Huntsman stronger as investor confidence on bank paydown continues to grow

By Sara Rosenberg

New York, Sept. 11 - Huntsman LLC's bank debt headed higher on Thursday in an otherwise somber market, as the company kicked off the roadshow for its $375 million senior secured notes offering, giving bank debt investors more confidence in a future paydown.

The paper was quoted at 94 bid, 95 offered, according to a trader, up from 93¾ bid, 94¾ offered. The paper is now higher by about four points on the week, after making its most dramatic move on Monday (on rumors of the bond deal) and Tuesday (on confirmation of the bond deal).

In order to successfully complete the bond offering, Huntsman had to amend its credit facility to allow for the issuance of senior secured bonds and modify the application of proceeds definition, something that the company has been trying to do since August.

Most of the terms of the original proposal remained the same except for an increase in amendment fees to 30 basis points from 15 basis points, according to sources.

Furthermore, there was a change in leading banks as Deutsche Bank was previously expected to be sole lead on the bond deal and now a number of banks, including Credit Suisse First Boston as joint bookrunner with Deutsche, Citigroup, CIBC World Markets, JP Morgan and UBS Investment Bank, have been reported as being involved, alleviating some previous concerns that the Salt Lake City petrochemical company would not be able to complete a bond offering.

Proceeds from the bond offering will 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.

Dean Foods Co.'s repriced $750 million term loan B due 2008 now has a "101 bid out there," according to a trader, after trading at the 101 and 101¼ level on Wednesday.

"There's nothing out there for people to buy. There are no sellers and institutional investors are long cash. Bids are up. I mean Dean Foods moved half a point in two days. I'm just happy I bought it three days ago," a trader said.

The paper, which broke for trading around the last week of August, was previously quoted at par ½ bid, par ¾ offered.

The term loan B is priced at Libor plus 200 basis points and was brought to market with a $1 billion revolver due 2007 with an interest rate of Libor plus 175 basis points and a $1 billion term loan A due 2007 with an interest rate of Libor plus 175 basis points. Wachovia Securities and Bank One are the lead banks on the deal.

Dean Foods is a Houston processor and distributor of milk and other dairy products.

In follow-up news, Alliance Gaming Corp. closed on a new $400 million credit facility (B1/BB-), consisting of a $275 million six-year term loan with an interest rate of Libor plus 275 basis points and a $125 million five-year revolver with an interest rate of Libor plus 250 basis points.

Bank of America and CIBC were the lead banks on the deal.

Originally it was anticipated that the Las Vegas gaming company's facility would total $375 million and would consist of a $275 million term loan B and a $100 million revolver.

Proceeds from the new facility will be used to repay all outstanding existing bank debt under the company's old senior credit facility, to fund the purchase of all outstanding 10% senior subordinated notes in a tender offer and pending redemption, and to pay transaction costs and expenses.

Per-Se Technologies Inc. closed on its new $175 million credit facility (B2/B+), consisting of a $125 million five-year term loan B with an interest rate of Libor plus 425 basis points (25 basis points higher than the initially expected interest rate) and a $50 million three-year revolver with an initial interest rate of Libor plus 350 basis points.

Pricing on the revolver can range between Libor plus 300 to 350 basis points, based on the company's performance.

Bank of America and Wachovia acted as joint lead arrangers on the deal.

Proceeds from the term loan B and cash on hand were used to fund the cash tender offer for the company's outstanding $160 million 9½% senior notes, in which $143.6 million were tendered. The revolver is currently undrawn.

"The completion of our refinancing initiative will yield a permanent reduction in our debt level of approximately $35 million and an annualized cash interest expense savings of approximately $7.5 million to $8 million, based on current rates," stated Philip M. Pead, chairman, president and chief executive officer, in a news release. "We expect to continue to generate strong free cash flow from our operations, which combined with the lower interest costs, will allow improved financial flexibility and further debt reduction."

Per-Se is an Atlanta provider of business services to healthcare providers.

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