Huntsman amendment still under negotiation as Wednesday's approval deadline passes

By Sara Rosenberg

New York, Aug. 13 - Huntsman LLC's bank loan amendment, which was set to receive lender responses on Wednesday, is currently in flux as notification still hasn't been given by certain accounts and some accounts are still in the process of rolling in.

"Ultimately I think the problem is sharing of collateral," one source said, explaining why obtaining the amendment is taking slightly longer than expected. But, he added, "I don't think they'll come a second time and fail again. I think they'll do what it takes to get it done."

Huntsman's proposed amendment consists of two parts, allowing for the issuance of senior secured bonds and modifying the application of proceeds definition.

If approved, the company could issue a minimum of $300 million of bonds to a maximum of $600 million sometime before the amendment expires on Oct. 31. Currently, the bond offering is anticipated to be sized at $365 million with Deutsche Bank slated to lead the deal.

Proceeds from the bond offering would be used to completely repay all outstanding revolver debt, which is about $65 million, and prepay two years of amortization requirements under the company's term loan A, which is approximately $290 million. Therefore, a $365 million bond offering would essentially cover all expenses including fees associated with the transactions. The bonds would be ranked pari passu with the second lien bank debt.

In order for the use of proceeds portion of the amendment to pass, a 50.1% approval vote is needed from term loan B lenders and a 50% approval vote is needed from term loan A and B lenders.

In order for the bond sale portion of the amendment to pass, two-thirds approval is needed from term loan A and B lenders combined and 50.1% approval is needed from first priority revolver lenders.

Some pluses going for the amendment include that term loan A lenders will get repaid at par, about nine points higher than where the paper is currently trading, and the higher blended coupon spread since the A tranche has a lower interest rate than the B tranche.

The Salt Lake City chemical company's term loan A and B were quoted at 88 bid, 90 offered by one trader and 89 bid, 91 offered by a second trader on Wednesday.

Casella Waste Systems Inc. is currently talking to lenders about repricing its $150 million term loan B, according to market sources.

"It's an ongoing event. We're working with lenders and expect a repricing to be completed within the near future," a syndicate source said, declining to reveal any further details on the matter.

According to a buy-side source, the company is trying to lower pricing by 50 basis points to Libor plus 275 basis points. However, the market is showing some resistance towards the proposal and therefore some perks may be added to the deal. For example, extended call protection is under negotiation right now, the source said.

Fleet Securities and Bank of America are the lead banks on the deal as was the case when Casella first obtained this facility in the beginning of this year.

Casella Waste Systems is a Rutland, Vt. provider of collection, transfer, disposal and recycling services.

In the secondary, Charter Communications Inc.'s term loan B remained at relatively the same levels with the paper quoted at 93 bid, 94 offered despite revisions made on the upcoming $1.7 billion bond deal, according to a trader.

The bank debt was pushed down slightly last week on talk that the bond deal was not going smoothly.

Although the company plans to repay $500 million of bank debt with proceeds from this bond offering, the paper is not expected to trade much higher than current levels. According to a trader, a $500 million paydown will not really make a dent in Charter's outstanding debt levels given the enormous amount of bank debt that the company has.

On Wednesday, the St. Louis cable company revised price talk to the 10 1/8% area from 9¼%-9½% on the seven-year non-call-four notes and the 10¼% area from 9 3/8%-9 5/8% on the 10-year non-call-five notes.

On Tuesday it was revealed that the deal had been restructured into an offering from a single issuer as compared to the original plan of having two issuers, one senior to the other in the capital structure, each offering $850 million of 10-year non-call-five notes.

In follow-up news, Medco Health Solutions Inc. closed on its $1.15 billion senior secured credit facility (Ba1), according to a syndicate source. JPMorgan, Goldman Sachs and Citigroup were the lead banks on the deal.

The facility consists of a $40 million five-year term loan A with an interest rate of Libor plus 200 basis points, a $250 million five-year revolver with an interest rate of Libor plus 200 basis points and a $500 million seven-year term loan B with an interest rate of Libor plus 225 basis points.

Initially, the deal was structured with a $350 million term loan A and a $550 million term loan B, but the sizing was modified during the syndication process.

Security is basically all assets of the Franklin Lakes, N.J. pharmacy benefits management company.

Proceeds will be used to help fund a $2 billion dividend to Merck & Co. Inc. as part of the company's spin-off and for working capital and general corporate purposes. Merck shareholders will receive 0.1206 shares of Medco Health common stock for every one share of Merck common stock held.

Concentra Operating Corp. closed on its new $435 million senior credit facility, which replaced its previously outstanding senior credit facility. JPMorgan was the lead bank on the deal.

The facility consists of a $335 million six-year term loan B with an interest rate of Libor plus 375 basis points and a $100 million five-year revolver. The revolver was undrawn at closing.

Proceeds from the term loan, combined with proceeds from a notes offering and cash on hand, were used to retire the previous credit facility, to terminate the company's interest rate hedge agreements, to transfer cash proceeds to Concentra Inc., to enable it to redeem approximately $139 million of the principal and accreted interest of its 14% senior discount debentures due 2011 and to pay related fees and expenses.

Concentra is an Addison, Tex. provider of services designed to contain healthcare and disability costs and serves the occupational, auto and group healthcare markets.

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