Wyndham heads north on earnings news; Rent-A-Center new loan sees lots of interest

By Sara Rosenberg

New York, May 6 - Wyndham International Inc.'s bank debt continued to head higher on Tuesday following the release of better-than-expected earnings numbers. The term loan B was quoted at 80½ bid, 81½ offered and the IRL was quoted at 82¼ bid, 84¼ offered, according to a market sources, who put both tranches up by approximately two points.

Meanwhile, market talk is that Rent-A-Center Inc.'s proposed $600 million credit facility, which launched on Tuesday, "was a huge blowout", according to a buy-side source. This was essentially confirmed by a syndicate source who stated that the deal is "going well" with a significant number of commitments already having been received.

"The market has run up quite a bit," the fund manager said in regards to Wyndham's bank debt. "It's been steadily churning up and it's been turbocharged Monday and today. I think the market liked the earnings. It moved up about two points yesterday and about two points today. And, it's definitely still better bid."

The Dallas hotel enterprise exceeded its original actual EBITDA guidance of $82 million for first quarter 2003, posting actual EBITDA of $87.9 million, compared to $114.3 million for the same period in 2002. The company had a net loss of $107.4 million, including a non-cash impairment, versus a $343.2 million net loss for the same period in 2002. Total company comparable owned and leased revenue per available room (RevPAR) was in-line with expectations at a 2% percent decline versus the prior year. Wyndham-branded properties also posted RevPAR consistent with guidance at a 0.8% decline versus first quarter 2002 results.

"The lodging industry is still operating in a difficult environment that has been made even more challenging by world events. The flexibility and focus of our operations created the environment that allowed us to manage through these tough times," stated Fred J. Kleisner, chairman and chief executive officer, in a news release. "We will remain nimble to react to changes in our industry and we intend to make the necessary adjustments to our business operating plan in order to continue generating positive cash flow and maintain a financially sound company."

As of March 31, total debt was $2.8 billion comprised of $171.4 million revolver debt, $447.7 million IRL's, $1.175 billion in term loans and $1.034 billion mortgage and other indebtedness.

That Rent-A-Center's bank meeting was a success does not come as a surprise since the initial reaction to the deal from accounts that were called prior to the launch was a positive one. Some reasons for the anticipated smooth syndication process previously given include: the market is familiar with the company, there is a large existing lender base, the company has a history of deleveraging and performing well, pricing is more beneficial to existing investors, and both Moody's Investors Service and Standard & Poor's upped the company's rating outlook recently - Moody's to stable from negative and S&P to positive from stable.

The facility consists of a $400 million six-year term loan B with price talk of Libor plus 250 to 275 basis points, a $120 million five-year revolver with an interest rate of Libor plus 225 basis points and an $80 million five-year letter of credit facility with an interest rate of Libor plus 225 basis points.

The term loan B is being offered at par. For the revolver, a $15 million commitment gets 5/8 on allocation and a $20 million commitment gets 75 basis points on allocation.

Banks are being asked to commit on a three to one basis with regards to the letter of credit facility and the revolver. For every $3 committed to the letter of credit facility, banks are required to commit $1 to the revolver, the syndicate source said. "From an investor standpoint it's good because rather than getting an undrawn revolver they get a fully utilized letter of credit facility," he explained.

The facility was originally expected to be sized at $650 million, but was reduced by $50 million after the company's bond offering was upsized by $50 million.

Lehman Brothers and JPMorgan are the lead banks on the deal, which will be used to refinance the company's existing senior debt.

Rent-A-Center is a Plano, Tex. operator of company-owned stores in the rent-to-own industry.

In follow-up news, Amphenol Corp. closed on its $750 million credit facility on Tuesday. Deutsche Bank and UBS Warburg are the lead banks on the deal.

The loan consists of a $500 million seven-year term loan B with an interest rate of Libor plus 250 basis points and a quarter point upfront fee, a $125 million five-year revolver, which is currently undrawn, with an interest rate of Libor plus 200 basis points and a $125 million five-year term loan A with an interest rate of Libor plus 200 basis points. Upfront fees for the pro rata were 7/8 for a commitment of $35 million, 5/8 for a commitment of $25 million and 3/8 for a commitment of $15 million.

Amortization on the term loan B is $5 million per year amortization through 2009 and final maturity in 2010. The term A amortizes over the five-year period through May 2008, according to a news release.

The term B loan broke for trading on Monday and was quoted at par 3/8 bid, par 5/8 offered. During market hours on Tuesday, the new loan was quoted at the same levels, according to a trader.

Proceeds from the facility will be used to repay all amounts outstanding under the previous senior credit agreement totaling approximately $440 million, to redeem $144 million of 9 7/8% senior subordinated notes and for working capital purposes.

"We are very pleased to complete this refinancing. Under the company's previous credit agreement, we had approximately $440 million of required loan amortization over the next three years. Under the new credit agreement, required loan amortization for that period has been reduced to approximately $60 million. While it is still our intention to further reduce debt levels, the new credit agreement gives us significantly increased flexibility to pursue additional opportunities to grow and expand our business. Furthermore, upon completion of the Notes redemption, we will have achieved this enhanced financial flexibility without increasing our projected interest costs," said Martin H. Loeffler, chairman and chief executive officer, in the release.

Amphenol is a Wallingford, Conn. producer of electronic and fiber optic connectors, cable and interconnect systems.

Kmart Corp. closed on a new $2 billion exit financing facility that was obtained in connection with the company's emergence from Chapter 11 on Tuesday. GE Corporate Financial Services' Retail and Restructuring Group is the lead administrative agent on the credit facility and the syndicate group is comprised of approximately 30 institutions.

The loan consists of a $1.8 billion revolver with an interest rate of Libor plus 350 basis points and a $200 million term loan.

The Troy, Mich. discount retailer originally filed for bankruptcy protection on Jan. 22, 2002. Proceeds from the facility will be used to replace the company's debtor-in-possession financing facility and help fund working capital needs.

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