Kansas City Southern term loan B breaks into the secondary at 101 plus levels

By Sara Rosenberg

New York, March 22 - Kansas City Southern's credit facility broke for trading on Monday at 101 plus levels, satisfying investors who have been watching for the deal's entrance into the secondary since the latter half of last week as allocations were still being finalized.

The $150 million term loan B, which carries an interest rate of Libor plus 200 basis points, was quoted at 101¼ bid, 101½ offered, according to a trader.

The $250 million credit facility (Ba3/BB+) also contains a $100 million revolver with an interest rate of Libor plus 225 basis points.

Morgan Stanley and Scotia are the lead banks on the refinancing deal.

Kansas City Southern is a Kansas City, Mo., holding company with principal operations in rail transportation.

Allied Waste down on additional debt

Allied Waste International Inc.'s bank debt dropped by about a quarter to a half a point on Monday as news emerged that the company plans on increasing its amount of senior secured debt by doing an add-on to its credit facility, according to a trader.

The waste services company's paper was quoted at 101 bid, 102 offered, the trader said.

Scottsdale, Ariz. - based Allied Waste is hoping to issue up to $1.1 billion of debt, of which up to $500 million may be senior secured debt and the remainder will be senior unsecured debt, in order to fund the cash tender offer for Allied Waste North America Inc.'s $1 billion 10% senior subordinated notes due 2009.

CalGen first lien active

Calpine Generating Co. LLC's $835 million five-year first lien term loan/note was said to trade actively on Monday with the paper quoted late in the day at par ¼ bid, par ½ offered, according to a trader. The paper opened at par 1/8 bid on Monday morning and progressed to be better bid as the day went on, a second trader added.

By comparison though, the $740 million six-year second lien floating-rate loan/note saw "very little activity" on Monday, with the paper quoted around 96 1/2, according to the first trader.

"If guys wanted yield on this they would have gone to the third lien instead of the second lien," the second trader said in explanation of why the second lien has not been trading as actively as the first or third lien paper. "I think a large enough portion [of the second lien is being held by the agent] that there's better sellers than buyers," he added.

CalGen is a subsidiary of San Jose, Calif., power generator Calpine Corp.

Adesa structure firms

Details on Adesa Inc.'s proposed credit facility, which is scheduled to launch via a bank meeting on Tuesday, firmed up with the credit facility now expected to consist of $150 million five-year revolver with an interest rate of Libor plus 225 basis points, a $200 million five-year term loan A with an interest rate of Libor plus 225 basis points and a $150 million six-year term loan B with an interest rate of Libor plus 250 basis points, according to an informed source.

Previously, the deal structure was a bit more fluid with the facility anticipated to contain $350 million in total of term loans, split in half between a term loan A and a term loan B.

UBS and Merrill Lynch are the joint lead arrangers on the deal, with UBS listed on the left.

Security for the credit facility is expected to a lien on some of assets.

Proceeds from the credit facility will be used in combination with proceeds from a $150 million senior subordinated notes and proceeds from an initial public offering of Adesa's common stock to help support Adesa's spin-off from Allete Inc.

More specifically, Adesa will replace and repay its existing credit facility, pay a $100 million dividend to Allete, repay $200.2 million of outstanding debt owed to unaffiliated third parties and repay all outstanding intercompany debt owed to Allete and its subsidiaries, which totaled $136.1 million as of Dec. 31, 2003.

The IPO is expected to be completed in the second quarter of 2004. After the IPO, Allete will own at least 80% of the equity of Adesa. The company anticipates completing the subsequent spin-off within four months of the IPO, according to an Allete news release.

The revolver is expected to be undrawn at closing.

Adesa is a Carmel, Ind. operator of used vehicle and auto salvage auctions.

Omega closes

Omega Healthcare Investors Inc. closed on its new $125 million senior secured revolver. Banc of America Securities LLC served as the sole lead arranger and sole bookrunner on the deal and Bank of America is the administrative agent.

Also involved in the syndicate is Deutsche Bank AG, UBS Loan Finance LLC and GE Healthcare Financial Services, according to a company news release.

Borrowings under the revolver will be used for acquisitions and general corporate purposes.

The new revolver and a completed $200 million senior notes offering replace the company's previous $225 million senior secured credit facility and $50 million acquisition credit facility, which have been terminated.

As was previously announced, Omega expects to record expenses of approximately $12.4 million in connection with the completion of these transactions, of which $6.4 million would consist of non-cash charges relating to deferred financing costs previously paid in connection with the establishment of the previous credit facilities that must be written off upon termination of the facilities.

Omega is a Timonium, Md., real estate investment trust specializing in the long-term care industry.

Correction: Boyd via B of A and CIBC

Boyd Gaming Corp.'s proposed credit facility will be led by Bank of America and CIBC, according to a market source, not by Deutsche as was reported in Friday's issue.

The facility, which is being obtained in connection with the Coast Casinos Inc. merger, is still expected to be April business.

Proceeds from the facility combined with proceeds from a bond offering will be used to refinance Coast's existing credit facility, Coast's 9 ½% bonds due 2009 and Boyd's existing credit facility. Boyd's three outstanding note issues are expected to be unaffected by the refinancing.

The $1.3 billion merger consideration consists of the receipt by Coast shareholders of, on a fully-diluted basis, about $495 million in cash and the issuance of about 19.4 million shares to Coast shareholders. Completion of the transaction is anticipated by mid-2004.

Boyd Gaming is a Las Vegas gaming company. Coast Casinos is a Las Vegas owner and operator of hotel-casinos.

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