National CineMedia, ECI set talk; Paetec retranches; Baldor cuts spread; HCA dips; Sbarro breaks

By Sara Rosenberg

New York, Jan. 29 - National CineMedia LLC and Electrical Components International Holdings Co. (ECI) came out with price talk on their new bank deals as the transactions were launched to investors on Monday.

In other primary news, Paetec upsized its first-lien term loan B and eliminated the second-lien term loan from the capital structure, and Baldor Electric Co. lowered pricing on its term loan being that the tranche was well-oversubscribed.

Meanwhile, in the secondary, HCA Inc.'s term loan debt ended the day slightly softer as news of a repricing hit the market, and Sbarro Inc.'s credit facility freed for trading with the term loan quoted in the high par to 101 type context.

National CineMedia held a bank meeting on Monday morning to launch its new credit facility, and in connection with the launch, price talk on the term loan B surfaced, according to a market source.

The $725 million eight-year term loan B was presented to lenders with talk set at Libor plus 200 basis points, the source said.

Price talk on the $80 million six-year revolver has yet to emerge, the source added.

According to recent filings with the Securities and Exchange Commission, both tranches were expected to carry pricing of Libor plus 175 bps; however, this was never the official price talk on the deal.

Lehman, JPMorgan, Morgan Stanley and Credit Suisse are joint bookrunners on the $805 million senior secured credit facility (B1/B+), with Lehman and JPMorgan the joint lead arrangers and Lehman the left lead.

Proceeds from the term loan will be used to redeem preferred membership units of National CineMedia LLC and repay existing revolver debt.

The revolver will be available for general corporate purposes.

The credit facility is being done in conjunction with the company's initial public offering of common stock.

National CineMedia is a Centennial, Colo., operator of digital in-theatre networks. The company's founding members are AMC Entertainment Inc., Cinemark, Inc. and Regal Entertainment Group.

Electrical Components price talk

Electrical Components released price talk of Libor plus 250 bps on its $90 million first-lien term loan add-on as syndication on the deal officially kicked off on Monday, according to a market source.

The add-on is priced in line with the company's existing $155 million of first-lien term loan debt, the source remarked.

UBS is the lead arranger on the deal.

Proceeds will be used to fund the acquisition of GenTek Inc.'s Noma Wire and Cable Assembly Business for $75 million cash.

The company's existing $35 million revolver and $60 million second-lien term loan will remain in place as is, the source added.

Electrical Components is a St. Louis-based manufacturer and marketer of wire harnesses and a provider of value-added assembly services.

Paetec upsizes first, cancels second

Paetec decided to change the structure of its $850 million credit facility by upsizing its first-lien term loan B and eliminating the second-lien term loan from the deal, according to a market source.

The six-year first-lien term loan B (B2/B) is now sized at $800 million, up from an original size of $625 million, the source said, adding that the price talk of Libor plus 350 bps was left unchanged.

The seven-year second-lien term loan (Caa1/CCC+) that was canceled was sized at $175 million with price talk of Libor plus 650 bps and call protection of 102 in year one and 101 in year two.

Both term loans were heavily oversubscribed, but the company decided to go with all first-lien borrowings since it is cheaper debt, the source explained.

Paetec's credit facility still includes a $50 million five-year revolver (B2/B) that is talked at Libor plus 350 bps with a 50 bps unused fee.

Deutsche Bank and Merrill Lynch are joint lead arrangers and joint bookrunners on the deal, with Deutsche the left lead and administrative agent, Merrill the syndication agent and CIT Group the documentation agent.

Proceeds from the credit facility will be used to help fund the company's merger with US LEC Corp., to refinance both companies' debt and to fund the repurchase of US LEC's series A preferred stock held by Bain Capital and Thomas H. Lee Partners LP.

Under the merger agreement, Paetec and US LEC will become wholly owned subsidiaries of a new publicly owned holding company, New Paetec. Taking into account outstanding rights to acquire shares in the new holding company in the future, US LEC security holders will own about one-third and Paetec security holders will own about two-thirds of the new holding company.

Total debt to adjusted EBITDA will be 4.3 times, and net debt to adjusted EBITDA will be 4 times.

The new holding company will be based in Fairport, N.Y., and will operate as a communications provider.

Baldor trims pricing

Baldor announced Monday that it reverse flexed pricing on its $1 billion seven-year term loan to Libor plus 175 bps from original talk at launch of Libor plus 225 bps due to strong market demand, according to an informed source.

Pricing on the company's $200 million five-year revolver was left unchanged at Libor plus 225 bps, the source added.

Recommitments from lenders are due by noon on Tuesday.

BNP Paribas and SunTrust are the lead banks on the $1.2 billion credit facility (Ba3/BB) that will be used to help fund the acquisition of Reliance Electric Co. and certain of its affiliated companies from Rockwell Automation, Inc. for $1.8 billion, comprised of $1.75 billion in cash and 1.6 million shares of Baldor common stock.

Late last week, Baldor had said that it was considering increasing its term loan to $1.05 billion as a result of the decision to cancel a $150 million mandatory convertible preferred stock offering.

However, the upsizing proved unnecessary as the company raised enough funds through a common stock offering to avoid the need for more debt.

Baldor is a Fort Smith, Ark., manufacturer of industrial electric motors, drives and generators.

UAL flexes

Also lowering pricing was UAL Corp., as it reduced the spread on its $1.8 billion term loan B to Libor plus 200 bps from original talk at launch of Libor plus 225 bps, according to a fund manager.

The company's $2.1 billion credit facility (B1/B+) also includes a $300 million five-year revolver.

Allocations on the transaction are expected to go out by the end of this week.

JPMorgan is the lead bank on the deal that will be used to refinance the Elk Grove Township, Ill., airline's existing credit facility.

HCA lower with repricing

Moving to the secondary, HCA's term loan A and term loan B were off a touch in very active trading as the company announced plans to reprice its term loan debt, according to traders.

The term loan A closed the session at par ¾ bid, 101 offered, down from par 7/8 bid, 101 1/8 offered, traders said.

As for the term loan B, one trader had the paper closing the session at par 7/8 bid, 101 1/8 offered, down from Friday's closing levels of 101 bid, 101¼ offered. The trader went on to say that immediately after news of the repricing hit, the term loan B was quoted at par ¾ bid, 101 offered but it regained most of the ground it lost before the day was done.

Meanwhile, a second trader had the term loan B closing the session at 101 bid, 101 1/8 offered, down from Friday's levels of 101¼ bid, 101 3/8 offered. This trader said that the term loan B had dropped to as low as par 5/8 bid, par 7/8 offered immediately following the news, but then a bunch of paper traded at 101 and then at north of 101.

Either way, both traders agreed that the term loan B was lower by an eighth of a point on a day-over-day basis.

Under the amendment proposal, pricing on the term loan A would go down to Libor plus 225 bps from Libor plus 250 bps and pricing on the term loan B would go down to Libor plus 225 bps from Libor plus 275 bps.

In addition, the company will reprice its European term loan at Euribor plus 225 bps from Euribor plus 250 bps.

Bank of America is the lead bank on the repricing.

HCA is a Nashville, Tenn., health care services company.

Sbarro frees to trade

Also in trading news, Sbarro's credit facility hit the secondary with the $183 million term loan B quoted at par ¾ bid, 101 offered, according to a trader.

The term loan B is priced at Libor plus 250 bps. During syndication, the tranche was upsized from $150 million as a $33 million seller note was eliminated and pricing was reduced from original talk at launch of Libor plus 300 bps.

Sbarro's $208 million credit facility (Ba3/B) also includes a $25 million revolver.

Bank of America and Credit Suisse are the lead banks on the deal, with Bank of America the left lead.

Proceeds from the credit facility, along with $150 million of bonds, will be used to help fund MidOcean Partners' leveraged buyout of Sbarro, a Melville, N.Y., quick service Italian restaurant company.

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