Refco firms on bankruptcy filing; QTC, Sorenson, NextMedia hold bank meetings; market firms

By Paul A. Harris

St. Louis, Oct. 18 - Again it was Refco, Inc. that commandeered much of the leveraged loan market's attention on Tuesday as its parent company filed for bankruptcy after negotiating a sale of its main futures business to a group of investors led by J.C. Flowers & Co. LLC.

Elsewhere bank meetings were held for NextMedia Group, QTC Management Inc. and Sorenson Communications, while pricing emerged on deals from Penhall International Corp. and Swett & Crawford.

Meanwhile market source said that the broad market traded as much as a quarter of a point higher during the session.

Refco up again

A sell-side source told Prospect News that the loans of Refco were up in light trading, spotting them in the low 90s going out, in a market that was altogether firmer on the day.

Late Monday Refco filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court for the Southern District of New York, after the company sold its commodities trading subsidiary to a group of investors led by J.C. Flowers for $768 million.

"There are bids for the futures business, and the other businesses," one market source remarked on the improvement.

"Basically you are able to put a value on the whole thing to where guys are able to back out where coverage should be in a bankruptcy scenario," the source added, spotting Refco's bonds trading up on the session into the mid-50s and bank debt also up into the low 90s.

This source also saw names including SunGard Data Systems, The Neiman Marcus Group Inc. and Charter Communications firming in the secondary, and spotted Blockbuster's term loan B also higher, trading in "the mid-98s."

Bank meetings for QTC, Sorenson, NextMedia

In the primary market QTC Management Inc. held a bank meeting Tuesday for its $170 million credit facility via UBS and Bear Stearns.

The acquisition financing loan is comprised of a $15 million six-year senior secured revolver and a $100 million seven-year senior secured first-lien term loan, both talked at Libor plus 250 basis points, and a $55 million 7.5-year senior secured second-lien facility talked at Libor plus 600 basis points.

Diamond Bar, Calif.-based QTC Management is a provider of outsourced disability evaluations.

Meanwhile Sorenson Communications held a bank meeting for its $585 million credit facility via Bank of America and Royal Bank of Scotland.

The deal includes a $20 million revolver talked at Libor plus 300 basis points, an approximately $405 million first-lien term loan talked at Libor plus 300 basis points, and an approximately $160 million second-lien term loan talked at Libor plus 725 basis points.

A source close to the acquisition financing deal said that the meeting for the deal from the Salt Lake City-based services provider for the hearing impaired was very well attended.

Also Tuesday NextMedia Operating Inc. held a bank meeting for its $390 million credit facility via Goldman Sachs and GE Capital.

The facility features a $50 million revolver and a $240 million term loan B (B1/B) talked at Libor plus 225 basis points, and a $100 million second-lien term loan (B3/CCC+) talked at Libor plus 400 basis points

The Denver-based billboard company will use the proceeds to refinance debt.

Talk on Penhall, Swett & Crawford

Also in primary market action price talk of Libor plus 650 to 700 basis points emerged for Penhall International Corp.'s $105 million term loan B.

The loan is part of the company's $160 million credit facility being led by Deutsche Bank.

Meanwhile Swett & Crawford issued price talk on its $280 million credit facility.

The wholesale insurance brokerage firm talked its $20 million revolver and $190 million term loan B (B1) at Libor plus 275 basis points, and its $70 million second-lien term loan (B3) at Libor plus 700 basis points

Credit Suisse First Boston and Deutsche Bank are joint lead arrangers.

Crown to fund tender with bank, bond deals

In a Tuesday press release Crown Holdings, Inc. announced it will sell new senior unsecured notes and obtain a new senior credit facility to fund its tender for any and all of Crown European Holding's SA's $1.085 billion 9½% second-priority senior secured notes due March 1, 2011, €285 million 10¼% second-priority senior secured notes due March 1, 2011 and $725 million 10 7/8% third-priority senior secured notes due March 1, 2013.

Citigroup and Lehman Brothers are the dealer managers and solicitation agents for the tender from the Philadelphia-based packaging company, which expires on Nov. 16.

Targa bank deal oversubscribed

Sources also said Tuesday that the upsized Targa Resources Inc. $2.5 billion credit facility (Ba3/B+) is oversubscribed and looking very strong.

The deal, led by Credit Suisse First Boston, Merrill Lynch and Goldman Sachs, is comprised of a $250 million six-year revolver talked at Libor plus 225 basis points, a $300 million six-year synthetic letter-of-credit facility talked at Libor plus 250 basis point, a $700 million two-year asset sale term loan talked at Libor plus 225 basis points and a $1.25 billion seven-year term B talked at Libor plus 250 basis points.

The deal was upsized by $100 million when the company downsized its bond deal by that amount, dropping a proposed offering of floating-rate notes.

One buy-side source professed the expectation that the deal would come with a small premium, however a syndicate source, hearing that color, said that it's too early to tell.

"Whether they flex pricing down or not remains to be determined," the source said, confirming that the deal is oversubscribed.

The source added that there has been no change to the credit ratings of the bank deal as a consequence of its being upsized.

Meanwhile in the junk market on Tuesday the Houston-based midstream priced its downsized $250 million issue of eight-year senior notes (B2/B-) at par on Tuesday to yield 8½%, on top of price talk.

Kodak closes

In follow-up news, Eastman Kodak Co. said it completed its $2.7 billion credit facility (Ba2/BB-) via Citigroup.

The facility includes a $1 billion five-year revolver at Libor plus 200 basis points, a $1.2 billion seven-year term loan at Libor plus 225 basis points and a $500 million seven-year delayed-draw term loan at Libor plus 225 basis points.

The new revolver replaces Kodak's existing $1.225 billion five-year revolver while the term loan was used primarily to repay debt used to fund the recent acquisition of Creo.

"We are pleased to close this important transaction, as it strengthens our financial position and enhances our ability to successfully execute our digital growth strategy," said Robert H. Brust, Kodak's chief financial officer, in news release. "Now that the major pieces of our digital transformation are in place, we are committed to paying down debt."

Kodak is a Rochester, N.Y., digital imaging products, services and solutions company.

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