Trump adds pricing step down, starts trading; Energy Transfer sees good attendance; Calpine rallies again

By Sara Rosenberg

New York, May 4 - Trump Hotels & Casinos Resorts Inc. added a step down in pricing on Wednesday to its term loans that would become effective upon a rating upgrade, allocated the deal and saw the term loans free up for trading in the 101 context.

Meanwhile, Energy Transfer Co. saw a nice sized audience participate in its conference call as investors were interested to learn about the credit with its debut appearance in the loan market.

And, in the secondary, Calpine Corp.'s second-lien term loan seems unstoppable as the paper has moved higher every day this week, including Wednesday when levels rallied by an additional three to four points.

Trump added a pricing step down to its $150 million delayed-draw term loan and $150 million term loan B on Wednesday morning, under which pricing can reduce to Libor plus 225 basis points if the deal is awarded a ratings upgrade, according to a market source. So, if Moody's Investors Service were to increase its rating on the exit facility by one notch to B1 from B2 the step down would take effect, the source explained.

Following this minor modification, allocations were given out and the term loans opened for trading around 101 bid, 101¼ offered, according to a trader. The paper then moved up to 101¼ bid, 101½ offered during the session before settling back down at opening levels, the trader added.

Pricing on the two tranches is set at Libor plus 250 basis points - unchanged from opening price talk levels.

The two term loans were sold to investors as a strip, and both tranches were described as very oversubscribed within a week of the mid-April launch.

Trump's $500 million exit financing facility (B2/BB-) also contains a $200 million revolver with an interest rate of Libor plus 250 basis points.

Morgan Stanley & Co. Inc. and UBS Investment Bank are joint lead arrangers on the deal, with Morgan Stanley the left lead.

Security is a first-priority lien on substantially all company assets.

Proceeds will be used to fund immediate capital improvements as well as certain expansion projects at current properties and to provide financial resources to potentially invest in additional jurisdictions.

The facility is being sought after in connection with the company's recapitalization plan, under which it was required to file for Chapter 11. Trump anticipates emerging from bankruptcy this month as Trump Entertainment Resorts Inc. The company filed for bankruptcy on Nov. 22.

Under the reorganization plan, Trump Hotels & Casino Resorts Holdings LP and Trump Hotels & Casino Resorts Funding Inc. would issue new 8.5% 10-year notes to help replace some of the company's existing bonds. These new notes are secured by substantially all real property and incidental personal property and some other assets, subject to liens securing the $500 million exit facility.

Holder of the approximately $1.3 billion Trump Atlantic City Associates notes would get about $777.3 million of new notes, about $384.3 million of common stock and an additional amount in cash equal to simple interest accrued on about $777.3 million of new notes at the annual rate of 8.5% from the last scheduled date to which interest was paid with respect to the Trump Atlantic City notes through the effective date of the plan.

Holders of the approximately $425 million Trump Casino Holdings first-priority notes would get about $425 million of new notes, $21.25 million in cash, about $8.5 million of common stock and an additional amount in cash equal to simple interest accrued on $425 million at the annual rate of 12.625% through the effective date of the plan.

Unaffiliated holders of the approximately $54.6 million Trump Casino Holdings second-priority notes would get about $47.7 million of new notes, about $2.3 million in cash, about $2.1 million of common stock and an additional amount in cash equal to simple interest accrued on $54.6 million at the annual rate of 18.625% from the last scheduled date to which interest was paid with respect to the Trump Casino Holdings second-priority notes to the date that is 90 days after the petition date for the Chapter 11 cases and about $47.7 million at the annual rate of 8.5% from the 91st day after the petition date through the effective date of the plan.

Lastly, existing common stockholders would receive nominal amounts of common stock of the recapitalized company.

Trump Hotels is an Atlantic City, N.J., hotel and casino owner and operator.

Energy Transfer well attended

Energy Transfer had a lot of people listening in on its conference call Wednesday that was held to launch a proposed $700 million seven-year term loan; however, no early commitments had come in by late day as the issuer is new to the loan market and investors probably need some time to get comfortable with the credit, according to a market source.

The term loan is priced with an interest rate of Libor plus 200 basis points and is being offered to investors at par. There is no call protection contained in the deal.

Commitments are due May 16.

Citigroup and Goldman Sachs are the lead banks on the deal, with Citigroup the left lead.

Proceeds will be used to pay a dividend to Energy Transfer Partners LP, a Tulsa, Okla.-based publicly traded partnership owning and operating a diversified portfolio of energy assets.

Energy Transfer Co. owns the 2% general partnership interest in Energy Transfer Partners.

Calpine momentum builds

Calpine's second-lien bank debt jumped up about three to four points on Wednesday continuing the upward trend that has been seen every day this week, according to a trader.

One trader had the paper quoted at 80 bid, 81 offered by late day, while a second trader said that the paper was going out at 79 bid, 80 offered.

On Tuesday, one trader had Calpine quoted at 76 bid, 77 offered and said that the paper was only up about half to three quarters of a point on the day, being that he traded it at 76 on Monday, while a second trader had the paper quoted at 77 bid, 78 offered and put levels up by three points on the day as he saw it close out Monday's session at 74 bid, 75 offered.

The paper also saw gains during Monday's session as well. In fact, since the release of preliminary first-quarter numbers last Friday, Calpine's second-lien term loan has gained somewhere in the range of 8½ to 9½ points.

Financial results that were released early included expectations of cash and cash equivalents on hand of approximately $800 million, EBITDA, as adjusted for non-cash and other charges, of about $240 million and a fully diluted loss per share of about $0.38.

The San Jose, Calif.-based power company announced these results almost a full week ahead of schedule to disqualify bankruptcy rumors that played havoc on Calpine's equity, bonds and second-lien loan.

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