Targa, Cooper break; Cedar Fair rises on buyout; Rite Aid up with numbers; Clear Channel gains

By Sara Rosenberg

New York, Dec. 17 - Targa Resources Inc. firmed pricing on its credit facility at the tight end of talk on Thursday and then freed the deal up for trading, where it was seen quoted above par, and Cooper-Standard Automotive Inc.'s term loan broke for trading as well.

In more trading happenings, Cedar Fair LP's bank debt headed higher in trading following news that the company is being acquired by Apollo Global Management, and Rite Aid. Corp.'s loans were stronger after quarterly earnings were released.

Also, Clear Channel Communications Inc.'s term loan B and delayed-draw term loan were lifted as talk circulated throughout the market that the company's bond offering might be upsized.

Targa sets pricing

Targa Resources finalized pricing on its credit facility at the low end of initial guidance, according to a market source.

The $500 million 61/2-year term loan B and the $125 million to $130 million 41/2-year revolver - the size of which is still not finalized - are both priced at Libor plus 400 basis points, compared to initial talk at launch of Libor plus 400 bps to 425 bps.

In addition, the original issue discount on the term loan B firmed at 99, the tight end of guidance in the 98½ to 99 area, the source said.

As was the case since launch, the term loan B has a 2% Libor floor and the revolver has a 75 bps unused fee.

Covenants under the credit facility include maximum total leverage of 5.75 times in 2010 and 2011, stepping down to 5.50 times in 2012 and 5.25 times in 2013 and thereafter, and a minimum interest coverage ratio of 1.50 times.

Targa frees to trade

After setting pricing, Targa allocated and hit the secondary market, with the term loan B quoted at par ¼ bid, par 5/8 offered, the source remarked.

Deutsche Bank, Credit Suisse and Citadel are the lead banks on the up to $630 million deal (B1/BB-).

Proceeds will be used to refinance $250 million of 8½% senior unsecured notes due 2013, an existing senior secured term loan due in 2012 and a portion of Targa Resources Investments Inc.'s holdco loan due 2015.

During syndication, the term loan B was downsized from $550 million and the revolver was downsized from $150 million.

As a result of the term loan B downsizing, less of the holdco loan than was originally planned will be taken out, and the revolver downsizing was done given the lower needs at the opco company.

Targa is a Houston-based provider of midstream natural gas and natural gas liquid.

Cooper-Standard breaks

Also breaking for trading on Thursday was Cooper-Standard Automotive's $175 million debtor-in-possession term loan, with levels quoted at par ¼ bid, 101¼ offered, according to a market source.

The term loan is priced at Libor plus 600 bps with a 2% Libor floor and was sold at par.

During syndication, pricing on the term loan was reduced from initial talk of Libor plus 650 bps.

Deutsche Bank is the lead bank on the deal, which is being used to refinance an existing DIP loan that will be repaid at a price of 101.

Through this transaction, the company is basically just repricing its existing DIP term loan, which carries an interest rate of Libor plus 950 bps and includes a 3% Libor floor.

The maturity on the new DIP loan is Aug. 3, 2010, the same as the maturity on the existing DIP loan.

Cooper-Standard is a Novi, Mich.-based manufacturer and marketer of systems and components for the automotive industry.

Cedar Fair strengthens

Cedar Fair's extended and non-extended term loan Bs saw positive momentum in the secondary market as the company announced that it will be bought out by Apollo Global Management, according to traders.

The extended term loan B was quoted by one trader at 98 bid, 99½ offered, up from 96½ bid, 97½ offered and by a second trader at 98¾ bid, 99½ offered, up from 95¾ bid, 96¾ offered.

And, the non-extended term loan B was quoted by the first trader at 98¾ bid, 99¾ offered, up from 95¼ bid, 96¼ offered, and by the second trader at 98 3/8 bid, 99 3/8 offered, up from 95½ bid, 96½ offered.

Under the transaction agreement, Cedar Fair unitholders will receive $11.50 in cash for each limited partnership unit that they hold.

The acquisition is valued at roughly $2.4 billion, including the refinancing of the company's outstanding debt.

Cedar Fair gets financing commitment

To help fund the buyout, Cedar Fair has received a commitment for $1.95 billion in financing, which will include a new credit facility and high-yield bonds, a market source told Prospect News.

The $1.25 billion credit facility consists of a $250 million revolver and a $1 billion term loan, the source said.

Meanwhile, the bond offering is expected to be sized at $700 million and is backed by a commitment for a bridge loan.

Both the new loan and the notes are expected to come to market next year.

JPMorgan, Bank of America, Barclays Capital, UBS and KeyBanc Capital Market are the lead banks on the financing.

Closing on the buyout is expected by the beginning of the second quarter of 2010, subject to approval of holders of two-thirds of Cedar Fair's outstanding units, the receipt of regulatory approvals and other conditions. There is no financing condition.

Cedar Fair is a Sandusky, Ohio-based amusement-resort operator.

Rite Aid trades up

Rite Aid's bank debt gained some ground on Thursday as the company came out with third fiscal quarter 2010 numbers that showed a year-over-year drop in net loss, according to traders.

The tranche 2 term loan was quoted by one trader at 87 3/8 bid, 88 1/8 offered, up an eighth of a point, and by a second trader at 87 bid, 88 offered, up from 86½ bid, 87½ offered.

The tranche 3 term loan was quoted by the first trader at 93¾ bid, 94¼ offered, up a quarter of a point, and by the second trader at 93 bid, 94 offered, up from 92½ bid, 93¼ offered.

And, the tranche 4 term loan was quoted by the first trader at 103¾ bid, 104¼ offered, up a half a point, and by the second trader at 103¼ bid, 104¼ offered, up from 102¾ bid, 103 5/8 offered.

For the third fiscal quarter of 2010, Rite Aid reported a net loss of $83.9 million, or $0.10 per diluted share, compared to last year's third quarter net loss of $243.1 million, or $0.30 per diluted share.

Revenues for the quarter were $6.35 billion versus revenues of $6.47 billion in the previous year.

Adjusted EBITDA for the quarter was $254.2 million, or 4% of revenues, compared to $259.6 million, or 4% of revenues last year.

Rite Aid has strong liquidity

Also on Thursday, Rite Aid said that its liquidity remained strong with a total of $903.2 million of availability from its credit facility and invested cash at the end of the third fiscal quarter.

"Our results demonstrate the significant progress we've made to strengthen our company since last year's third quarter," said Mary Sammons, chairman and chief executive officer, in a news release.

"Liquidity at the end of the quarter more than doubled, and we've refinanced all of our 2010 debt maturities to give more time for our growth initiatives to work," Sammons added.

As previously announced, in October the company refinanced its first-and second-lien accounts receivable securitization facilities due September 2010. The company now has no major debt maturities until September 2012.

Rite Aid adjusts outlook

In addition, Rite Aid narrowed its fiscal 2010 guidance for total sales, same store sales, adjusted EBITDA and net loss and reduced its guidance for capital expenditures.

Total sales are expected to be between $25.6 billion and $25.9 billion, and same stores sales are expected to range from a decrease of 1% to an increase of 0.5% over fiscal 2009.

Adjusted EBITDA for the full year is expected to be between $925 million and $975 million.

Net loss for the year is expected to be between $413 million and $542 million or a loss per diluted share of $0.50 to $0.66.

And, capital expenditures for the year are expected to be $220 million.

Rite Aid is a Camp Hill, Pa.-based drugstore chain.

Clear Channel higher on bond chatter

Clear Channel's term loan B and delayed-draw term loan were both better during market hours on talk that the company's bond offering could be upsized and that there may be a paydown of some bank debt, according to traders.

The term loan B was quoted by one trader at 83 bid, 85 offered, up a point and a half, and by a second trader at 83½ bid, 85½ offered, up from 80½ bid, 82½ offered.

Meanwhile, the delayed-draw term loan was quoted by the first trader at 79½ bid, 81½ offered, up a half a point on the day.

Clear Channel selling bonds

Last week, Clear Channel's subsidiary, Clear Channel Outdoor Holdings Inc., said that its subsidiary, Clear Channel Worldwide Holdings Inc. will be selling $750 million of senior notes.

Clear Channel Outdoor said that proceeds from the note sale would be used to repay about $730 million of debt owed to Clear Channel Communications.

Then on Thursday afternoon, the company said in an 8-K filed with the Securities and Exchange Commission that it is exploring an increase in size of the notes offering to facilitate the repayment of the intercompany note and to repay term loans at par.

And in the evening, talk was that the deal was indeed upsized to $2.5 billion.

Clear Channel is a San Antonio-based media and entertainment company.

Nortek closes

In other news, Nortek Inc. closed on its $250 million asset-based revolving credit facility as it exited from Chapter 11, according to a news release.

Bank of America, GE Capital, Wells Fargo Foothill and PNC Bank acted as the lead banks on the deal.

Proceeds are being used to replace an existing facility, and for working capital and other general corporate purposes.

Nortek is a Providence, R.I., manufacturer of residential and commercial ventilation, HVAC and home technology convenience and security products.

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