TXU trims OID, breaks; Catalina frees to trade; Cablevision dips as buyout fails; Tousa trades up

By Sara Rosenberg

New York, Oct. 24 - Texas Competitive Electric Holdings Co. LLC (TXU) reduced the original issue discount on its term loan B-2 on Wednesday morning and then allocated the debt in the afternoon, with the loan freeing up for trading atop par.

In other news, Catalina Marketing Corp. broke for trading with the term loan trading above its discount price, Cablevision Systems Corp.'s term loan B was softer as the buyout of the company did not get stockholder approval, and Tousa Inc.'s bank debt gained some ground as news of an amendment proposal hit the market.

Texas Competitive Electric Holdings tightened the original issue discount on its term loan B-2 and then broke the deal for trading late in the afternoon, with levels quoted in the par plus context, according to a trader.

More specifically, the term loan B-2 was seen at par ¼ bid, par ½ offered on the break, it then traded as high as par 5/8 plus, and then it settled in at par ¼ bid, par 3/8 offered, where it closed out the day, the trader said.

"Everyone was really ramping up for TXU. The book was huge so a lot of accounts were wrangling for allocations. There was a lot of action. [Trading] volume was well into the triple digits," the trader remarked.

The discount on the $7 billion term loan B-2 firmed at 993/4, compared with the originally offered discount that was in the 99½ area, the trader continued.

Rumors that the discount could be reduced have been circulating around the market based on the fact that the tranche was significantly oversubscribed from a variety of accounts including high-yield guys, asset managers, hedge funds and traditional loan investors.

Pricing on the term loan B-2 is set at Libor plus 350 basis points, in line with initial talk, and the paper carries soft call protection of 103 in year one, 102 in year two and 101 in year three.

Texas Competitive's $24.5 billion senior secured credit facility (Ba3/B+) also includes a $4.1 billion seven-year final maturity delayed-draw term loan, a $1.25 billion seven-year deposit letter-of-credit facility, a $2.7 billion six-year revolver, a $3.45 billion seven-year term loan B-1 and a $6 billion seven-year term loan B-3, with all of these tranches priced at Libor plus 350 bps as well.

The delayed-draw term loan, revolver, letter-of-credit facility, term loan B-1 and term loan B-3 were not syndicated.

Recently, Most-Favored-Nation language was added to the term loan B-3 so that buyers would be protected from price pressure in the event that the arrangers sell part or all of the loans that have remained on their books in the future at prices below the original issue discount.

This addition sparked some speculation that maybe the term loan B-3 will start being syndicated shortly since the B-2 was so oversubscribed.

"[There's] no word on the other tranches," the trader remarked. "[They] are trying to be cautious and not flood the market with too much paper at this time - just the $7 billion B-2.

"They have to wait for the B-2 to settle a little bit but they are feeling out the market for the B-3. Have received bids on it. Indications of interest. But it's not being syndicated yet," the trader added.

The term loan B-3 is non-callable for three years, and the term loan B-1 carries no call protection.

The revolver has a commitment fee of 50 bps.

Of the total delayed-draw term loan amount, $2.15 billion was funded at close. The additional $1.95 billion of delayed-draw term loan commitments in place are to ensure available liquidity to fund the construction of new plants.

The delayed-draw term loan has an undrawn fee of 125 bps for the first year and 150 bps after that.

Under the facility, the company must maintain a maximum secured leverage ratio of 7.25 to 1.00 beginning on Sept. 30, 2008.

Citigroup, JPMorgan, Goldman Sachs, Lehman Brothers, Morgan Stanley and Credit Suisse are the joint lead arrangers and bookrunners on the deal, with Citi administrative agent, JPMorgan syndication agent, and Credit Suisse, Goldman, Lehman and Morgan Stanley co-documentation agents.

Proceeds from the credit facility were used to help fund the recently completed leveraged buyout of TXU Corp. by an investor group led by Kohlberg Kravis Roberts & Co. and Texas Pacific Group for $69.25 per share. The transaction was valued at $45 billion.

As of June 30, Texas Competitive's total senior secured debt was 4.8 times pro forma adjusted last-12-months EBITDA and total debt was 6.9 times.

In connection with the buyout, TXU, a Dallas-based energy company, changed its name to Energy Future Holdings Corp.

Catalina breaks

Catalina Marketing's credit facility also hit the secondary on Wednesday, with its $660 million term loan trading in the 98 plus context, according to traders.

One trader said that the term loan opened at 98 bid, 98½ offered and then moved up to 98½ bid, 99 offered, where it closed out the day.

A second trader said that the term loan opened at 98 1/8 bid, 98 5/8 offered and then moved up to 98 3/8 bid, 98 7/8 offered, where it closed out the day.

The term loan is priced at Libor plus 300 bps and was sold to investors with an original issue discount of 973/4.

During syndication, the discount on the term loan was tightened from the originally offered discount of 97.

Catalina's $760 million senior secured credit facility (Ba3/BB-) also includes a $100 million revolver that is priced at Libor plus 300 bps.

Morgan Stanley, Bear Stearns and Goldman Sachs acted as the lead banks on the deal.

Proceeds were used to help fund the already completed leveraged buyout of the company by Hellman & Friedman Capital Partners VI, LP for $1.7 billion, including the assumption of debt. Stockholders received $32.50 per share in cash.

Catalina is a St. Petersburg, Fla., provider of behavior-based promotional messaging, loyalty programs and direct-to-patient information.

Cablevision slides as buyout is denied

Cablevision's term loan B was weaker on Wednesday after news emerged that the company's stockholders rejected the buyout of the company by the Dolan Family Group, according to a trader.

The term loan B was quoted at 97¾ bid, 98 offered, down from around 97 7/8 bid, 98 1/8 offered, the trader said.

Stockholders have been expressing their opposition towards the public-to-private transaction for a while now, saying that the proposed $36.26-per-share offer price undervalued the company.

To help fund the buyout and to refinance existing debt, Cablevision had received commitments for $9.23 billion of credit facilities and $6.23 billion of high-yield bonds from Merrill Lynch, Bear Stearns and Bank of America.

Under the commitments, CSC Holdings Inc., a direct wholly owned subsidiary, was going to get a $7.25 billion senior secured credit facility, consisting of a $1 billion six-year term loan A, a $4.75 billion seven-year term loan B, a $500 million seven-year delayed-draw term loan and a $1 billion six-year revolver.

Regional Programming Partners, an indirect subsidiary of CSC, was going to get a $950 million senior secured credit facility, consisting of a $900 million seven-year term loan B and a $50 million five-year revolver.

And Rainbow National Services LLC, a direct wholly owned subsidiary of Rainbow Programming Holdings LLC, was going to get a $1.03 billion senior secured credit facility, consisting of a $730 million eight-year term loan B and a $300 million six-year revolver.

Meanwhile, on the bond side, Cablevision was going to issue $4.43 billion of a to-be-determined combination of unsecured senior fixed- and floating-rate and PIK toggle notes with at least a 10-year maturity.

Intermediate Holdco, a newly formed direct wholly owned subsidiary, was going to issue $800 million of a to-be-determined combination of unsecured senior fixed- and floating-rate notes with at least an eight-year maturity.

And Rainbow Programming Holdings, an indirect wholly owned subsidiary of CSC, was going to issue $1 billion of a to-be-determined combination of unsecured senior fixed- and floating-rate notes with at least a 10-year maturity.

Cablevision is a Bethpage, N.Y., media, entertainment and telecommunications company.

Tousa higher with amendment proposal

Tousa's bank debt got a bit of a pop on Wednesday after details surfaced on an amendment that the company is asking lenders to approve, according to a trader.

The first-lien term loan went out at 98½ bid, 99½ offered, up from 98 bid, 99 offered, the trader said.

The revolver went out at 98½ bid, 99½ offered, up about a quarter to half a point on the day, the trader continued.

And the second-lien term loan went out at 94 bid, 95 offered, up from 93 bid, 94 offered, the trader remarked.

On Wednesday, the Hollywood, Fla.-based homebuilder said that it is seeking an amendment because it anticipates that recording certain asset impairment charges, deposit write-offs and abandonment charges will cause it to breach one or more of the covenants under the first-lien term loan and revolver.

Asset impairment charges are expected in the third quarter due to weaker-than-anticipated net sales orders and declining prices, and write-offs and abandonment charges are expected in the third quarter because the company is exercising its right to abandon a number of homesite option contracts due to deteriorating market conditions.

Under the amendment, pricing on the first-lien term loan would be increased to Libor plus 500 bps and the revolver pricing grid would be changed so that pricing can range anywhere from Libor plus 250 bps to Libor plus 525 bps depending on ratings and leverage.

"Seems like it will pass from what I've heard," the trader said, explaining that people don't want the company to have to file for bankruptcy protection. "I would guess they will eventually file but this will stave it off for a little while."

Centaur upsizes, cuts second-lien spread

Moving to the primary, Centaur LLC upsized and reduced pricing on its second-lien term loan while downsizing its first-lien term loan by not quite the equivalent amount, resulting in an overall larger credit facility, according to a market source.

The six-year second-lien term loan (Caa1/CCC+) is now sized at $180 million, up from $130 million, and pricing was reverse flexed to Libor plus 750 bps from original talk at launch of Libor plus 800 bps, the source said. The paper still carries an original issue discount of 98.

Meanwhile, the five-year funded first-lien term loan (B1/BB-) is now sized at $420 million, down from $455 million, while pricing was left at Libor plus 400 bps and the discount was left at 98, the source continued.

Centaur's now $775 million (up from $760 million) credit facility also includes a $25 million five-year revolver (B1/BB-), a $50 million letter-of-credit facility (B1/BB-) and a $100 million one-year delayed-draw term loan, with all of these tranches priced at Libor plus 400 bps.

The revolver has a 75 bps commitment and an original issue discount of 98.

Credit Suisse is the lead bank on the deal, which will be used to fund the development of racino facilities in greater Indianapolis and western Pennsylvania.

Centaur is an Indiana-based gaming and horseracing company.

Deb Shops closes

Lee Equity Partners, LLC completed its buyout of Deb Shops, Inc. for approximately $395 million, according to a news release.

To help fund the transaction, Deb Shops got a new $205 million credit facility consisting of a $30 million revolver, a $110 million first-lien term loan and a $65 million second-lien term loan, according to previous filings with the Securities and Exchange Commission.

Barclays acted as the lead arranger and bookrunner on the deal.

Deb Shops is a Philadelphia-based specialty retailer of apparel, shoes and accessories for juniors.

X-Rite closes

X-Rite Inc. completed its acquisition of Pantone Inc. for a purchase price of $180 million, according to a company news release.

To fund the acquisition, and to refinance existing debt, X-Rite got a new $415 million credit facility consisting of a $40 million revolver (Ba3/BB-), a $250 million first-lien term loan (Ba3/BB-) and a $125 million second-lien term loan (B3/B).

Merrill Lynch, Fifth Third Bank, National City Bank and LaSalle Bank acted as the lead banks on the deal.

The second-lien term loan, which is being held by GoldenTree Asset Management, carries call protection of 102 in year one and 101 in year two.

Financial covenants include an interest coverage ratio and a debt-to-EBITDA ratio.

X-Rite is a Grand Rapids, Mich., technology company that develops color management systems. Pantone is a Carlstadt, N.J., provider of color systems and services.

Targa closes

Targa Resources Partners LP closed on its oversubscribed $250 million revolver add-on, according to an 8-K filed with the Securities and Exchange Commission Wednesday.

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

Proceeds from the upsized revolver are being 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.

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.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.