Texas Genco, Carrols cuts B loan spread; Federal-Mogul, Polar break for trading

By Sara Rosenberg

New York, Dec. 7 - Texas Genco Holdings Inc. lowered pricing on its largely oversubscribed term loan B on Tuesday as price talk came out on the company's bond deal. Carrols Corp. also cut pricing on its term loan B during the session, but the changes didn't end there - there was also a $20 million increase to the tranche as the proposed bond deal was decreased by the equivalent amount.

In the secondary, Federal-Mogul Corp.'s exit facility broke for trading, with the term loan quoted on either side of par 1/2, and Polar Corp.'s second-lien term loan broke for trading near the 102 context.

Texas Genco's $1.625 billion seven-year term loan B, of which $475 million is delayed draw, was reverse flexed to Libor plus 200 basis points from Libor plus 250 basis points, according to market sources.

Furthermore, a stepdown in pricing to Libor plus 175 basis points was added to the tranche, effective upon the company reaching Ba1 ratings, a source said. The $2.45 billion credit facility is currently rated Ba2/BB.

The reverse flex came on the heels of 6 7/8% to 7 1/8% price talk surfacing on the company's $1.125 billion 10-year bond deal, which is set to price on Wednesday.

This is the second change made to the term loan B since syndication began. Last week, the what was then labeled as a two times oversubscribed term loan B was upsized by $250 million in response to an equivalent reduction in the proposed bond deal.

Texas Genco's $325 million five-year revolver, $200 million five-year letter-of-credit facility and $300 million five-year special letter-of-credit facility are still talked at Libor plus 225 basis points, a source added.

Goldman Sachs, Deutsche Bank, Morgan Stanley and Citigroup are lead banks on the deal (excluding the special letter-of-credit facility), with Goldman listed on the left.

Deutsche is leading the syndication of the $300 million special letter-of-credit facility and is marketing the tranche to special investors, such as hedge funds and insurance companies.

CIT and GE Capital have signed on to the revolver as co-documentation agents, ABN Amro and Royal Bank of Canada signed on as senior managing agents, and NatCity signed on to the lower tier.

Proceeds from the facility, combined with proceeds from the bond deal, will be used to help fund GC Power Acquisition LLC's acquisition of Texas Genco from CenterPoint Energy Inc. for about $3.65 billion in cash.

GC Power Acquisition LLC is a newly formed entity owned in equal parts by affiliates of The Blackstone Group, Hellman & Friedman LLC, Kohlberg Kravis Roberts & Co. LP and Texas Pacific Group.

Texas Genco is a Houston wholesale electric power generating company.

Carrols ups B size, cuts pricing

Carrols upsized its term loan B to $220 million from $200 million and downsized its senior subordinated notes offering to $180 million from $200 million, according to a market source. Furthermore, pricing on the term loan B was lowered to Libor plus 250 basis points from Libor plus 300 basis points.

The $50 million revolver talked at Libor plus 300 basis points was left unchanged in terms of size and pricing, the source added.

Proceeds from the $270 million senior secured credit facility (B1/B+) and the bonds will be used to redeem $170 million outstanding principal amount of the company's 9½% senior subordinated notes due 2008, repay outstanding borrowings under the existing senior credit facility, and make a distribution to shareholders.

JPMorgan is the lead bank on the deal.

Carrols is a Syracuse, N.Y., restaurant company that operates Burger Kings, Taco Cabana restaurants and Pollo Tropical restaurants.

Novelis B oversubscribed

Novelis Inc.'s $1.5 billion seven-year term loan B talked at Libor plus 225 basis points has reached "ample oversubscription" levels way ahead of the Dec. 13 commitment deadline, according to a market source.

In fact, the tranche has been oversubscribed since Friday - less than a week after launch - and the book has just continued to grow from there as more and more commitments keep coming in from lenders, the source added.

The term loan B, of which about $550 million will reside at a Canadian borrower, is being offered to investors at par.

Novelis' $2 billion senior secured credit facility (Ba2/BB-) also contains a $500 million five-year revolver talked at Libor plus 225 basis points.

Citigroup, Morgan Stanley and UBS are joint lead arrangers on the deal, with Citigroup the left lead.

Proceeds, combined with proceeds from a proposed $1.3 billion senior notes offering that won't kick off till next year, will be used to help fund the spinoff of Novelis from Alcan Inc.

Alcan shareholders will meet to consider approving the spin-off at a special meeting scheduled for Dec. 22.

Novelis is a rolled aluminum products company with 2003 revenues of $6.2 billion and 38 operating facilities in 12 countries. Alcan is a Montreal-based aluminum and packaging, and aluminum recycling company.

Federal-Mogul plus par

Federal-Mogul's $828 million senior secured seven-year term loan B (B1/B+) was quoted at par ¼ bid, par ¾ offered by the end of its first day in the secondary loan market, according to a trader. The tranche is priced with an interest rate of Libor plus 300 basis points, up from original price talk of Libor plus 225 to 250 basis points.

The company's $1.418 billion exit facility also contains a $500 million asset-based five-year revolver (Ba2/BB) with an interest rate of Libor plus 225 basis points, and a $90 million synthetic letter-of-credit facility (B1/B+), downsized from $105 million, with an interest rate of Libor plus 300 basis points. The synthetic letter-of-credit facility was also flexed up from original price talk of Libor plus 225 to 250 basis points during syndication.

Citigroup is the lead bank on the deal for the Southfield, Mich., supplier of vehicular parts.

Polar breaks

Polar's $88 million second-lien term loan hit the secondary on Tuesday, "traded well" throughout the session and was quoted at 101¾ bid, 102½ offered by the end of the day, according to a trader.

Bank of America is the led bank on the term loan, which is priced with an interest rate of Libor plus 650 basis points.

Polar is a Holdingford, Minn.-based manufacturer, seller and servicer of tank trailers.

GenCorp closes

GenCorp Inc. closed on its new $180 million secured credit facility (B1/BB/BB-) consisting of an $80 million revolver due Dec. 6, 2009 with an initial interest rate of Libor plus 275 basis points, a $25 million term loan due Dec. 6, 2010 with an interest rate of Libor plus 300 basis points, and a $75 million credit-linked institutional letter-of-credit facility due Dec. 6, 2010 with an interest rate of Libor plus 300 basis points.

The term loan and institutional letter-of-credit facility were originally talked at Libor plus 300 to 325 basis points before firming up at the tight end of talk during syndication.

Revolver pricing is grid based and can range from Libor plus 225 to 300 basis points depending on leverage.

Wachovia Capital Markets LLC acted as co-lead arranger and sole bookrunner, The Bank of Nova Scotia acted as co-lead arranger, Wachovia Bank, is the administrative agent, The Bank of Nova Scotia is the syndication agent and JPMorgan Chase Bank and The Bank of New York are documentation agents.

Security is substantially all company assets including the stock and assets of material domestic subsidiaries.

The new facility replaces the company's previous credit facility. The outstanding term loans totaling $141 million plus accrued interest under the previous facility were repaid in full using restricted cash from the proceeds of the GDX Automotive sale in August and the equity offering in November.

"We are pleased with the successful closing of this new credit facility which is another milestone in the recapitalization of our balance sheet," said Yasmin Seyal, senior vice president and chief financial officer, in a company news release.

GenCorp is a Rancho Cordova, Calif., technology-based manufacturer with positions in the aerospace and defense, and real estate industries.

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