International Transmission meeting sees good attendance on favorable view of sector

By Sara Rosenberg

New York, Feb. 6 - International Transmission Co. held a bank meeting for a new $320 million credit facility on Thursday that was very well attended, a source close to the deal told Prospect News.

CIBC is the lead bank on the deal and Union Bank of California and SocGen have signed on to the deal as co-syndication agents.

"It's a great deal," the source said. "Wires are pretty simple businesses. There's a lot of interest in this part of the industry. It's going to be a growth sector.

"This is the first of many transactions in this sector," the source predicted.

The credit facility is divided into two parts - one to be held at the operating company and one to be held at the holding company.

The operating company's loan consists of a $185 million six-year term loan B with an interest rate of Libor plus 250 basis points and a $15 million three-year revolver with an interest rate of Libor plus 250 basis points, the syndicate source said.

The holding company's loan consists of a $120 million six-year term loan B with an interest rate of Libor plus 375 basis points.

The difference in pricing is due to the dissimilarity of ratings that the holding company and operating company are expected to be assigned. "We expect investment grade ratings at the op. co. and strong BB ratings for the ho. co.," a syndicate source previously explained.

Proceeds from the facilities will be used to help fund the acquisition of International Transmission by affiliates of Kohlberg Kravis Roberts & Co. and Trimaran Capital Partners LLC for approximately $610 million in cash.

International Transmission is the Detroit-based transmission business subsidiary of DTE Energy.

Overall, there haven't been that many announcements in terms of new deals recently, especially compared to the mad rush of deals that came in January. However, market professionals have still been very busy, according to one market participant, who explained that since there are a lot of deals currently in market people have been focusing on those and waiting to see how well everything gets digested.

Furthermore, the "whole Iraq thing has people kind of sitting on their hands," he added.

In other news, following Wyndham International Inc.'s lender call on Wednesday, it is still unclear to some participants whether the company's proposed amendment will pass. The company is seeking to extend the maturities of the installment repayment loan and revolver to June 30, 2006 from June 30, 2004, according to a fund manager. Term loan B holders are not being asked to execute any modifications to their agreement.

"I haven't really heard much from the bank group so I can't really gauge whether it will pass or not," the fund manager told Prospect News.

Under the amendment, the cash portion of the revolver's pro rata distribution from proceeds of asset sales would be used towards paying down the IRLs. Meanwhile, the revolver commitments would be reduced by whatever the pro rata portion of the paydown would have been. For example, the company currently has $474 million in commitments for the revolver, which is 22.5% of the committed facilities so the pro rata portion of proceeds from asset sales is 22.5%. If Wyndham were to have $1 million for pay downs from asset sales, then revolver commitments would be reduced by $225,000 and the actual cash would be used to pay down the IRLs, the fund manager explained.

There is no event prompting this amendment, meaning the Dallas hotel operator is currently in full compliance with its covenants.

"I'm not in favor of it," the fund manager said. "As an IRL holder I don't think there's enough of an economic incentive to sign this - to get a larger portion of a paydown from asset sales that haven't even been announced then to get paid down on June 30, 2004."

As for term loan B holders, even though they are not being asked to do anything, they may end up benefiting from this amendment since if an extension is obtained the company won't have to refinance the IRLs or the revolver so there's no potential liquidity crisis, a source previously told Prospect News.

In the secondary, Federal-Mogul Corp. once again was actively trading on Thursday still in response to last week's revelation of the company's reorganization plan, according to a trader. The loan traded at 76, up a point from Wednesday's levels.

On Friday, the company announced that the Official Committee of Unsecured Creditors, the Official Committee of Asbestos Claimants, the Steering Committee of Pre-Petition Lenders, Icahn Associates and the Futures Representative have all agreed to the principal terms of a plan to reorganize Federal-Mogul and emerge from Chapter 11 free of asbestos liabilities, with a de-leveraged balance sheet. The reorganization plan, which is expected to be filed in early March, is still subject to court approval.

Federal-Mogul, a Southfield, Mich. automotive parts manufacturer, filed for Chapter 11 in October 2001.

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