NV Broadcasting may tighten OID; Chem Rx sets OID; CreditCards.com talk; Movie Gallery overfills

By Sara Rosenberg

New York, Oct. 16 - NV Broadcasting LLC is considering reducing the original issue discount on its first-lien term loan due to the strong demand that the tranche has received, Chem Rx Corp. revealed the original issue discount on its credit facility as it launched during the Tuesday session and CreditCards.com Inc. came out with price talk on its credit facility as it too was launched to investors.

In other news, Movie Gallery Inc.'s debtor-in-possession facility is oversubscribed by existing lenders and Targa Resources Partners LP successfully syndicated the add-on to its revolving credit facility.

Moving to trading news, LCDX and the cash market were softer on Tuesday as they followed equities.

Talk is that NV Broadcasting (New Vision Television) may reduce the discount on its $215 million six-year first-lien term B (B+) being that the tranche is around four times oversubscribed, according to a market source.

The discount on the first-lien term loan is expected to move to 98½ from the original price of 98, the source said, adding that nothing official has been announced as of yet.

Price talk on the first-lien term loan is Libor plus 300 basis points, and the tranche carries 101 soft call protection for one year.

NV Broadcasting's $390 million credit facility also includes a $25 million six-year revolver (B+) talked at Libor plus 300 bps, a $120 million seven-year second-lien term loan (CCC+) talked at Libor plus 650 bps and a $30 million senior unsecured holdco loan (CCC+).

The second-lien term loan is being offered at a discount of 98 and is non-callable for one year, then at 102 in year two and 101 in year three.

The first- and second-lien debt contain total leverage and minimum interest coverage covenants.

UBS Investment Bank is the lead bank on the deal.

Proceeds will be used to help fund New Vision Television's acquisition of Montecito Broadcast Group, LLC and to refinance existing debt.

Upon completion of the acquisition, Los Angeles-based New Vision Television will own and operate nine major affiliated television stations and, through joint sales or local market agreements, will provide sales and other services to two other stations. These stations are in eight markets across the southern, midwestern and northwestern United States.

Chem Rx discount surfaces

Chem Rx announced at a bank meeting on Tuesday afternoon that its first- and second-lien term loan debt will be issued at a discount of 99, according to a market source.

As was previously reported, pricing on the $80 million six-year first-lien term loan (B1/B+) and $20 million six-year delayed-draw term loan (B1/B+) is Libor plus 400 bps, and pricing on the $37 million seven-year second-lien term loan (Caa1/CCC+) is Libor plus 800 bps.

Second-lien call protection is 103 in year one, 102 in year two and 101 in year three.

Chem Rx's $162 million senior secured credit facility also include a $25 million five-year revolver (B1/B+) priced at Libor plus 400 bps.

CIBC is the lead bank on the deal.

Recently, the company amended its credit facility commitment, reducing the total size from $177 million, increasing pricing and revising second-lien call premiums.

Under the original commitment, the facility consisted of a $25 million five-year revolver (B1/B+) at Libor plus 300 bps, a $90 million six-year first-lien term loan (B1/B+) at Libor plus 300 bps, a $20 million six-year delayed-draw term loan at Libor plus 300 bps and a $42 million seven-year second-lien term loan (Caa1/CCC+) at Libor plus 650 bps.

Second-lien call protection under the original commitment was 102 in year one and 101 in year two.

The first-lien debt contains a covenant regarding a minimum fixed-charge coverage ratio, a maximum total leverage ratio and limitations on consolidated capital expenditures, and the second-lien debt has only a covenant regarding a maximum total leverage ratio, which will be less stringent than that applicable to the first-lien debt.

Security is substantially all of the assets of Paramount Acquisition Corp., Chem Rx and its subsidiaries.

Repayments on the loans must be made from 50% of the net proceeds from the issuance of additional equity interests by Paramount, 75% of consolidated excess cash flow (reduced to 50% if the total leverage ratio is less than or equal to 3.75 to 1.00), 100% of the net proceeds of certain debt and 100% of the net proceeds of any asset sales and insurance and condemnation proceeds.

Amortization on the first-lien term loan is equal quarterly installments of an aggregate of 2.5% per year for the years 2008, 2009 and 2010, 5% per year for the years 2011 and 2012 and 1.25% for each of the first three fiscal quarters of 2013, with the balance payable in a balloon at maturity.

Proceeds will be used to help fund the acquisition of the company by Paramount Acquisition.

The revision to the credit facility was a result of the change to the acquisition agreement, which reduced the amount of cash consideration payable to the sellers by anywhere from $5 million to $15 million, depending on the number of holders of Paramount's common stock who vote against the transaction and elect to convert their shares into cash.

In lieu of such cash consideration, Paramount will issue to the sellers 10% unsecured subordinated promissory PIK notes.

Proceeds from the delayed-draw term loan can be used to finance the contingent "initial earnout" payments that may become payable to the sellers in 2008 as well as the first annual milestone earnout, if the making of such payment through the issuance of shares would cause the sellers to own more than 20% of Paramount's outstanding common stock and Paramount elects to pay out such shares in excess of 20% in cash.

Chem Rx is a Long Beach, N.Y.-based long-term care pharmacy. Paramount is a New York-based special-purpose acquisition corporation.

CreditCards.com price talk

CreditCards.com Inc. held a bank meeting on Tuesday to kick off syndication on its proposed $100 million credit facility, at which time price talk was announced, according to a market source.

Both the $25 million revolver and the $75 million term loan are being talked at Libor plus 200 bps, the source said. Pricing will be based on a grid.

Commitments are being asked for on a pro rata basis, the source added.

BMO Capital Markets is the lead bank on the deal, which is being done in conjunction with the company's initial public offering of common stock.

Proceeds will be used to repay debt and for general corporate purposes.

CreditCards.com is an Austin, Texas-based online credit card marketplace.

Movie Gallery DIP oversubscribed

Movie Gallery's $150 million debtor-in-possession financing facility is oversubscribed by existing first-lien lenders, and allocations are expected to go out later this week, according to a market source.

The DIP consists of a $100 million term loan and a $50 million revolver, with both tranches priced at Libor plus 350 bps and both offered to investors with a 150 bps upfront fee, the source said.

There was no bank meeting to launch the facility into syndication, the source added.

Goldman Sachs is the lead bank on the deal.

Proceeds from the DIP will be used to refinance the company's existing revolver at a lower interest rate and to provide additional working capital.

Movie Gallery filed for Chapter 11 on Tuesday to re-align its business operations and to restructure its debt under a pre-negotiated deal, according to a company news release.

If approved by the Bankruptcy Court, the plan of reorganization would provide that the company's first-lien debt would remain in place on restructured terms that are currently being negotiated with lenders, that approximately $72 million of its $175 million second-lien debt, held by Sopris Capital Advisors, would be converted into new equity, and that the remaining second-lien debt would be amended to revise interest rates based upon the terms of the restructured first-lien debt and modify certain PIK interest terms and conditions.

The plan also provides for the conversion of the company's $325 million 11% senior notes and other general unsecured claims into new equity, a commitment by Sopris to backstop a $50 million equity rights offering to be made available to all eligible holders of the 11% senior notes and provisions for holders of common equity to receive under certain circumstances a minority share of the new equity.

The proposed restructuring is supported by holders who own a majority of the 11% senior notes and a majority of the second-lien lenders.

The company's proposed reorganization would reduce total debt by approximately $400 million and would be expected to improve cash flow by significantly reducing ongoing interest expense.

"Movie Gallery needs to re-align its cost structure due to the ongoing changes in our industry," Joe Malugen, chairman, president and chief executive officer, said in the news release. "Although the company has taken numerous steps to reduce its debt and strengthen its balance sheet through closing unprofitable stores, headcount reductions and other means, these actions were not sufficient to offset the significant shift in our business and the cost of our substantial debt obligations.

"After careful consideration of all available alternatives, the company's board of directors determined that a Chapter 11 filing was a necessary and prudent step and the best way to obtain the financing necessary to maintain regular operations and allow for a successful restructuring," Malugen added in the release.

In reaction to the bankruptcy filing, Movie Gallery's existing first- and second-lien term loan debt rose in trading on Tuesday, according to a trader.

The first-lien term loan was quoted at 90 bid, 92 offered, up about a point on the day, and the second-lien term loan was quoted at 74 bid, 76 offered, up about three to four points on the day, the trader said.

Movie Gallery is a Dothan, Ala.-based video rental company.

Targa wraps syndication

Targa's $250 million revolver add-on is oversubscribed as orders from new and existing lenders came in toward the deal, according to a company news release.

Including the add-on, Targa's revolver will carry a total size of $750 million.

In addition, the company has received approval from the necessary lenders for a $250 million accordion feature.

Proceeds from the upsized revolver will be used to help fund the acquisition of Targa Resources, Inc.'s San Angelo Operating Unit and Louisiana Operating Unit in a transaction valued at about $705 million, subject to certain adjustments.

Remaining funds for the acquisition will come from equity.

For the six-month period ended June 30, the acquired businesses generated EBITDA of $38.4 million and pro forma distributable cash flow of $22.9 million.

Houston-based Targa Resources Partners was formed by Targa Resources, Inc. to engage in the business of gathering, compressing, treating, processing and selling natural gas and fractionating and selling natural gas liquids and natural gas liquids products.

LCDX, cash weaken

Switching to the secondary, LCDX and the cash market were lower on Tuesday in sympathy with the stock market, according to traders.

LCDX 9 ended the day at 99.85 bid, 99.95 offered, down from 100.25 bid, 100.35, traders said.

LCDX 8 ended the day at 97.60 bid, 97.70 offered, down from 97.85 bid, 97.95 offered.

Meanwhile, traders said that the cash market took less of a hit as levels were off by about an eighth of a point across the board.

Nasdaq ended the day down 16.14 points, or 0.58%, Dow Jones Industrial Average ended down 71.86 points, or 0.51%, S&P 500 ended down 10.18 points, or 0.66%, and NYSE ended down 90.89 points, or 0.89%.

Technical Olympic slides lower

Also in trading, Technical Olympic USA Inc.'s bank debt was softer as the loan market was down, the stock market was down and general sentiment toward homebuilders was increasingly negative, according to traders.

One bit of news that put pressure on the homebuilding sector was that the National Association of Home Builders/Wells Fargo index, a housing market index that tracks expectations of home sales, fell to its lowest level ever. The index dropped to 18 in October from 20 in September.

Also, somewhat negative was the statement made by Federal Reserve chairman Ben S. Bernanke on Monday that "further contraction in housing is likely to be a significant drag on growth in the current quarter and through early next year."

By the end of the day Tuesday, Technical Olympic's first-lien term loan was quoted at 95¾ bid, 96¾ offered by one trader and at 95½ bid, 96½ offered by a second trader, down about a point on the day.

The second-lien term loan was quoted at 90½ bid, 91½ offered by one trader and at 90 bid, 92 offered by a second trader, down about a point or two on the day.

The Hollywood, Fla.-based homebuilder's revolver was quoted at 96 bid, 97 offered by both traders, down about half a point on the day.

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