Scientific Games, American Airlines reverse flex; 24 Hour Fitness, Propex break; Valor up on prepayment

By Sara Rosenberg

New York, Dec. 10 - Scientific Games Corp. made a number of changes to its credit facility Friday, including increasing the revolver size and decreasing pricing on both the revolver and the term loan. Meanwhile, American Airlines Inc. made another round of changes to its deal, this time cutting pricing on the revolver and changing call protection on the term loan.

In the secondary, 24 Hour Fitness Worldwide Inc.'s term loan B add-on and Propex Fabrics Inc. broke for trading, with the companies' institutional paper quoted in the plus par area on the bid side. Also, Valor Communications Group Inc.'s second-lien term loan and senior subordinated term loan headed higher to call protection levels on news that they will be repaid with proceeds from an initial public offering of common stock.

Scientific Games upsized its five-year revolver to $250 million from $200 million, resulting in an overall $50 million increase to the total credit facility size, according to a market source.

Furthermore, initial pricing on the revolver as well as on the $100 million five-year term loan was reverse flexed to Libor plus 175 basis points from Libor plus 200 basis points, the source added. Pricing on both tranches will be grid based.

The term loan was marketed primarily to banks and funds that committed to the revolver being that the company is reducing its term debt by close to $400 million through this new deal and increasing its revolver by $175 million.

The term loan is being offered at par, and the revolver has a $15 million tier with an upfront fee of 75 basis points and a $10 million tier with an upfront fee of 50 basis points.

There is also an uncommitted $100 million term loan greenshoe provision in the credit agreement. This incremental bank debt would be available post closing, if needed, primarily for general corporate purposes.

JPMorgan and Bear Stearns are joint bookrunners on the deal.

Security is substantially all the assets of Scientific Games and its wholly owned domestic subsidiaries, including stock and other equity interests.

Proceeds from the oversubscribed facility (Ba2/BB), which just launched on Dec. 2, will be used to replace the company's existing senior credit facility. A portion of the borrowings under the proposed facility would be used to repay a portion of the current outstanding term loan debt D.

The company also tapped the high-yield market for $200 million of eight-year senior subordinated notes, which priced on Thursday at 6¼%. Price talk on the bonds had been 6¼% to 6½%. Proceeds from the bonds will also be used to repay a portion of the existing term loan outstanding and additionally will be used to finance the tender offer for the company's 12½% senior subordinated notes due 2010.

Furthermore, the company priced $250 million 0.75% convertible senior subordinated debentures last week with proceeds earmarked for existing term debt repayment.

At Sept. 30, there was $459.354 million in outstanding term loan D under the existing facility. The existing facility also contains a $75 million revolver.

Scientific Games is a New York-based provider of services, systems and products to both the instant ticket lottery industry and the pari-mutuel wagering industry.

American Airlines revolver reverse flexes

American Airlines made a second group of changes to its $850 million credit facility (B+), reducing pricing on the $600 million revolver to Libor plus 475 basis points from Libor plus 525 basis points and changing the call protection on the $250 million term loan B to only include 101 in year one instead of 102 in year one and 101 in year two, according to a market source.

These modifications come on the heels of Wednesday's term loan B reverse flex to Libor plus 525 basis points from Libor plus 600 basis points and the acceleration of the term loan B commitment deadline to Friday from Dec. 15.

The term loan is being offered at par and a fee of 50 basis points is being given to lenders for a $50 million revolver commitment.

Citigroup Global Markets Inc. and JPMorgan Chase are joint lead arrangers on the deal, with Citigroup the left lead.

Proceeds will be used to refinance the Fort Worth, Texas-based airline's existing $834 million facility. The deal is hoped to close before Christmas.

24 Hour Fitness high par bid

24 Hour Fitness' $130 million add-on to its term loan B (B1/B) allocated on Friday and opened for trading at par 5/8 bid, 101 offered before moving up to par 7/8 bid with no offers, according to a fund manager.

The tranche is priced at Libor plus 350 basis points, in-line with pricing on the existing term loan B.

The add-on was marketed to existing lenders and "if you were in the existing deal you got your pro rata percentage of the new deal," the fund manager explained.

JPMorgan is the lead bank on the deal that will be used to redeem senior subordinated notes and some junior capital.

24 Hour Fitness is a San Ramon, Calif., owner and operator of a fitness center chain.

Propex plus par

Propex Fabrics' $110 million seven-year term loan B also allocated on Friday with opening levels seen at par ½ bid, 101 offered, according to a market source.

"I heard lots of people were out today so that's why it didn't trade up," the source added.

The term loan was four times oversubscribed so allocations were relatively small, with one source saying that he got about 20% of what he put in for.

Pricing on the term loan is set at Libor plus 225 basis points. Originally, the tranche was priced at Libor plus 275 basis points but it was reverse flexed on two separate occasions by 25 basis points each time.

Propex Fabrics' $175 million credit facility (B3/B+) contains a $65 million five-year revolver as well, which also priced at Libor plus 225 basis points after two 25 basis point cuts.

Proceeds from the BNP Paribas led deal were used to acquire BP's Amoco Fabrics and Fibers subsidiary and its associated assets in a transaction that was actually completed last week. The transaction was sponsored by an investor group comprised of The Sterling Group LP, Genstar Capital LP and Laminar Direct Capital LP.

Propex is an Austell, Ga.-based producer of synthetic fabrics.

Valor up on repayment news

Valor Communications' senior secured second-lien term loan and senior subordinated term loan moved higher on the day, with the second lien quoted at 103 bid, 103½ offered, up from 102 bid, 103 offered, and the senior subordinated quoted at 104 bid, 104½ offered, up from 102 bid, 102¾ offered, according to a trader.

The movement came on the heels of the company's Thursday night S-1/A filing with the Securities and Exchange Commission for an IPO of common stock, which will be used to repay the $265 million senior secured second-lien term loan and the $135 million senior subordinated term loan in full.

"The second-lien will be called at 103 and the senior sub. deal will be called at 104," the trader said in explanation of why levels moved higher.

Valor Communications is an Irving, Texas-based provider of telecommunications services.

Advanced Medical Optics nets orders

Commitments have been coming in for Advanced Medical Optics Inc.'s $305 million term loan C since Thursday's bank meeting, according to a market source, who anticipates that the deal's syndication process will be a good one.

The term loan C is talked at Libor plus 200 basis points and is being offered to investors at par.

"I think people like the story. Outstanding CFO. Liked the rationale of the transaction. I mean look how much equity they're using," the source explained.

By the "transaction," the source was referring to the acquisition of VISX Inc. for a total consideration of approximately $184 million in cash - which this facility will help fund - and approximately 29 million shares of Advanced Medical Optics stock.

The $505 million credit facility also contains a $200 million revolver talked at Libor plus 225 basis points.

Commitments are due on Dec. 20.

Bank of America and Morgan Stanley are joint lead arrangers on the deal, with Bank of America on the left.

Advanced Medical Optics is a Santa Ana, Calif., developer, manufacturer and marketer of medical devices for the eye and eye care products.

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