Spectrum, RCN break; Harrah's rises; Cincinnati, World Kitchen tweak deals; Fidelity sets launch

By Sara Rosenberg

New York, June 4 - Spectrum Brands Inc. and RCN Cable saw their credit facilities allocate and free up for trading during Friday's market hours, and Harrah's Entertainment Inc.'s bank debt was stronger on news of an investment.

Over in the primary market, Cincinnati Bell Inc. came out with some changes to its term loan, including lifting the spread and the original issue discount, and World Kitchen LLC reduced pricing and the Libor floor on its credit facility.

Also, Fidelity National Information Services Inc. firmed up timing on the launch of its proposed credit facility, but has not yet gone out with structural details on the debt.

Additionally, New Development Holdings LLC's credit facility was significantly oversubscribed by the recommitment deadline at the recently announced revised terms, and allocations are expected to go out during the week of June 7.

Spectrum Brands frees to trade

Spectrum Brands' credit facility hit the secondary market on Friday a few hours after the 11 a.m. ET recommitment deadline, according to trader.

The $750 million six-year term loan (B2/B) was quoted by one trader at 99 bid, 99½ offered, by a second trader at 99 bid, par offered and by a third trader at 99¼ bid, 99¾ offered. A fourth trader said the debt was at 98½ bid, 99½ offered on the break and then he saw it move up to 99½ bid, par offered.

Pricing on the oversubscribed term loan is Libor plus 650 basis points with a 1.5% Libor floor, and it was sold at an original issue discount of 98. There is 101 soft call protection for one year.

On Thursday, the term loan was downsized from $1 billion, pricing was increased from Libor plus 450 bps, the discount widened from 99 and call protection was added.

Amortization on the term loan is 2.5% in year one, followed by 5% per annum in subsequent years.

The company's $1.05 billion credit facility also includes a $300 million ABL revolver.

Spectrum Brands lead banks

Credit Suisse, Bank of America and Deutsche Bank are the lead banks on Spectrum Brands' credit facility, with Credit Suisse the left lead.

Proceeds from the credit facility, along with $750 million of bonds, will be used to help fund the company's merger with Russell Hobbs Inc. and to refinance Spectrum Brands' existing senior debt and a portion of Russell Hobbs' existing senior debt.

The senior secured notes offering was upsized from $500 million as a result of the term loan downsizing.

The company priced its 9½% notes on Friday at 98.634 to yield 9¾%.

Spectrum Brands leverage multiple

Following the refinancing of Spectrum Brands' term loan debt and ABL facility, the new combined entity is expected to have a leverage ratio of 3.8 times. By comparison, Spectrum Brands' leverage ratio at the end of the first fiscal 2010 quarter was 4.7 times.

The merger of Spectrum Brands and Russell Hobbs is expected to close in June, subject to approval by holders of a majority of Spectrum Brands' common stock, which will be sought at a special meeting on June 11.

Spectrum Brands is an Atlanta-based consumer products company. Russell Hobbs is a Miramar, Fla.-based marketer and distributor of a broad range of branded small household appliances.

RCN Cable starts trading

Another deal to break for trading was RCN Cable, with its $560 million six-year term loan B quoted at 98½ bid, 99 offered, according to a trader.

Pricing on the term loan B is Libor plus 450 bps with a 2% Libor floor and an original issue discount of 981/2. There is 101 soft call protection for one year.

During syndication, pricing on the term loan B was flexed up most recently from Libor plus 400 bps and, before that, from Libor plus 375 bps, the floor was increased from 1.75%, the discount widened from 99 and the call protection was added.

The company's $600 million credit facility (B1/B) consists of a $40 million five-year revolver.

RCN Cable funding buyout

Proceeds from the RCN Cable facility, along with a $265 million credit facility (B2/B) at RCN Metro Fiber, will be used to fund the buyout of RCN Corp. by ABRY Partners in a transaction valued at $1.2 billion, including the assumption of debt. RCN stockholders will be receiving $15 per share.

Prior to launch, RCN Cable's term loan B had been downsized from $580 as a result of increased cash flow at RCN, along with fewer shares to purchase than was originally thought in the buyout of the company.

SunTrust, GE Capital and Société Générale are the bookrunners on the deal, with SunTrust the left lead and the administrative agent.

RCN is a Herndon, Va.-based broadband services provider.

Harrah's heads up

Harrah's term loans headed higher in trading on the back of the company's announcement that it will be getting an investment from Apollo Management, TPG Capital and Paulson & Co. Inc., according to traders.

The term loan B-1 was quoted by one trader at 84 5/8 bid, 85 1/8 offered, up from 83½ bid, 84 offered and by a second trader at 84 bid, 84½ offered, up from 83½ bid, 84 offered.

The term loan B-2 was quoted by the first trader at 84 7/8 bid, 85 3/8 offered, up from 83½ bid, 84 offered, and by the second trader at 84¼ bid, 84¾ offered, up from 83¾ bid, 84¼ offered.

And, the term loan B-3 was quoted by the first trader at 84½ bid, 85 offered, up from 83 ¼ bid, 84 offered, and by the second trader at 83 7/8 bid, 84 3/8 offered, up from 83 bid, 83½ offered.

Harrah's exchanging debt

Under the investment agreement, Harrah's is exchanging $1.118 billion of debt for up to 15.6% of its common equity.

Specifically, Paulson, Apollo and TPG agreed to purchase roughly $835 million of Harrah's 5.625% senior notes due 2015, 6.5% senior notes due 2016 and 5.75% senior notes due 2017 for approximately $557 million.

Paulson has agreed to exchange about $710 million of notes in a private exchange for equity in Harrah's, and Apollo and TPG have agreed to exchange approximately $408 million of notes for equity on the same terms and conditions as Paulson.

In addition, through this transaction, Harrah's will raise $557 million of cash proceeds, which will be used for general corporate purposes, including further balance sheet optimization and strategic investments.

Harrah's, a Las Vegas-based provider of branded casino entertainment, expects to close on the exchange in the fourth quarter of 2010 or the first quarter of 2011.

Cincinnati Bell reworks pricing

Moving to the primary market, Cincinnati Bell made a round of changes to its $760 million seven-year term loan on Friday, such as flexing the spread higher, increasing the discount price and adding 101 soft call protection for one year, according to a market source.

Pricing on the term loan is now talked at Libor plus 500 bps, up from Libor plus 375 bps, and the original issue discount is now 97, up from the 98 to 99 area, the source said.

The 1.5% Libor floor on the term loan was left unchanged.

Prior to the deal's launch, the company remarked in a conference call that it expected the term loan to be priced in the Libor plus 350 bps area, compared to pricing of Libor plus 150 bps on its existing term loan, which will be refinanced in connection with this transaction.

Commitments are due form lenders on Tuesday morning.

Cincinnati Bell revolver flexing, too

Cincinnati Bell's $210 million four-year revolver will also see pricing increased so that it is in the same vicinity as the term loan pricing, but specifics are not yet available, the source continued. At launch, the revolver was being talked at Libor plus 350 bps with a 75 bps unused fee.

Bank of America, Morgan Stanley and Barclays are the lead banks on the $970 million senior secured credit facility (Ba3/BB), with Bank of America the left lead.

In addition to refinancing the existing roughly $200 million term loan, the new deal will be used to fund the $525 million acquisition of CyrusOne, a data center operator, and for general corporate purposes.

Closing on the transaction is targeted by the end of the second quarter, subject to customary conditions, including regulatory approvals.

Cincinnati Bell, a Cincinnati, Ohio-based provider of integrated communications services, expects pro forma LTM leverage to be 5.1 times.

World Kitchen trims pricing

World Kitchen revised its $220 million deal by lowering pricing across all tranches to Libor plus 400 basis points from Libor plus 425 bps and reducing the Libor floor to 1.25% from 1.5%, according to a market source.

The facility is comprised of a $90 million revolver, a $60 million term loan, $20 million Canadian dollar equivalent term loan and a $50 million capital expenditures facility.

The revolver has a 50 bps commitment fee and the capital expenditures facility has a 100 bps commitment fee.

At launch, all tranches were being offered with a 75 bps upfront fee for a commitment of $15 million and a 100 bps upfront fee for a commitment of $25 million.

World Kitchen refinancing debt

Proceeds from World Kitchen's credit facility will be used to refinance existing debt and fund capital expenditures.

BMO Capital Markets is the lead bank on the deal.

The facility is being marketed to banks, and those banks are being asked to commit pro rata across the board.

Total leverage at close will be 2.4 times.

World Kitchen is a Rosemont, Ill.-based manufacturer and marketer of bakeware, dinnerware, kitchen and household tools, rangetop cookware and cutlery products.

Fidelity National timing emerges

Fidelity National Information Services has nailed down timing on the launch of its proposed credit facility with the scheduling of a bank meeting for Tuesday, according to a market source.

Previously, the JPMorgan and Bank of America led deal was simply labeled as June business.

Specifics on the structure of the credit facility are not yet available, but, as was previously reported, the company plans to incur $2.5 billion of additional term loans and long-term bonds and will seek to amend and refinance its existing credit facilities.

Proceeds will be used to fund a leveraged recapitalization plan, under which the company will repurchase up to $2.5 billion of its common stock in a modified Dutch auction tender offer.

Fidelity National is a Jacksonville, Fla.-based provider of financial institution core processing and card-issuer and transaction-processing services.

New Development overfills

New Development Holdings, a subsidiary of Calpine Corp., saw its credit facility reach strong oversubscription levels by Friday's noon ET recommitment deadline at the revised terms, according to a market source.

The hope is to allocate the deal early-to-middle of the June 7 week after comments come in on documentation, the source remarked.

Credit Suisse, Citigroup and Deutsche Bank are the lead banks on the deal, with Credit Suisse the left lead.

The $1.4 billion credit facility consists of a $100 million revolver and a $1.3 billion seven-year amortizing term loan.

New Development pricing

Pricing on New Development Holdings' term loan is Libor plus 550 bps with a 1.5% Libor floor and an original issue discount of 98. There is 101 soft call protection for one year.

On Thursday, pricing on the term loan was flexed up from Libor plus 350 bps and the call protection was added.

And, at launch, the term loan was being talked at Libor plus 350 bps or Libor plus 375 bps, depending on where ratings fell out, but once the facility ratings of Ba3/BB- emerged, the initial price talk firmed at Libor plus 350 bps.

New Development funding acquisition

Proceeds from New Development Holdings' credit facility, along with $535 million of corporate cash, will be used to help fund Calpine's purchase of 4,490 MW of power generation assets from Pepco Holdings Inc. for $1.65 billion plus adjustments.

Pro forma net debt to adjusted EBITDA as of Dec. 31 is 4.8 times.

Closing on the acquisition is expected to take place by June 30, subject to customary conditions, approval from the Federal Energy Regulatory Commission and antitrust review under the Hart-Scott-Rodino Act. No shareholder approval is required.

Calpine is a Houston-based power generation company.

Tenneco closes

In other news, Tenneco Inc. closed on its new $150 million six-year term loan B (Ba2/BB-/BB+), according to a news release.

Pricing on the term loan B is Libor plus 475 bps with no Libor floor, and it was sold at an original issue discount of 99.

JPMorgan and Bank of America acted as the lead banks on the deal for the Lake Forest, Ill.-based designer, manufacturer and marketer of emission control and ride control products and systems.

Proceeds were used to refinance the company's existing $128 million term loan A due in March 2012.

The new loan will mature on April 15, 2013 if the company's senior secured notes are not refinanced by that date or on Aug. 16, 2014 if the company's senior subordinated notes are not refinanced by that date.

Tenneco extends revolver

In addition to completing the new term loan B, Tenneco also successfully amended and extended its revolving credit facility, the release said.

Under the amendment, the size of the revolver increases immediately to $622 million from $550 million until March 16, 2012, when commitments of $66 million from non-extending lenders expire, and then, until the extended maturity date of May 31, 2014, the revolver will provide $556 million of total availability.

The extended revolver priced at Libor plus 400 bps to 550 bps with a 50 bps to 75 bps commitment fee, based on consolidated net leverage.

If the company's secured notes are not refinanced by April 15, 2013, the extended revolver will mature on that date, and if the company's tranche B-1 letter of credit/revolving loan facility is not refinanced by Dec. 14, 2013, the revolver will mature on that date.

Protection One buyout completed

GTCR closed on its buyout of Protection One Inc. for $15.50 per share, according to a news release. The total purchase price, including the refinancing of debt, was roughly $828 million.

To help fund the transaction, Protection One got a new $415 million senior secured credit facility (BB), consisting of a $25 million five-year revolver with a 75 bps commitment fee, and a $390 million six-year term loan priced at Libor plus 425 bps with a 1.75% Libor floor that was sold at an original issue discount of 981/2.

JPMorgan and Barclays acted as the lead banks on the deal.

Protection One is a Lawrence, Kan.-based provider of electronic security services to the residential, commercial and wholesale markets.

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