Boyd Gaming, AES seen closer to par on repayment expectations

By Sara Rosenberg

New York, Feb. 9 - Boyd Gaming Corp. and AES Corp. were said to be coming in closer to par on Monday after both companies revealed news that led to investor expectations of full and partial paydowns, according to various traders.

Boyd Gaming's bank debt was placed around par to par 1/4, down from previous levels of 101 bid, after the company announced that it would refinance its debt as well as Coast Casinos Inc.'s debt in connection with the merger agreement between the two companies, according to a trader.

"All the paper is going to go away," the trader said regarding Boyd Gaming, adding that the paper did not trade since "everyone needs coupon" and therefore holders are unwilling to sell.

And since "Coast Casinos doesn't trade," according to the trader, levels for the company's debt were unattainable.

Boyd Gaming Corp. intends to enter into a new credit facility and issue high-yield bonds to support its merger agreement with Coast Casinos Inc., under which Coast will become a wholly owned subsidiary of Boyd Gaming, positioned as a separate operating unit, company officials said in a conference call Monday.

The $1.3 billion merger consideration consists of the receipt by Coast shareholders of, on a fully diluted basis, about $495 million in cash and the issuance of about 19.4 million shares to Coast shareholders. Using the 10-day average of the closing stock price for Boyd ended Feb. 5, the deal is valued at about $325 million and the assumption of about $460 million of Coast debt.

"We will be refinancing the Coast debt and that includes the call of the 9½ of '09 as well as redoing their bank deal. This will all be part of an overall global Boyd refinancing that will include Boyd's bank facility. The only thing that will not be affected is Boyd's three outstanding note issues," company officials added in the call (see story elsewhere in this issue).

Boyd Gaming is a Las Vegas gaming company. Coast Casinos is a Las Vegas owner and operator of hotel-casinos.

Meanwhile, AES' bank debt was said to come in to par even though traders were seeing a 101 bid on the term loan B on the Street following news of a partial paydown with bond sale proceeds.

"It should definitely be sub-101," a trader said. "The 101 bid is probably stale - from before the news. It's really not trading anywhere right now. But, it's much closer to par."

"There's been some softening because of the pay down," a second trader agreed.

On Monday, the Arlington, Va., power company announced that it would repay a portion of its term loan with proceeds from a $500 million unsecured senior notes offering. The term loan matures on July 31, 2007 and carries an interest rate of Libor plus 400 basis points.

SGL Carbon closes

SGL Carbon AG closed on its $116 million six-year term loan B (B2/B) with an interest rate of Libor plus 300 basis points. Credit Suisse First Boston was the sole lead arranger on the deal.

Originally, the institutional term loan was launched with an interest rate of Libor plus 325 basis points, but the deal was reverse flexed by 25 basis points during syndication.

The term loan was part of an overall refinancing of the company's €495 million bank debt that included a capital increase, a high-yield bond offering and a new €330 million syndicated loan that included the previously mentioned U.S. term loan as well as a euro term loan.

The capital increase was approved by 99.6% of shareholders at the extraordinary general meeting allowing the company to increase its total number of shares by 33,277,437 to 55,462,395. Existing and new shareholders exercised 99.9% of the pre-emptive rights for the new SGL Carbon shares during the two-week subscription period. The original guaranteed minimum subscription price was raised to €8 from €6, generating gross proceeds of €266 million, compared to the originally projected €200 million, according to a company news release.

Since the net proceeds of the capital increase were higher than expected, the volume of the high-yield bond sale was reduced to €270 million and the tranche originally earmarked in dollars for the U.S. market was not required.

As for the credit facility, although Credit Suisse First Boston was sole lead on the U.S. term loan, Bayerische Landesbank, CSFB, Deutsche Bank and Dresdner Kleinwort Wasserstein were the lead arrangers on the euro portion of the deal.

"Overall, the structure of the refinancing package as well as the lower volume of the new syndicated loan have helped to substantially reduce the company's dependence on its banks," the news release said.

SGL Carbon Group has achieved three key goals with its refinancing: first, the company's equity ratio has more than doubled as compared to the end of September 2003 (11.4%) on a pro forma basis; second, gearing has improved significantly; third, the maturities of the group's financial liabilities have been postponed by five to eight years and include interest servicing and the elimination of most debt upon maturity, the release added.

SGL is a Wiesbaden, Germany, manufacturer of carbon and graphite products.

Centennial Communications closes

Centennial Communications Corp. closed on its $750 million senior secured credit facility consisting of a $600 million seven-year term loan B with an interest rate of Libor plus 275 basis points and a $150 million six-year revolver with an interest rate of Libor plus 325 basis points and a commitment fee of 50 basis points.

Originally the term loan B was launched with pricing of Libor plus 325 basis points but was reverse flexed by 50 basis points due to overwhelming demand.

Investors got a point and a half upfront fee for a $10 million revolver commitment, while the term loan was offered at par.

Credit Suisse First Boston acted as joint lead arranger, joint bookrunner and administrative agent. Lehman Brothers acted as joint lead arranger, joint bookrunner and syndication agent.

Proceeds from the term loan combined with proceeds from a $325 million senior notes sale were used to refinance and replace the company's existing senior secured credit facilities, repurchase all of the outstanding unsecured subordinated notes due 2009 which were accruing paid-in-kind interest at a rate of 13%, repurchase and/or redeem $70 million aggregate principal amount of the outstanding $370 million 10.75% senior subordinated notes due 2008, and pay related fees and expenses.

"The new financings extend the weighted average maturities of the company's long-term debt by over two years and eliminate approximately $600 million in scheduled amortization payments over the next four years. As a result of these transactions, the company's weighted average total cost of debt will decrease to approximately 7.75%," a company news release said.

Centennial is a Wall, N.J., wireless telecommunications service provider.

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