agreement with Highland Hospitality Corp. to sell four hotel properties for about $227 million.

Both Wyndham's term loan B and IRLs were stronger by about three quarters of a point, with the term loan B quoted at 98½ bid, 99 offered and the IRLs quoted at 99½ bid, par offered, according to a trader.

Although all net proceeds from the sale will be used to pay down debt, only a portion of the proceeds will be used to pay down bank debt, the trader added.

"We are pleased with our asset sale program as we continue to sell assets at de-leveraging multiples and improve the financial strength of the company," said Fred J. Kleisner, chairman and chief executive officer, in a Wyndham news release.

Wyndham is a Dallas multi-branded hotel enterprise.

Titan trades at plus par

The Titan Corp.'s bank debt traded above par and in some cases even traded stronger on the day as bank loan investors opted to look at the positive side of the Lockheed Martin Corp.'s - an investment-grade company - acquisition possibly falling through.

"A trade took place at par 3/8. I heard some other trades took place at par 1/8. I was pretty surprised [someone] got it off at par 3/8 on the news. It was trading in the par, par ¼ range before today," a fund manager said.

Late Thursday night, Titan announced that Lockheed is unwilling to extend the Friday deadline by which Titan must secure a definitive plea agreement with the Department of Justice relating to alleged violations of the Foreign Corrupt Practices Act.

Furthermore, Titan said that it did not expect to be able to finalize and sign a definitive plea agreement by Friday, which would allow Lockheed to terminate the merger agreement if it so desired.

No final announcement regarding the acquisition was heard, although there was a lot of speculation in the markets and nervousness seen in both the stock and bond markets, as was reflected by Titan's equity and bond performance.

"I don't think this is the worst thing for them. Bank loan people get to keep paper at Libor plus 325 basis points. It keeps more supply out there in the market with a good coupon," the fund manager continued.

"The whole investigation by the DOJ will probably only result in a fine. There could be worse things. They could lose out on some government business but that's highly unlikely. It never happened before.

"Even if the deal with Lockheed falls through, it probably will remain a par, par plus name."

Titan is a San Diego provider of comprehensive information and communications systems solutions and services to the Department of Defense, intelligence agencies, and other federal government customers.

Crown Castle fate unknown

It was hard to pin down levels on Crown Castle International Corp.'s bank debt, with one trader saying "it's either going to be 102 or par" depending on the outcome of the National Grid Transco negotiations.

National Grid Transco said on Friday that "it has entered into discussions with Crown Castle" regarding a potential acquisition of Crown Castle's U.K. operations.

"It doesn't make sense for them to sell the business because it's a lower multiple than it's worth. But, if they do sell it then the bank debt will be paid off so then it's par," the trader said, adding that if the deal doesn't go through then the bank debt should remain in the 102 context in which has previously been quoted.

Crown Castle is a Houston owner, operator and leaser of towers and co-locatable rooftop sites and transmission networks for wireless communications and broadcast transmission.

Worldspan allocations ahead

It is "likely" that Worldspan Technologies Inc.'s recently tweaked $225 million credit facility will allocate late in the June 28 week, according to a market source.

The facility consists of a $185 million term loan with an interest rate of Libor plus 225 basis points and a $40 million revolver with an interest rate of Libor plus 225 basis points.

However, the syndicate recently added a step down in pricing to the "very" oversubscribed term loan B, under which pricing is reduced to Libor plus 200 basis points on total leverage being less than 2.25x, the source added.

Lehman and JPMorgan are joint bookrunners on the credit facility, with Lehman listed on the left for the transaction.

The company is obtaining the credit facility in connection with its proposed initial public offering of common stock, which is expected to generate proceeds of about $604.4 million.

IPO proceeds along with the proposed term loan will be used to repay about $71 million of bank debt, repurchase about $107.4 million of 9 5/8% senior notes, prepay about $89.1 million under the 10% seller notes originally issued to Delta Air Lines and 12% seller notes originally issued to American, prepay all credit, or about $154.8 million, provided to Delta and Northwest Airlines pursuant to their FASA, terminate advisory fees payable to CVC Management LLC for about $5.3 million, prepay the approximately $3.5 million special dividend payable on class B convertible common stock and redeem shares of series A preferred stock, according to the filing.

The revolver is expected to be undrawn at closing.

Worldspan Technologies is an Atlanta provider of mission-critical transaction processing and information technology services to the travel industry.

US Oncology to wrap in July

US Oncology Inc.'s $500 million senior secured credit facility (Ba3/B+) is expected to close next month as the loan is still waiting on pricing of the company's proposed $675 million high-yield bond offering, a market source explained.

"The bonds are likely to come after the fourth of July. Once that's resolved, the loan will settle. It's a timing thing. We're entering that part of the year when people aren't really around," the source said.

Originally, it was anticipated that the bond deal would hit the high-yield market some time in June.

The credit facility, which launched around mid-May, consists of a $100 million five-year revolver and a $400 million seven-year term loan B, with both tranches priced at Libor plus 250 basis points.

JPMorgan Chase Bank, Wachovia Bank and Citicorp North America Inc. are the lead banks on the deal.

Proceeds from the debt transactions will be used to help fund the acquisition of US Oncology by Oiler Acquisition Corp., an affiliate of Welsh, Carson, Anderson & Stowe IX LP.

Under the merger agreement, the holders of US Oncology common stock, other than Welsh Carson who already owns approximately 14.5% of the common stock, will receive $15.05 per share in cash for their shares, which represents an 18.5% premium above the March 19 closing price of $12.70. The transaction is valued at about $1.7 billion, including consideration for outstanding stock options and the assumption of debt.

Closing of the deal is subject to various conditions including majority approval from US Oncology's shareholders excluding Welsh Carson and members of senior management participating in the transaction, closing of the financing transactions, closing of a tender offer for US Oncology's public debt securities, the expiration of the applicable waiting period under the Hart-Scott-Rodino Act and other customary conditions.

On June 14, US Oncology announced that it had received tenders of notes and related consents from holders of more than a majority of the $175 million outstanding principal amount of its 9 5/8% senior subordinated notes due 2012.

The company also extended the tender offer expiration date and consent expiration date to July 16 from July 7.

US Oncology is a Houston cancer-care services company.

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