Goodyear add-on continues descent; Calpine CCFC II revolver drops on refinancing concerns

By Sara Rosenberg

New York, Feb. 23 - The Goodyear Tire & Rubber Co.'s $650 million secured term loan (B1/B+) add-on was still feeling heavy on Monday with the paper quoted even lower than it was late last week with the bid/offer said to be "wrapped around 99," according to a trader.

Meanwhile, Calpine Construction Finance Co. II LLC's revolver headed lower as rumors were circulating that the bond and the bank deal were struggling, with some sources even suggesting that the bond deal was restructured or pulled.

Goodyear's add-on broke for trading last Wednesday trading in the par 5/8, par 7/8 context and then moved down to trade in the par 3/8 level on Thursday. By the end of the day Thursday, the bank debt was quoted at 99½ bid, par ½ offered.

The paper was said to feel heavy on its first couple of days in the market with some speculating that there were a couple of large accounts that had too much exposure leading to technicals of better sellers than buyers.

On Monday, Goodyear announced that it officially closed on the deal. The add-on to the company's existing $1.3 billion asset-based credit facility due March 31, 2006 is priced with an interest rate of Libor plus 450 basis points.

Originally, the deal was sized as a $300 million term loan; however, it was increased to $650 million during syndication due to strong investor demand.

JPMorgan and Citigroup were the lead banks on the deal.

Akron, Ohio-based tire company, Goodyear, plans to use about $335 million of the proceeds of the loan to partially repay its existing $583 million U.S. term loan. Proceeds will also be used to repay other debt and for general corporate purposes.

Furthermore, Goodyear has received lender approval to amend its senior secured credit facilities allowing for this loan as well as future capital markets transactions that could be secured by a junior lien on certain of the collateral securing the company's other senior secured U.S. credit facilities.

"We appreciate the high level of support we received in finalizing this transaction," said Robert W. Tieken, executive vice president and chief financial officer, in a company news release. "Goodyear is now positioned to move forward with our plan to refinance the loans we put in place last year and to drive the company's turnaround."

The company is also moving forward with its previously announced plans for a private senior secured notes offering.

On Feb. 12, Goodyear revealed that it would sell $650 million of senior secured notes due 2011 via JP Morgan, Citigroup and Credit Suisse First Boston as placement agents for the true private offering.

Proceeds from the offering will be used to prepay the U.S. term loan facility, to reduce a portion of the commitments under the U.S. revolver, to repay other debt of the company, including temporary reductions of outstanding balances under the revolver, and for general corporate purposes.

CCFC II lower on refi worries

Calpine Construction Finance Co. II LLC's revolver was quoted by one trader at 95 bid, 97 offered, explaining that the paper was heading back to the 95 area at which is was quoted prior to the refinancing news.

"Bonds are starting to back up a little bit. There must be some rumors that if the bonds price wide they won't get done. If they don't get the bond deal done, they don't get the new bank deal. The existing revolver would stay in place," the trader said.

A second trader placed the revolver slightly higher at 96 bid, 97 offered.

"I don't think the bank deal got done. It's a lot of leverage on the second lien. Nobody likes the deal. [There are] a lot of problems. They keep making changes and people still don't like it," the trader said.

On Friday, the paper traded as low as 98, moved up to trade at 98 1/8 and then moved even higher to trade at 983/4, according to a trader. By late afternoon, the paper was being quoted at 98¾ bid, 99¼ offered.

Calpine Generating Co. LLC (previously Calpine Construction Finance Co. II LLC) increased pricing on its $1.3 billion non-recourse first priority secured institutional term loan (B+) to Libor plus 475 basis points from Libor plus 425 basis points on Friday, with the expectation being that this level would be where the deal gets done. The tranche also contains a 1.5% Libor floor, 50 basis points original issue discount, non-call of two years and two years of call premiums.

Also, price talk on the bond deal (B-) emerged on Friday with the $525 million floating-rate tranche talked at Libor plus 725 basis points, with a 1.5% Libor floor, 50 basis points original issue discount and seven-year non-call, and the $525 million fixed-rate tranche talked to yield 11¼%, according to a market source. Pricing on the bonds is expected to take place Tuesday.

Deutsche is leading the financing transactions.

Proceeds from the term loans, combined with proceeds from the notes, will be used to refinance amounts outstanding under the $2.5 billion CCFC II credit facility that matures in November. Currently there is about $2.3 billion in outstanding debt under the CCFC II facility including letters of credit.

When the refinancing proposal was first announced, the CCFC II revolver moved to 98½ bid, 99 offered. The paper was unable to reach the usual par levels that a refinancing announcement tends to incite as investors remained cautious on the company's ability to complete its proposed transaction.

Calpine Generating is a wholly owned subsidiary of Calpine Corp., a San Jose, Calif.-based power company.

New Flyer to allocate

Allocations are expected to take place either Tuesday or Wednesday on New Flyer Industries Corp.'s recently modified credit facility (B1/B+), with closing anticipated for Thursday, according to a market source.

The credit facility (B1/B+) underwent some structural changes late in the day Friday that ended up increasing the total size of the facility to $255 million from $240 million.

More specifically, the revolver was increased to $45 million from $40 million, the synthetic letter-of-credit facility was decreased to $50 million from $55 million and the term loan B was increased to $160 million from $145 million.

Furthermore, pricing on the synthetic letter-of-credit facility and the term loan B was reduced to Libor plus 275 basis points from Libor plus 300 basis points.

Pricing on the revolver remained unchanged at Libor plus 275 basis points.

The company opted to increase the bank debt so that it could decrease its mezzanine debt, the source said. And, the reverse flex was just a function of strong demand, the source added.

Citibank and UBS are joint leads on the transaction.

Proceeds will be used to help support the acquisition of New Flyer by Harvest Partners Inc. and Lightyear Capital LLC from KPS Special Situations Funds.

New Flyer is a Winnipeg, Manitoba, manufacturer and aftermarket service provider of heavy-duty transit buses.

Ply Gem tranche shifts

Ply Gem Industries Inc.'s $255 million credit facility (B1/B+) underwent some tranche size changes, with the five-year revolver reduced by $10 million to $55 million and the seven-year term loan B increased by $10 million to $200 million, according to a source close to the deal.

The deal was originally launched with a $235 million term B, but the tranche was later downsized following the pricing of an upsized bond offering. However, it was increased on Friday to the $200 million mark because of investor demand.

The revolver is priced with an interest rate of Libor plus 250 basis points, and the term loan is priced with an interest rate of Libor plus 275 basis points.

UBS and Deutsche Bank are joint bookrunners, and CIBC and Merrilll Lynch are co-arrangers and documentation agents on the facility.

Proceeds will be used to help support the company's acquisition by Caxton-Iseman Capital Inc. from Nortek Inc., which was actually completed on Feb. 12.

Ply Gem is a Kearney, Mo., manufacturer and distributor of products for use in the residential new construction, do-it-yourself and professional renovation markets.

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