K&F ups term loan size, cuts pricing; SpectraSite B reverse flexes; Ad Directory breaks, Calpine second lien up

By Sara Rosenberg

New York, Nov. 4 - K&F Industries Inc. upsized its credit facility on Thursday after downsizing its bond deal, and cut pricing on the severely oversubscribed term loan. And, SpectraSite Communications Inc. also cut pricing on its term loan B during the session.

On the secondary front, Advertising Directory Solutions Inc. broke for trading and Calpine Corp.'s second lien took a nice jump up on earnings.

K&F increased the size of its eight-year term loan B to $480 million from $430 million after downsizing its proposed bond deal to $315 million, according to a market source.

In addition, pricing on the term loan B was reduced to Libor plus 250 basis points from Libor plus 275 basis points and a performance-based grid was added that takes pricing down even further to Libor plus 225 basis points under certain conditions, the source added.

Price talk on the downsized bond offering, which is in the roadshow stage, is 7¾% to 8%.

The term loan B, which launched on Oct. 21, had built a book that was somewhere around $1.5 billion strong by late last week so the reverse flex in pricing was an already anticipated move.

K&F's six-year revolver remained sized at $50 million with an interest rate of Libor plus 250 basis points.

Lehman, JPMorgan, Goldman Sachs and Citigroup are the lead banks on the deal, with Lehman left lead.

Proceeds from the now $530 million senior secured credit facility (B2/B+), along with proceeds from the senior subordinated note issue and a $315 million equity contribution from Aurora Capital Group, will be used to help finance Aurora's acquisition of the company for a cash purchase price of $1.06 billion.

The acquisition is scheduled to close this month.

K&F is a New York supplier to manufacturers and operators of commercial, general aviation and military aircraft. The company is jointly owned by Bernard L. Schwartz and Lehman Brothers Merchant Banking.

SpectraSite reverse flex

SpectraSite Communications Inc. lowered pricing on its $400 million term loan B to Libor plus 150 basis points from Libor plus 175 basis points on Thursday, according to a market source.

The $200 million revolver and $300 million delayed-draw term loan A remained priced at Libor plus 150 basis points.

TD Securities and Citigroup are the joint lead arrangers on the deal, with TD listed on the left. TD is the administrative agent, Citigroup is the syndication agent, and Deutsche Bank, Lehman and Royal Bank of Scotland are co-documentation agents. These five banks have already fully underwritten the $900 million deal (Ba3/BB-).

Security is a pledge of substantially all the company's assets.

Proceeds will be used to refinance the company's existing credit facility and for general corporate purposes, including acquisitions and financing distributions to its shareholders.

The existing facility currently has outstanding borrowings of about $439 million.

SpectraSite is a Cary, N.C.-based wireless tower operator.

Ad Directory breaks

Advertising Directory Solutions Holdings, also known as SuperPages Canada, hit the secondary on Thursday, with the term loan B quoted at 101½ bid, 101¾ offered and the second-lien term loan quoted at 102¼ bid, 102½ offered, according to a trader.

The $769 million term loan B (B1/BB-) is priced with an interest rate of Libor plus 225 basis points, and the approximately $310 million second-lien term loan (B2/B-) - which was upsized during syndication from $230 million after the senior notes offering was reduced by $40 million to $170 million - is priced with an interest rate of Libor plus 400 basis points.

The Burnaby, B.C.-based directories publisher's $1.139 billion credit facility also contains a $60 million revolver (B1/BB-).

JPMorgan, Bank of America, Deutsche and Merrill Lynch are the lead banks on the deal that will be used to help fund Bain Capital's acquisition of the Verizon Communications' directory operations in Canada.

Calpine up on earnings

Calpine's second-lien bank debt gained a couple of points during market hours, trading as high as 86 and closing out the day at 85¾ bid, 86¼ offered, according to traders.

"This company always disappoints and I think it was actually in-line with what people thought so I guess that's a positive. Their stock is up like 14%," a trader said.

For the three months ended Sept. 30, net income was $22.3 million, or $0.05 per share, compared to earnings of $237.8 million, or $0.51 per share, for the same period last year. Revenue was about $2.557 billion compared to about $2.657 billion, and EBITDA was $716.5 million compared to $663.1 million last year.

"During the quarter, Calpine's power plant operations remained strong, with 97% availability," said Peter Cartwright, chief executive officer and president, in a news release. "Earnings, however, fell short of our expectations - primarily as a result of low market spark spreads attributed in part to mild, below normal weather in several U.S. power markets.

"While we cannot predict when power prices will normalize, we are encouraged by an improvement in spark spreads in several of Calpine's major power markets. Moving forward, Calpine remains committed to advancing our strategy of selling power under long-term contracts, improving our balance sheet through the repurchasing of debt, and enhancing liquidity."

Charter slightly stronger

Charter Communications Inc.'s bank debt gained maybe an eighth of a point on Thursday after the release of earnings numbers with the term loan A quoted at 98¼ bid and the term loan B quoted at 99¼ bid, according to a trader.

For the third quarter, revenues were $1.248 billion, an increase of $89 million, or 8%, over pro forma third quarter 2003 revenues of $1.159 billion and an increase of 3% over third quarter actual revenues of $1.207 billion. Loss from operations was $2.344 billion compared to third quarter 2003 income from operations of $104 million on a pro forma basis. Net loss applicable to common stock was $3.295 billion compared to earnings of $36 million last year and loss per common share was $10.89 compared to earnings per common share of 12 cents last year. Lastly, adjusted EBITDA was $471 million, an increase of $7 million over last year.

For the nine months ended Sept. 30, pro forma revenues were $3.672 billion, an increase of 6% over pro forma revenues of $3.457 billion for the year-ago period. Pro forma loss from operations totaled $2.266 billion compared to net income of $267 million for the same pro forma 2003 period. Adjusted EBITDA rose to $1.401 billion from $1.372 billion last year.

At Sept. 30, the St. Louis cable company had $18.5 billion of outstanding debt and $129 million of cash on hand.

"It is likely that Charter or Charter Communications Holding Co. LLC will require additional funding to repay debt maturing in 2005 and 2006. We are working with our financial advisors to address such funding requirements, however, there can be no assurance that such funding will be available to us," a company news release added.

Cooper-Standard sale sees hitch

The sale of Cooper-Standard Automotive by Cooper Tire & Rubber Co. to an entity formed by The Cypress Group and Goldman Sachs Capital Partners for about $1.165 billion in cash has hit a bit of a snag as the U.S. District Court in Indiana granted a preliminary injunction on the sale of four of the 47 facilities on Tuesday, according to a company news release.

The court's decision affects the Cooper-Standard Automotive facilities in Auburn, Ind., El Dorado, Ark., and two facilities located in Bowling Green, Ohio.

The temporary injunction was in response to a complaint filed by the United Steelworkers of America that claimed they have the right to require a buyer to negotiate new labor agreements before a sale takes place.

"We believe this ruling will be reversed on appeal and both parties continue to pursue the closing of this transaction according to the original schedule," said Thomas A. Dattilo, Cooper's chairman, president and chief executive officer, in the release. "We have protected the employees of Cooper-Standard as the sale agreement requires that all existing contractual arrangements are maintained."

To help fund this transaction, Cooper-Standard is expected to approach both the bank loan and the high-yield markets with new deals; however, nailing down timing on the financing has been tough because of this situation.

Some thought the loan was scheduled to launch this Friday, but that meeting was pushed off to an undetermined date, according to one market source.

Structure on the facility has also been incredibly fluid, although that's a separate issue from this court case, a source explained. It was originally anticipated that the credit facility would be sized at $625 million, consisting of a $125 million revolver and a $500 million term loan B talked in the Libor plus 275 basis points context. It was also assumed that there would be about $300 million of bonds. However, now sources say that the structure is still to be determined. One person told Prospect News that the structure changed to a $475 million credit facility consisting of a $125 million revolver, a $90 million term loan A, a $75 million term loan B, and a $185 million term loan C. Another source said that the structure was not finalized but he thought the total size might be $425 million. And, a third source said that it's possible that neither structural assumption is accurate.

One thing is for sure though, and that is that lead banks on the deal are Deutsche Bank and Lehman Brothers acting as joint lead arrangers and joint bookrunners, with Deutsche listed on the left, and Goldman Sachs and UBS acting as co-documentation agents.

Cooper-Standard is a Novi, Mich.-based manufacturer of fluid handling systems, body sealing systems, and active and passive vibration control systems.

Choctaw closes

Choctaw Resort Development Enterprise closed on its new $143.75 million term loan (Ba3/BB) priced with an interest rate of Libor plus 225 basis points. The deal had originally gone out at Libor plus 250 basis points but was reverse flexed during syndication.

Bank of America was the lead bank on the facility.

Proceeds from the term loan, combined with proceeds from a $150 million 15-year amortizing senior note offering, were used to fund the tender offer for the company's 9¼% senior notes due 2009 and to repay some bank debt.

Choctaw Resort Development Enterprise was established by the Mississippi Band of Choctaw Indians to operate the Silver Star Hotel and Casino and to develop and operate the Golden Moon Hotel and Casino.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.