Charter dips as CEO leaves; Koch repriced loan starts trading; Celanese subscribed, CamelBak filling up

By Sara Rosenberg

New York, Jan. 18 - Charter Communications Inc.'s bank debt was weaker on Tuesday as its chief executive officer resigned, and Koch Cellulose LLC's repriced term loan started trading. Meanwhile, the new deal market continues to be hot with Celanese Corp. now full and CamelBak gaining momentum.

Charter's term loan A and term loan B bank debt were each down by about half a point, with the term loan A quoted at 99 bid, 99½ offered and the term loan B quoted at 99¾ bid, par ¼ offered, according to a trader, who said that the drop came on the heels of the resignation news.

On Tuesday morning, the St. Louis broadband communications company said that Carl Vogel resigned his position as president, chief executive officer and a director of the company.

Robert P. May, a director of Charter and chairman of the board of HealthSouth Corp., was named interim president and chief executive officer, effective immediately.

Koch Cellulose loan trades

Koch Cellulose's repriced $300 million term loan B and $74 million letter-of-credit facility started trading, with the term loan quoted at par ¼ to par ½ bid, par ¾ to 101 offered "in light volume," according to a trader.

Although it was the first day that the repriced bank debt traded, it was not technically considered a break since no one dropped out of the amended deal, another trader explained.

Through the amendment the company lowered the pricing grid on its term loan B and letter-of-credit facility by 25 basis points across the board. The initial interest rate on the two tranches is Libor plus 200 basis points. Pricing can step down to Libor plus 175 basis points if leverage falls below 21/2x.

The deal included 101 soft call protection.

Citigroup and Deutsche Bank were the lead banks on the deal, with Citigroup the left lead.

Koch Cellulose is a Brunswick, Ga., manufacturer and seller of wood pulp.

Warner Chilcott to break Wednesday

It is now expected that Warner Chilcott Corp.'s $1.79 billion senior secured credit facility (B) will open for trading on Wednesday, not Tuesday as was previously anticipated by the market, according to traders.

The syndicate started working on allocations on Friday.

The facility consists of a $1.4 billion seven-year term loan B, which was upsized by $150 million after the bond deal was downsized by $150 million, with an interest rate of Libor plus 275 basis points, a $240 million seven-year delayed-draw term loan B with an interest rate of Libor plus 275 basis points and a commitment fee of 137.5 basis points, and a $150 million six-year revolver with an interest rate of Libor plus 250 basis points and a 50 basis point commitment fee.

Deutsche Bank and Credit Suisse First Boston are joint lead arrangers and joint bookrunners on the deal with Deutsche the left lead, CSFB is administrative agent, Deutsche is syndication agent, and JPMorgan and Morgan Stanley are co-documentation agents.

Proceeds from the term loan B, along with proceeds from the senior subordinated notes offering, will be used to help fund the acquisition of Warner Chilcott plc by DLJ Merchant Banking, JP Morgan Partners, Bain Capital and Thomas H. Lee.

The delayed draw will be used for product acquisition.

Warner Chilcott is a U.K.-based branded pharmaceutical manufacturer and marketer.

Celanese subscribed

Celanese's $1.385 billion term loan B add-on, which just launched about a week ago, is already fully subscribed as the deal is "going extremely well," according to a market source.

The quick fill up of the term loan book was somewhat expected after a substantial amount of orders had been placed within hours of launch illustrating the good momentum that the deal would continue to have throughout last week and into this one.

The term loan B, of which $250 million is delayed draw, is priced with an interest rate of Libor plus 250 basis points - in line with existing term B pricing. Pricing can step down to Libor plus 225 basis points after the first quarter depending on leverage.

Celanese is also looking to get a $220 million add-on to its revolver, which is priced at Libor plus 225 basis points, also in line with existing pricing.

The Dallas-based chemical company's term loan is being offered at par, and revolver commitments of $10 million or more get 50 basis points upfront.

Although these are add-ons to the existing credit facility, the Jan. 11 bank meeting had been open to everyone because of the large size of the incremental term B bank debt.

Celanese is getting the additional bank debt (B1/B+) in connection with its IPO of series A common stock that is expected to generate net proceeds of about $949 million and a preferred stock offering that is expected to generate net proceeds of about $194 million. These proceeds will be used to redeem notes and pay a portion of a $952 million dividend to the holders of the company's series B common stock.

Proceeds from the non-delayed-draw term loan B will be used to repay the amounts outstanding under the existing senior credit facilities and the floating-rate term loan, and to pay $582 million of the dividend payment.

Proceeds from the delayed-draw term loan B will be used for the Acetex Corp. and Vinamul Polymers acquisitions.

Commitments are due Jan. 21, and closing is anticipated for Jan. 26. There is no expectation of closing the books early, despite the great forward progress that the deal is making, the source added.

Deutsche Bank, Morgan Stanley and Bank of America are the lead banks on the deal, with Deutsche the left lead.

CamelBak building

The book on CamelBak's $100 million 61/2-year first-lien institutional term loan "is building nicely but not done yet" as a lot of accounts are still working on the deal, according to a market source. A few commitments on the tranche had already been in as of mid-last week.

As for the $37 million seven-year second-lien term loan, the book is basically full and has been since mid-last week.

The first-lien term loan is talked at Libor plus 350 basis points, and the second-lien term loan is talked at Libor plus 700 basis points.

The $152 million facility also contains a $15 million six-year revolver talked at Libor plus 350 basis points.

There are no upfront fees on the term loans or the revolver.

BNP Paribas and Bank of New York are co-lead arrangers on the deal, with BNP listed on the left.

Proceeds will be used to refinance debt and pay a dividend.

CamelBak is a Petaluma, Calif., producer of personal hydration systems.

Intelsat price reduction possible

Market speculation is that buyers will seek a purchase price reduction for Intelsat Ltd. now that a second satellite has been lost; however, it is anticipated that any reduction would probably result in less equity, less bonds, or a combination thereof, for LBO financing rather then a decrease in the size of the credit facility, according to a market source.

The credit facility is currently sized at $650 million (Ba3), consisting of a $350 million term 61/2-year term loan B talked at Libor plus 225 basis points and a $300 million six-year revolver talked at Libor plus 200 basis points, with a 37.5 basis point commitment fee. By comparison, the bond deal is sized as $2.55 billion of senior notes in three tranches.

The reason for such a large difference in size between the two debt transactions is because the company wants to leave its existing bonds in place and the bonds have a carve out as to how much bank debt is allowed.

Intelsat's loss of its IS-804 satellite, which was announced on Sunday, is the second glitch in the LBO process that has been going on for months now. The company had to delay its bank meeting at the end of November indefinitely, with the launch finally occurring in early January, due to a failure in the Americas-7 satellite.

Intelsat expects to record a non-cash impairment charge of about $73 million to write off the value of the IS-804 satellite.

An investor call was held on Tuesday to discuss the impact on revenue and EBITDA from the loss of the IS-804 satellite, according to a market source.

Because of the satellite failure, the company extended its bond roadshow to the end of this week from mid-week.

Deutsche Bank, Credit Suisse First Boston and Lehman Brothers are the lead banks on the credit facility, with Deutsche listed on the left.

Zeus Holdings Ltd., a company formed by a consortium of funds advised by Apax Partners, Apollo Management, Madison Dearborn Partners and Permira, originally agreed to acquire Intelsat, a Pembroke, Bermuda-based satellite communications company, in a transaction valued at about $5 billion, including about $2 billion of existing net debt.

Universal Compression closes

Universal Compression Holdings Inc. closed on its $650 million senior secured credit facility (Ba2/BB) consisting of a $400 million seven-year term loan B with an interest rate of Libor plus 175 basis points and a step down to Libor plus 150 basis points, and a $250 million five-year revolver with an interest rate of Libor plus 150 basis points.

The term loan B reverse flexed during syndication from original price talk of Libor plus 200 basis points.

Wachovia Capital Markets and J.P. Morgan Securities acted as the joint lead arrangers and joint bookrunners on the deal. Deutsche Bank Securities Inc. acted as co-arranger, Wachovia Bank administrative agent, JPMorgan Chase Bank syndication agent, and Deutsche Bank Securities Inc., The Bank of Nova Scotia and The Royal Bank of Scotland plc were co-documentation agents.

Approximately $30 million under the new credit facility, together with borrowings under another facility, were used to repay $82 million of term debt. Furthermore, the company plans on using remaining proceeds to redeem the $440 million of 8.875% notes and for working capital needs and general corporate purposes. The 8.875% notes are callable beginning Feb. 15, 2005 at a price of 104.438.

"We are pleased by the broad participation in this facility, which reflects the growing awareness in capital markets of Universal's financial strength and business strategy. The facility will provide the opportunity to lower financing costs and extend debt maturities while allowing the financial flexibility to take advantage of growth opportunities," said J. Michael Anderson, senior vice president and chief financial officer, in a company news release.

Universal Compression is a Houston natural gas compression services company.

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