Charter new B loan heavy on oversaturation; MGM new B loan comes in on buyout talk

By Sara Rosenberg

New York, April 21 - Both Charter Communications Operating LLC and Metro-Goldwyn-Mayer Inc., two very large new credit facilities, hit the secondary bank loan market on Wednesday, with Charter's term B trading down probably due to oversaturation and MGM's term B coming in from initial breaking levels on buyout rumors.

Charter's $3 billion term loan B traded down to 99¼ bid, 99½ offered upon entering the secondary and then rebounded slightly to 99 5/8 bid, 99 7/8 offered by day's end, according to a trader, who explained that the paper probably backed up since there's just so much of it out there. This institutional tranche was sold to investors at par during syndication and is priced with an interest rate of Libor plus 325 basis points.

The $2 billion term loan A, which is priced with an interest rate of Libor plus 300 basis points, was quoted at 98½ bid, 98¾ offered.

"The A and the revolver are quoted lower on upfront fees," the trader said.

Charter's $6.5 billion credit facility also contains a $1.5 billion revolver with an interest rate of Libor plus 300 basis points.

JPMorgan and Bank of America are the lead banks on the St. Louis cable company's deal, with JPMorgan listed on the left.

Proceeds, combined with proceeds from a $1.5 billion senior second lien notes offering, will be used to refinance the bank debt of Charter's subsidiaries, CC VI Operating Co. LLC, Falcon Cable Communications LLC, and CC VIII Operating LLC, all as one concurrent transaction.

Upon completion of this transaction, Charter Operating's outstanding debt is expected to be about equal to the outstanding credit facility debt of Charter Operating and its subsidiaries immediately prior to this transaction. One of the principal benefits of the transaction would be to extend about $8 billion of the consolidated debt maturities currently scheduled to be due prior to 2009. The company is also expected to retain more than $1 billion of unused availability under the amended facilities at closing, according to the release.

MGM falls on buyout rumors

Metro-Goldwyn-Mayer's $2.4 billion credit facility broke for trading on Wednesday, with the $1.6 billion term loan B moving up to the 101 bid, 101¼ offered level upon hitting the secondary, according to a trader. However, by the end of the day, the paper was seen quoted at par 7/8 bid, 101 1/8 offered, according to a second trader, as investors were somewhat wary of a possible par paydown if rumors of a buyout prove to be true.

Late in the day Wednesday, various news reports came out saying that Sony Corp., in cahoots with two private equity firms, is in talks to purchase Metro-Goldwyn-Mayer, although no final decision has yet been made.

The term loan B priced at the lower end of price talk at Libor plus 250 basis points. Talk had the term loan pricing anywhere from Libor plus 250 to 275 basis points.

The company's $400 million revolver and the $400 million term loan A also came in at the low end of talk at Libor plus 225 basis points, according to a market source. Talk placed the two pro rata tranches anywhere from Libor plus 225 to 250 basis points.

Bank of America and JPMorgan are the lead banks on the deal, with Bank of America listed on the left.

Proceeds will be used to fund a shareholder distribution and refinance existing debt.

Metro-Goldwyn-Mayer is a Los Angeles entertainment content company.

EAS sees interest

Experimental & Applied Sciences Inc.'s (EAS) newly launched credit facility captured the interest of not only existing institutional lenders but also caught the eye of some mezzanine debt holders since they will be losing some of their investment with the proposed paydown from proceeds of the bank deal, according to a market source.

"There are existing lenders that there were positive vibes from. People have been pretty happy with the performance here. The existing B was $30 million. Some existing lenders have indicated interest in increasing their positions," the source said.

"Also, they're taking out some mezzanine debt so some of the holders are interested in taking part in the larger bank piece," the source added.

On Wednesday, the company held a conference call launching its proposed $150 million credit facility that consists of a $125 million term loan B with an interest rate of Libor plus 350 basis points that is being offered to investors at par and a $25 million revolver with an interest rate of Libor plus 350 basis points.

"They had a big crew on the phone. There was good interest," the source concluded.

Scotia Capital is the sole lead bank on the deal that will be used to refinance the existing credit facility and repay some of the company's junior capital.

Experimental & Applied Sciences is a Golden, Colo., nutritional supplements company.

Rockwood June business

General syndication on Rockwood Specialties Group Inc.'s acquisition financing credit facility is not expected to take place until after Memorial Day, according to a market source.

The company will be getting a total of $2.7 billion in senior bank and bond financing that will consist of both euro- and U.S. dollar-denominated debt to fund the acquisition of four chemical businesses of German-based Dynamit Nobel, according to one source.

However, a different source broke the debt financing structure down a little bit more by saying that the company is expected to bring €400-€500 million of high-yield bonds to market sometime during the third quarter of 2004.

UBS and Credit Suisse First Boston are the joint lead arrangers and joint bookrunners on the credit facility. Goldman Sachs will be acting as a non-bookrunning joint lead arranger on the financing.

The financing is permitted by Rockwood's existing bonds, which will remain outstanding following the transaction.

The equity for the transaction will be provided by Rockwood's internal resources, its existing majority shareholder Kohlberg Kravis Roberts & Co. LP and by CSFB Private Equity. The sponsors bid €2.25 billion for the four business units.

Closing of the transaction is planned for the third quarter of 2004 and is subject to approval by the supervisory board and annual general meeting of MG Technologies, parent company of Dynamit Nobel, as well as by the relevant antitrust authorities.

Rockwood is a Princeton, N.J., specialty chemicals and advanced materials company.

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