General Growth Properties B loan half full; Lake Las Vegas multiply oversubscribed

By Sara Rosenberg

New York, Oct. 22 - General Growth Properties Inc.'s $2 billion four-year term loan B continues to see good response from investors as about $500 million in orders were placed since Wednesday's launch, which on top of the approximately $500 million in orders placed before the bank meeting, brings the book to about half done.

In other primary news, Lake Las Vegas Resort's first- and second-lien term loans were multiply oversubscribed by Friday as a rush of commitments came in throughout the week.

General Growth's $250 million three-year revolver and $3.9 billion three-year term loan A have also gotten a couple of new orders in since the bank meeting, a market source said. During the senior managing agent process north of $2 billion in commitments came in for the pro rata debt. This number hasn't changed much with the additional orders placed this week, but it does show that the deal has good momentum.

The term loan B is talked at Libor plus 250 basis points, and both the revolver and the term loan A are talked at Libor plus 225 basis points.

The term loan B is being offered at par. Upfront fees for the pro rata strip are 50 basis points for $100 million commitment and 25 basis points for anything less than $100 million.

The commitment deadline is Nov. 3.

Some factors that may be drawing investors to the deal are that it's a large, liquid, relatively well rated deal at BB+ with underlying asset value and a management team that over time wants to take the company to investment-grade status, a source previously said.

The $3.6 billion six-month bridge loan is not being syndicated since it will be taken out by CMBS transactions. In fact, it is expected that only about $1.5 billion of the bridge loan will be left at the closing of the credit facility.

Lehman Brothers, Credit Suisse First Boston, Wachovia, and Bank of America are joint lead arrangers and joint bookrunners on the deal, with Lehman listed on the left.

Proceeds, along with $500 million of new equity, will be used to help fund the acquisition of The Rouse Co. for $7.2 billion, including the assumption of about $5.4 billion of Rouse debt, and to redo $2 billion of General Growth's unsecured credit.

The transaction is expected to close in the fourth quarter of 2004.

Post closing, General Growth, a Chicago-based shopping mall owner, will have about $23 billion of debt, or about 71% of total pro forma capitalization of $32.5 billion based upon the current stock price. Estimated interest coverage is approximately 1.6x for the first full year after closing, assuming the transaction closes in the fourth quarter.

Lake Las Vegas oversubscribed

Lake Las Vegas Resort's $460 million credit facility has seen an overwhelming amount of investor demand this past week, as the $360 million five-year first-lien term loan (Ba3/BB) is now two times oversubscribed and the $100 million six-year second-lien term loan (B1/B) is now three times oversubscribed, according to a market source.

The first-lien term loan (Ba3/BB) is talked at Libor plus 275 basis points and the second-lien term loan (B1/B) talked at Libor plus 600 basis points.

Proceeds will be used to pay a dividend to equity holders and to refinance the company's existing credit facility, which happens to be pretty small.

Credit Suisse First Boston is the lead bank on the loan.

Lake Las Vegas is a Henderson, Nev., residential, golf and resort community.

Federal-Mogul gets agent commitment

Federal-Mogul Corp. got its first agent commitment in on Friday on the $500 million senior secured asset-based five-year revolver, just two days after launch, which is a relatively quick response from an asset-based lender, according to a market source.

The revolver (Ba2), priced with an interest rate of Libor plus 225 basis points and a commitment fee of 50 basis points, is part of the company's $1.43 billion exit facility that contains a $828 million seven-year senior secured term loan (B1) talked at Libor plus 225 to 250 basis points and a $105 million synthetic letter-of-credit facility (B1) talked at Libor plus 225 to 250 basis points.

Federal-Mogul also launched its $500 million debtor-in-possession financing facility on Wednesday with pricing of Libor plus 225 basis points.

Citigroup is the lead bank on both deals.

Proceeds from the exit facility will be used to refinance the DIP facility on completion of the company's reorganization, to make some cash payments for allowed claims, to pay fees and expenses and for working capital and other general corporate purposes.

Proceeds from the new DIP will be used to refinance the existing DIP.

Federal-Mogul, a Southfield, Mich., auto parts manufacturer, filed for Chapter 11 on Oct. 1, 2001 over asbestos-related claims.

Smurfit-Stone cuts pricing

Smurfit-Stone Container Corp. reduced pricing on three out of the four tranches contained in its $2.32 billion credit facility (Ba3/BB-) by 25 basis points, according to a market source.

The $120 million six-year institutional letter-of-credit facility, the $1 billion seven-year term loan B and the $300 million seven-year term loan C were all reverse flexed to Libor plus 200 basis points from Libor plus 225 basis points.

However, the $900 million six-year revolver remained priced at Libor plus 225 basis points, the source added.

JPMorgan and Deutsche Bank are the lead banks on the deal, with JPMorgan listed on the left.

Proceeds from the credit facility will be used to refinance existing credit facilities at Stone Container Corp. and Jefferson Smurfit Corp. and combine the facilities into one credit agreement. The refinancing is being done in connection with the merger of the two operating companies.

Smurfit-Stone is a Chicago manufacturer of paperboard and paper-based packaging.

Nextel numbers reinforce paydown rumor

Nextel Communications Inc.'s release of strong third quarter numbers and upward guidance revision for 2004 helped to reinforce the rumor that the company will likely repay its term loan debt using revolver borrowings once the term loan call protection expires in December, according to a trader.

"They have this huge $4 billion revolver. With the numbers so good it makes it even more likely that they will take out this higher cost paper with revolver borrowings. I think the revolver is like Libor plus 100 basis points and the term loan is Libor plus 225 basis points. The risk of them needing $4 billion is getting smaller all the time," the trader said.

Of course, the potential that the company will call its term loan at par in December is still just market rumor, the trader said, but this speculation is enough to keep the term loan at par 1/8 bid, par ½ offered despite the release of strong financial numbers.

For the third quarter, revenue was $3.4 billion, up 18% from last year's third-quarter revenue of $2.89 billion, operating income before depreciation and amortization (OIBDA) was $1.32 billion, up 17% from last year's third-quarter OIBDA of $1.13 billion, and income was $586 million, or $0.53 per share, up from last year's third-quarter income of $346 million, or $0.33 per share.

Nextel ended the third quarter with about $1.7 billion in cash, cash equivalents and short-term investments. Total liquidity was $4.7 billion, and there was $9.1 billion of debt outstanding, down from $12.2 billion as of the end of the third-quarter 2003.

The Reston, Va., wireless communications company also revised its guidance for 2004, increasing OIBDA expectations to about $5.1 billion from $4.9 billion and earnings per share expectations to approximately $2.60, on a GAAP basis, from $2.00.

Consolidated Communications closes

Consolidated Communications Inc. closed on its repricing deal, under which the company reduced pricing on its $315 million eight-year term loan B to Libor plus 250 basis points from Libor plus 275 basis points, according to a market source.

Furthermore, there's a stepdown provision that would allow pricing to drop to Libor plus 225 basis points if two conditions are met - one, it can only occur after first quarter 2005, and two, the company needs to be taken off of negative watch by Moody's Investors Service without a downgrade in ratings.

Originally, the syndicate was looking to take pricing on the term loan B down to Libor plus 225 basis points but the request was revised at the start of this week to meet halfway with investors ahead of the Tuesday consent deadline. It was at that time that the stepdown was added into the credit agreement.

The 101 soft call protection for one year against a repricing was left unchanged throughout the repricing process.

Citigroup and Credit Suisse First Boston are the lead banks on the deal, with Citigroup listed on the left.

Consolidated Communications is a Mattoon, Ill., telecommunications provider.

CHI Overhead closes

CHI Overhead Doors Inc. closed on its $145 million senior credit facility Friday, according to a market source. UBS is the lead bank on the deal.

The facility consists of a $95 million first-lien term loan with an interest rate of Libor plus 350 basis points, a $30 million second-lien term loan with an interest rate of Libor plus 800 basis points and a $20 million revolver with an interest rate of Libor plus 300 basis points.

Proceeds from the facility will be used to help fund JLL Partners leveraged buyout of the overhead garage door manufacturing company.

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