TriZetto breaks; Penn National, Level 3, Ford move with numbers; Manitowoc timing, talk emerge

By Sara Rosenberg

New York, July 24 - TriZetto Group Inc.'s credit facility allocated and freed up for trading on Thursday, with the term loan B quoted atop its original issue discount price.

Also in trading, Penn National Gaming Inc. and Level 3 Communications Inc. both saw their term loan levels improve following the release of earnings, and Ford Motor Co.'s term loan fell on its numbers.

Over in the primary, Manitowoc Co. Inc. came out with timing on the retail launch of multi-billion credit facility and, at the same time, started floating price talk on the deal.

TriZetto's credit facility hit the secondary market, with the $315 million seven-year term loan B seen trading above the discount price at which it was sold during syndication, according to a trader.

The term loan B was quoted at 98¾ bid, 99¼ offered, the trader said.

Pricing on the term loan B is Libor plus 450 basis points with a 3% Libor floor, and it was sold at an original issue discount of 98.

During syndication, the term loan B was upsized twice, first from $280 million to $300 million and then to $315 million, as a result of the tranche being significantly oversubscribed.

TriZetto's $457.5 million credit facility (Ba3) also includes a $65 million six-year revolver priced at Libor plus 400 bps and a $77.5 million six-year term loan A priced at Libor plus 425 bps with a 3% Libor floor and an original issue discount of 98.

During syndication, the revolver was upsized from $50 million to improve liquidity and the term loan A was downsized twice, first to $92.5 million from $112.5 million and then to $77.5 million, in connection with the term loan B upsizings.

RBC Capital Markets is the lead arranger and bookrunner on the deal, with GE Capital the syndication agent.

Proceeds will be used to help fund the acquisition of the company by funds advised by Apax Partners along with BlueCross BlueShield of Tennessee and the Regence Group for $22 per share in cash in a transaction valued at about $1.4 billion.

The financing also includes $187.5 million of private senior unsecured mezzanine notes and equity. Recently, the equity contribution was increased by $5 million to $954.5 million to further enhance liquidity and will be cash on hand on the balance sheet at close.

Total leverage is around 5.5 times.

The acquisition is subject to customary closing conditions, including shareholder and regulatory approvals.

In April, the Federal Trade Commission granted early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act in connection with the transaction.

On July 14, TriZetto's stockholders approved the transaction, with 34.2 million shares, or 99.8% of shares voted and 79.2% of shares outstanding, voting for the proposal.

TriZetto is a Newport Beach, Calif., developer, licenser and supporter of proprietary and third-party software products for the health care industry.

Penn National gains ground

Penn National's term loan headed higher during market hours after the company announced second-quarter numbers, according to a trader.

The term loan was quoted at 95½ bid, 96½ offered, up from Wednesday's levels of 95 bid, 96 offered, the trader said.

For the quarter, Penn National's net income was $37 million, or $0.42 per diluted share, compared to $38.3 million of $0.43 per diluted share last year.

Net revenues were $620.6 million, compared to $625.2 million last year. Previous guidance had estimated that revenues would be $621.8 million for the quarter.

EBITDA was $164.2 million, compared to $172.8 million last year. Previous guidance had estimated that second quarter EBITDA would be $161.8 million. The guidance had anticipated a one-time charge at corporate of $4 million. This charge is now expected to be about $3.2 million and recorded in the third quarter.

"Overall, it continues to be a challenging environment for the gaming industry. Second-quarter results were impacted by smoking bans in Illinois and Colorado and ongoing competitive pressures at our Alton and Joliet facilities. Taking into consideration the difficult economic conditions, we are generally pleased with our general managers' success in controlling margins," said Peter M. Carlino, chairman and chief executive officer, in a news release.

The company also released third quarter guidance on Thursday that includes estimated net revenues of $657.5 million, EBITDA of $178.6 million, and net income of $47.4 million, or $0.53 per diluted share.

For the full year, the company is guiding net revenues at around $2.54 billion, EBITDA at $682.4 million, and net income at $172.8 million, or $1.81 per diluted share.

Penn National Gaming is a Wyomissing, Pa., owner and operator of casino and horse racing facilities.

Level 3 rises

Level 3 Communications' term loan also traded up after the quarterly results were released, and the company also revised certain forward guidance, according to a trader.

The term loan was quoted at 90¾ bid, 91¼ offered, up from 89 bid, 90 offered on Wednesday, the trader said.

In addition, on Thursday, the loan "traded up at 91.25 a few times post numbers," the trader remarked.

For the second quarter, the company's net loss was $33 million, or $0.02 per share, including a $96 million, or $.06 per share, gain on the sale of the company's Vyvx advertising distribution business. This compares to a net loss of $202 million, or $0.13 per share, for last year's second quarter.

Consolidated revenue was $1.09 billion for the quarter, an increase of 4% compared to $1.05 billion last year.

Consolidated adjusted EBITDA was $251 million in the quarter, a 30% increase from $193 million for the second quarter 2007.

Free cash flow for the quarter was positive $4 million, versus negative $141 million last year.

"Our strong second quarter results reflect Core Network Services growth and our continued focus on reducing network costs and operating expenses," said James Crowe, president and chief executive officer, in a news release. "We generated positive free cash flow and now expect to be free cash flow positive for the remainder of the year. And as previously announced, we expect to be free cash flow positive for the full year 2009."

"Our previous guidance for adjusted EBITDA and free cash flow included anticipated results from the Vvyx advertising distribution business," said Sunit Patel, executive vice president and chief financial officer, in the release. "For the second half of 2008, the Vvyx advertising distribution business was expected to contribute approximately $10 million in adjusted EBITDA and cash flow. Our 2008 business outlook for both core communications services revenue and consolidated adjusted EBITDA remains unchanged.

"In addition, we are raising our 2008 free cash flow guidance from breakeven to positive for the remainder of the year," Patel added in the release.

Level 3 is a Broomfield, Colo.-based provider of fiber-based communications services.

Ford slides

Ford's term loan fell off in trading after the company came out with second-quarter results that showed a pretty sizeable loss, according to traders.

The term loan was quoted at 81 bid, 82 offered by one trader and at 80¾ bid, 81½ offered by a second trader. Both traders said that the loan closed out Wednesday at 82 bid, 83 offered.

For the quarter, Ford reported a net loss of $8.7 billion, or $3.88 a share, including pre-tax special items totaling $8 billion, compared to a net profit of $750 million, or $0.31 per share, in the same period last year.

Pre-tax operating loss from continuing operations for the quarter, excluding special items, was $1 billion, compared to a year-ago profit of $483 million. On an after-tax basis, operating loss from continuing operations, excluding special items, was $1.4 billion, or $0.62 per share, compared with a net profit of $258 million, or $0.13 cents per share, a year ago.

Second-quarter revenues, excluding special items, were $38.6 billion, down from $44.2 billion last year.

The company said that special items reduced pre-tax results by $8 billion in the quarter, or $3.26 a share, primarily reflecting charges associated with asset impairments of $5.3 billion for Ford North America and $2.1 billion for Ford Credit.

Automotive gross cash, which includes cash and cash equivalents, net marketable securities, and loaned securities, was $26.6 billion at June 30, a decrease of $2.1 billion from the end of the first quarter, reflecting working capital increases, upfront subvention payments to Ford Credit and Automotive operating losses.

Ford also announced on Thursday a significant acceleration of its product and production transformation plan with the addition of several new fuel-efficient small vehicles in North America and a realignment of its North American manufacturing.

"We continue to take decisive action in response to the rapidly changing business environment and remain absolutely committed to the four elements of our business transformation plan," said Alan Mulally, president and chief executive officer, in a news release. "Our European and South American operations are robust and profitable. We have momentum in Asia. And we are uniquely positioned to leverage our global assets and the global strength of the Ford brand to quickly bring more small, fuel-efficient vehicles to North America.

"The second half will continue to be challenging, but we have absolutely the right plan to respond to the changing business environment and begin to grow again for the long term," Mulally continued in the release. "We continue to make progress on every element of our plan, and we are accelerating the transformation of Ford into a lean global company that delivers profitable growth for all."

Ford is a Dearborn, Mich.-based automotive company.

Manitowoc sets launch, price talk

Switching to primary happenings, Manitowoc firmed up timing on the retail launch of its proposed $2.925 billion credit facility with the scheduling of a bank meeting for July 31, and revealed price talk on the loan tranches, according to a market source.

The company's $400 million five-year revolver, $900 million five-year term loan A and $300 million 18-month term loan X are all being talked at Libor plus 325 bps, and the $1.325 billion six-year term loan B is being talked at Libor plus 350 bps, the source said.

The term loan B has a 3% Libor floor, the source added.

Price talk came out differently than what the company had previously outlined in filings with the Securities and Exchange Commission. According to those filings, all the tranches were expected to carry initial pricing of Libor plus 300 bps.

JPMorgan, Deutsche Bank, Morgan Stanley and BNP Paribas are the joint lead arrangers and joint bookrunners on the deal, with JPMorgan the administrative agent, Deutsche and Morgan Stanley the syndication agents, and BNP the documentation agent.

Senior managing agent meetings for the deal took place last week.

Proceeds will be used to help fund the acquisition of Enodis plc for 328 pence per Enodis share, resulting in a transaction valued at about $2.7 billion, including the assumption of Enodis' net debt, which was about $249 million/£125 million as of March 29.

In April, Manitowoc agreed to buy Enodis for 258 pence per share, but then in early May, Illinois Tool Works Inc. offered to buy the company for 280 pence in cash per share, plus a 2 pence per share dividend. Following the first Illinois Tool Works offer, Manitowoc increased its bid to 294 pence per share, plus a 2 pence per share dividend, and then the offer was increased again during an auction process.

As a result of Manitowoc increasing its purchase price for Enodis, the term loan B has already been upsized twice, first moving to $1.075 billion from $800 million, and then to $1.325 billion from $1.075 billion.

The transaction is expected to close in the fourth quarter and it will be structured as a court-sanctioned scheme of arrangement under the laws of the United Kingdom.

Manitowoc is a Manitowoc, Wis.-based provider of lifting equipment for the construction industry, manufacturer of cold-side equipment for the foodservice industry, and provider of shipbuilding, ship repair and conversion services. Enodis is a Tampa, Fla.-based food and beverage equipment manufacturer.

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