El Paso lower on possible restatement and filing delay; Enersys breaks for trading

By Sara Rosenberg

New York, March 10 - El Paso Corp.'s bank debt was down about a half a point on news of probable restatements and the delay of the company's 10-K filing. Meanwhile, Enersys Capital Inc.'s new deal broke for trading with the term loan reaching 101 plus levels.

El Paso's bank debt was quoted late in the day of 98½ bid, 99 offered, according to a trader.

On Wednesday morning, El Paso announced that it will delay the release of its fourth quarter 2003 earnings, which is currently scheduled for Thursday, pending the completion of a review of the impact of its recently announced reserve revision.

Since its Feb. 17 announcement regarding a negative revision of its proved natural gas and oil reserves of approximately 1.8 trillion cubic feet equivalent, El Paso has been reviewing whether portions of the revision should be applied to prior years.

The Houston energy company now believes that based on internal technical reviews as well as the independent review of the audit committee of the board of directors it is likely that a restatement of the financial statements and related supplemental oil and gas reserve disclosures for El Paso Corp., El Paso CGP Co. and El Paso Production Holding Co. will be required, a company news release said.

Completion of the internal review and review by the audit committee will cause a delay in the submission of 10-K filings, the news release continued.

El Paso has already requested waivers from its revolver lenders and other bank lenders to address a restatement or delay in its 10-K filings. "The company currently expects to receive those waivers," the release added.

Enersys breaks

Enersys Capital's credit facility hit the secondary on Wednesday with the term loan B breaking at 101 3/8 bid, 101 5/8 offered and then tightening up a little to 101½ bid, 101 5/8 offered, according to a trader.

The $580 million credit facility is structured as a $360 million term B with an interest rate of Libor plus 250 basis points (B1/BB-), a $120 million second lien term loan with an interest rate of Libor plus 500 basis points (B2/B) and a $100 million revolver with an interest rate of Libor plus 250 basis points (B1/BB-).

Bank of America is the lead bank on the deal that will be used by the Reading, Pa., industrial battery manufacturer to refinance debt and pay a distribution to equity holders.

Home Interiors may up pricing

Home Interiors & Gifts Inc.'s recently launched credit facility (B2/B) seems to be chugging along a bit slow leaving some expecting an increase in pricing on the $320 million term loan B before the deal gets done.

"There was $130 million in the books as of Monday. It seems to be going slower than any other deals have been going. Usually they've been blowing out a couple of hours after the call and this isn't half done a couple of days after the call," a fund manager said.

"This kind of implies that there might be a price flex upwards to get people interested to get it done," the fund manager continued.

Currently, the term loan is priced with an interest rate of Libor plus 325 basis points and is being offered to investors at par.

"Given the rating and the leverage it's probably a little aggressive. I could see this thing going to 350 or 375 before they get it done," the fund manager added.

However, when the deal launched last Thursday it was said by a market source that the meeting received good physical attendance as well as decent attendance on the phone. The source continued to say that since Home Interiors is not a straight forward manufacturing company it could take potential lenders a little longer to get comfortable with the business. Furthermore, he added that investors would also probably need time to evaluate the company's request to increase leverage at a lower price and get comfortable with the business based on leverage.

Home Interiors' existing term loan is priced with an interest rate of Libor plus 450 basis points, so this deal would result in a nice reduction in interest expense for the company. As for the potential lenders, some believe that Libor plus 325 basis points is an appropriate spread for the rating.

The proposed $370 million credit facility also contains a $50 million revolver with an interest rate of Libor plus 275 basis points. Investors get 1% for revolver commitments.

JPMorgan and Bear Stearns are the lead banks on the deal, with JPMorgan listed on the left.

Proceeds will be used to refinance about $169.8 million of existing senior debt, to repurchase all approximately $139 million or a portion of the company's outstanding convertible preferred stock, for general working capital purposes and to pay transaction fees and expenses.

On a pro forma basis after giving effect to the refinancing and the anticipated use of the proceeds from the refinancing, as of Dec. 31, 2003, the company would have had about $474.6 million in total debt, compared to about $323.2 million in total debt as of Dec. 31, 2003 on an actual basis.

Home Interiors & Gifts is a Dallas integrated manufacturer and distributor of home decorative accessories.

True Temper demand strong

Investors are expecting to receive little allocations on True Temper Corp.'s $110 million seven-year term loan B as a result of strong market demand. In fact, the deal was such a hit that it was said to be anywhere from 2½ to three times oversubscribed.

"With all the people they had interested in this deal, it's going to be small across the board," a fund manager said regarding allocations.

Allocations on the credit facility are anticipated to take place either Thursday or Friday.

As a result of this strong demand, the syndicate was able to reverse flex pricing on the term loan B earlier this week to Libor plus 250 basis points from Libor plus 275 basis points, according to the fund manager.

The $130 million credit facility (B1/B+) also contains a $20 million five-year revolver with an interest rate of Libor plus 250 basis points and a 50 basis points commitment fee.

Credit Suisse First Boston and Anteres are joint lead arrangers and joint bookrunners on the deal.

Proceeds will be used to help support the company's leveraged buyout by management and Gilbert Global Equity Partners from Cornerstone Equity Investors.

True Temper is a Memphis, Tenn., manufacturer of golf shafts and performance sports products for the bicycle, hockey and sporting goods industry.

Global Cash closes

Global Cash Access LLC closed on its new $280 million senior secured credit facility (B2/B+) consisting of a $20 million five-year revolver with an interest rate of Libor plus 300 basis points and a $260 million six-year term loan with an interest rate of Libor plus 300 basis points.

Banc of America Securities LLC also acted as sole lead arranger and sole book running manager on the deal.

Proceeds from the credit facility, combined with proceeds from a $235 million senior subordinated notes offering, were used to recapitalize the company and repurchase First Data Corp.'s interest in the company's parent holding company, GCA Holdings LLC, for about $435 million, according to a company news release.

Global Cash is a Las Vegas provider of transaction processing services and products.

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