Hexion rises with updates; Great Point OID emerges; Cedar Fair, Vanguard ready launches

By Sara Rosenberg

New York, Jan. 14 - Hexion Specialty Chemicals Inc.'s strip of C-1 and C-2 bank debt headed higher during the trading session after the company broke down how proceeds from its proposed bond offering would be used and announced progress on its revolver extension.

In other news, Great Point Power LLC came out with an original issue discount on its proposed term loan as the transaction was presented to investors on Thursday, and Cedar Fair LP and Vanguard Health Systems Inc. revealed that they are getting ready to launch their new deals.

Hexion trades up

Hexion's strip of C-1 and C-2 bank debt gained some ground during the session as the company detailed its paydown plans with proceeds from its proposed bond offering and said that it has received more commitments towards its extended revolver, according to traders.

The strip was quoted by one trader at 94¼ bid, 95¼ offered, up from Wednesday's levels of 93¾ bid, 94¼ offered, and by a second trader at 94 bid, 95 offered, up three quarters of a point on the day.

On Thursday morning, Hexion revealed that it will be repaying $500 million of its U.S. term loans with proceeds from a $700 million senior secured notes offering, and the remaining proceeds would be used to provide the company with incremental liquidity.

Then, at the end of the day, news surfaced that the bond offering was increased to $1 billion.

Proceeds from the notes will be placed into escrow until the company obtains approval of its credit facility amendment, which, among other things, allows for the notes.

Hexion extending maturities

As was previously reported, Hexion's amendment would also allow for the extension of term loan debt to May 5, 2015 in return for higher pricing as well as the extension of revolver maturities to May 5, 2013.

As of Jan. 12, the company had about $200 million in orders towards the extended revolver, up from $175 million prior to the launch of the amendment, according to an 8-K filed with the Securities and Exchange Commission on Thursday.

Pricing on the extended revolver is Libor plus 450 basis points and committing revolver lenders are being offered a 200 bps upfront fee as well as a 200 bps ticking fee.

The extended revolver would take effect upon the May 31, 2011 expiration of the existing revolver.

Hexion also revising covenants

Hexion's proposed amendment would also revise some covenants contained in the credit agreement and reset the accordion feature to $200 million.

In addition, the amendment would permit the issuance of additional senior notes or loans as long as an agreed amount of proceeds are used to prepay term loans and/or revolver loans at par.

Lastly, the amendment would allow the sale of additional debt, including junior or unsecured debt, in an amount not to exceed the accordion feature.

Hexion is a Columbus, Ohio-based thermoset resins company.

Great Point reveals OID

Moving to the primary market, Great Point Power held a bank meeting on Thursday to kick off syndication on its proposed $220 million seven-year term loan, and in connection with the launch, the original issue discount was announced, according to a market source.

The term loan, which has already received "strong early interest," is being offered to investors at a discount price of 981/2, the source remarked.

Price talk on the term loan is Libor plus 375 basis points with a 2% Libor floor.

Originally, it was anticipated that the term loan would sized at $210 million, but it was increased prior to the launch.

Barclays and Bank of America are the lead banks on the deal that will be used to fund the acquisition of four power generation plants and one transmission facility from Energy Investors Funds.

Great Point Power is a newly formed portfolio company of ArcLight Capital Partners LLC.

Cedar Fair sets timing

In more new deal happenings, Cedar Fair has firmed up timing on the launch of its $1.25 billion senior secured credit facility (Ba3) as a conference call has been scheduled for Friday morning, according to a market source.

The credit facility, which is going out to existing lenders only, consists of a $250 million revolver and a $1 billion term loan.

Bank of America, JPMorgan, Barclays Capital, UBS and KeyBanc Capital Market are the lead banks on the deal that will be used to help fund the buyout of the company by Apollo Global Management.

Under the acquisition agreement, Cedar Fair unitholders will receive $11.50 in cash for each limited partnership unit that they hold. The transaction is valued at about $2.4 billion, including the refinancing of outstanding debt.

Cedar Fair selling notes

Other financing for Cedar Fair's buyout is expected to come from the sale of $700 million of high-yield bonds and up to $765 million in equity.

The bonds are backed by a commitment for a $700 million senior unsecured bridge loan.

Closing on the buyout is expected by the beginning of the second quarter of 2010, subject to approval of holders of two-thirds of Cedar Fair's outstanding units, the receipt of regulatory approvals and other conditions. The transaction does not include a financing condition.

Cedar Fair is a Sandusky, Ohio-based amusement-resort operator.

Vanguard launching refinancing

News surfaced on Thursday that Vanguard Health Systems will be approaching the market with a $1.025 billion credit facility that will be used to refinance existing debt, according to a market source.

The deal will be launched to existing lenders only via a conference call on Friday, the source said.

Bank of America and Barclays are the lead banks on the credit facility.

Vanguard is a Nashville, Tenn.-based owner and operator of acute care hospitals and complementary facilities and services.

Fairway Market closes

Fairway Market LLC closed on its $114 million credit facility, according to a news release.

The facility consists of a $105 million five-year term loan priced at Libor plus 950 bps with a 2.5% Libor floor that was sold at an original issue discount of 97, and a $9 million 4½ year revolver.

During syndication, the term loan was upsized from $100 million while the revolver was downsized from $15 million, pricing on the term loan was flexed up from Libor plus 800 bps and the discount on the term loan firmed at the wide of the initial 97 to 98 talk.

Credit Suisse and Jefferies acted as the lead banks on the deal that was used to refinance existing debt and for expansion capital.

Fairway is a supermarket chain with locations in New York and New Jersey.

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