San Juan Cable shifts funds, cuts first-lien spread; Kodak edges higher; Unisys seen as buying opportunity

By Sara Rosenberg

New York, Oct. 24 - San Juan Cable LLC moved some funds out of its second-lien term loan and into its first-lien term loan and then proceeded to reverse flex pricing on the newly enlarged first-lien term loan tranche.

In secondary happenings, Eastman Kodak Co.'s term loan was creeping back up during Monday's session, spurred on by market activity. And, Unisys Corp.'s revolver attracted some attention as levels were heard to have dropped off on a government probe, making it an attractive buy to some investors.

San Juan Cable shifted $35 million out of its second-lien term loan and into its first-lien term loan while at the same time reducing the spread on the first-lien term loan by 25 basis points, according to a market source.

The first-lien term loan (B1) is now sized at $225 million, up from an original size of $190 million, the source said.

Furthermore, pricing on the upsized first-lien term loan tranche was reverse flexed to Libor plus 200 basis points from original price talk at launch of Libor plus 225 basis points, the source continued.

On the flip side, the second-lien term loan (B2) is now sized at $125 million, down from an original size of $160 million.

However, pricing on the second-lien term loan, despite the reduced size, was left unchanged at Libor plus 550 basis points, the source added.

San Juan Cable's $400 million credit facility also contains a $50 million revolver (B1).

Citigroup and JPMorgan are the lead banks on the deal.

Proceeds from the loan will be used to help fund MidOcean Partners' and Crestview Partners' acquisition of San Juan, Puerto Rico, area cable operations jointly owned by Adelphia Communications Corp. and ML Media Partners LP.

Under the terms of the transaction that was announced in June, MidOcean and Crestview will pay $520 million for the assets subject to customary purchase price adjustments, which equates to an approximately $3,800-per-subscriber valuation.

Cablevision may be November event

Rumor has it that Cablevision Systems Corp.'s proposed $2.8 billion credit facility could potentially emerge as November business, according to various sources.

The facility, as outlined in a commitment letter, will consist of a $600 million six-year term loan A, a $1.7 billion seven-year term loan B and a $500 million revolver. This loan will be borrowed at the operating company level.

Bank of America and Merrill Lynch will act as joint lead arrangers and joint bookrunners on the credit facility, with Bank of America the administrative agent.

The loan commitment currently expires Nov. 14, after being extended on three separate occasions.

The facility, along with $4.25 billion in bonds, would be used by The Dolan Family Group to take Cablevision private in an approximately $5 billion transaction - a proposal that has yet to be approved - and to refinance about $1.353 billion of Cablevision debt.

Cablevision's proposed $4.25 billion multi-tranche bond offering will be taken out at the holding company level and will contain a combination of unsecured senior fixed- and floating-rate notes with a minimum tenor of eight years.

The revolver is only expected to have about $11 million drawn at closing, with the rest available for working capital and general corporate purposes.

Under the proposal, The Dolan Family Group has offered Cablevision shareholders $21.00 per share in cash and Rainbow Media Holdings would be spun off to all Cablevision shareholders on a pro rata basis with an estimated value of $12.50 per share.

The transaction delivers an estimated value of $33.50 per share or a total of $7.9 billion to public shareholders, and implies an enterprise value for the company's telecom and cable businesses of $13.6 billion.

After the completion of the transactions, the Dolan Family Group would own 100% of the Bethpage, N.Y.-based Cablevision telecom and cable businesses and about 20% of Rainbow.

A definitive agreement on the proposed purchase has not yet been reached.

Toys 'R' Us launches

Toys "R" Us Inc. launched its $1.5 billion three-year real estate facility (B2/B-) on Monday morning with opening pricing of Libor plus 275 basis points, according to a market source.

Deutsche and Bank of America are the lead banks on the deal.

The Wayne, N.J., specialty toy retailer's facility contains two one-year extension options for a 25 basis point extension fee.

Proceeds will be used to repay the majority of a $1.9 billion bridge loan used in the leveraged buyout of Toys "R" Us by an investment group consisting of affiliates of Kohlberg Kravis Roberts & Co., Bain Capital Partners LLC and Vornado Realty Trust.

Kodak stronger

Kodak's term loan gained about an eighth to a quarter of a point on good market activity in the name after a slight pitfall last week when Standard & Poor's downgraded the debt for a second time.

The term loan was quoted at 99 7/8 bid, par 1/8 offered, according to a trader.

After S&P downgraded the term loan to B+ from BB- late last week, the paper was quoted as low as 99 3/8 bid and as high as 99 7/8 bid.

S&P said that the downgrade was a result of reduced confidence with Kodak's profitability and cash flow prospects because of ongoing and rapid deterioration of its traditional consumer imaging business, the unproven profit potential of its emerging digital imaging businesses, high cash restructuring costs and economic uncertainty.

S&P went on to say that these factors created concern about the company's ability to maintain an adequate margin of compliance with the bank leverage covenant that tightens rapidly throughout 2006.

This is the second rating downgrade that the facility has undergone. At the end of September, S&P had cut the loan rating by one notch to BB- from BB, citing essentially the same profitability and cash flow concerns.

Kodak is a Rochester, N.Y.-based digital imaging products, services and solutions company.

Unisys catches interest

Unisys' revolver has caught the attention of some market players as speculation was that levels dropped into the low-90 context on news of a government probe, making it an interesting investment prospect.

"Everybody is trying to buy the bank debt now," a trader said. "[People are] looking for levels. It doesn't usually trade. It's a high 99 kind of asset. [We're] now talking low-90 levels on the bank debt. It's a buying opportunity."

On Monday, news reports surfaced that the government is looking into whether Unisys overcharged the Transportation Security Administration for work done under a $1 billion technology contract.

This negative news came on the heels of last week's disappointing preliminary third-quarter numbers that included a net loss of $54.3 million, or 16 cents per share, compared with third-quarter 2004 net income of $25.2 million, or 7 cents per diluted share. Furthermore, revenue for the third quarter declined 4% to $1.39 billion from $1.45 billion in the year-ago quarter.

Unisys is a Blue Bell, Pa.-based provider of information technology services and solutions.

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