Huntsman lowers talk on term loan at meeting; tranche gets rollover commitments from existing lenders

By Sara Rosenberg

New York, June 16 - Huntsman International LLC lowered price talk on its proposed $1.34 billion term loan upon launching to investors at a bank meeting on Wednesday morning, and syndication of the tranche is already rolling along as many existing lenders have opted to continue their investment in the company's debt.

Price talk was reduced to Libor plus 325 basis points, according to a market source. Originally, it was thought that the institutional paper would go out at price talk of Libor plus 350 basis points.

"The meeting was well attended. I believe there are early commitments in," the source said.

"Existing lenders have already pretty much rolled in," another source added.

Essentially, the company is looking to consolidate its term loan B and term loan C into one large institutional term loan due Dec. 31, 2010 with an increased size of $100 million.

The $1.74 billion credit facility (B1/B) also contains a $400 million revolver, which is essentially just an extension of the existing revolver's maturity to Sept. 30, 2008 from June 30, 2005.

But, being that the entire capital structure is being changed through the extension of the loans' maturity dates, as well as through consolidation and increased liquidity, the whole deal is being syndicated.

The $100 million incremental term loan proceeds will be used for general corporate purposes, which may include the construction of the low-density polyethylene facility at the Wilton, U.K., site.

As of March 31, Huntsman's credit facility consisted of a term loan B of $620.1 million maturing on June 30, 2007, a term loan C of $620.1 million maturing on June 30, 2008 and a $400 million revolver that had $110 million in outstanding borrowings drawn. The weighted average interest rate of these borrowings was about 5.2%, according to a 10-Q filed with the Securities and Exchange Commission on May 17.

Deutsche Bank and Citigroup are the lead banks on the deal, with Deutsche listed on the left.

The amendment and restatement is expected to be completed by June 30.

Huntsman is a Salt Lake City chemical company.

Qwest up on upgrade

Qwest Communications International Inc.'s bank debt was higher on Wednesday in a somewhat calm secondary market after Standard & Poor's upgraded the company's ratings.

The floating-rate debt was quoted at 103¼ bid, 103¾ offered, up about a quarter of a point, and the fixed-rate debt was quoted at 96 bid, 97 offered, up about a point, according to a trader.

S&P raised Qwest's corporate credit rating to BB- from B- and assigned a developing outlook to the rating.

"The ratings reflect the relatively good overall business risk profile of an increasingly challenged, but still well-positioned, local exchange business," said S&P credit analyst Catherine Cosentino, in the release. "However, this is tempered by a lack of a national wireless presence, in contrast to the other RBOCs, and a fairly leveraged financial profile - largely a legacy of cash drain from the classic Qwest long-distance business."

As part of the upgrade, S&P incorporated a potential cash requirement related to the pending shareholder lawsuits and/or Department of Justice and SEC investigations, of no more than $2 billion to $2.5 billion.

Since current cash balances roughly equal mandatory maturities through 2006, and the revolver is not available for legal settlements, the rating assumes that any settlement would be largely funded with additional debt, or the sale of up to approximately 1 million access lines.

The $750 million revolver at Qwest Services Corp. is rated the same as the corporate credit rating due to the fact that the bank loan is provided an 80% to 100% estimated recovery.

Other than all senior unsecured debt at Qwest Corp. and the revolver, all debt at Qwest and the various entities, including senior unsecured debt at Qwest Capital Funding Inc., second-lien debt at Qwest, and third-lien debt at Qwest Services Corp., are rated two notches below the corporate credit rating reflecting the relatively significant concentration of priority obligations to total asset value, assuming a $2,500 value per access line.

Qwest is a Denver-based provider of voice, video and data services.

MGM Mirage around par

MGM Mirage Inc.'s bank debt remained pretty close to par on Wednesday following the announcement that an acquisition agreement was reached under which MGM will acquire Mandalay for $71 per share in cash.

"It's been trading on a yield-to-call basis," a trader said. "It's been pretty close to par for a while now. There have been rumors that something would happen with it anyways."

The acquisition is valued at $7.9 billion including equity value of about $4.8 billion, $600 million of convertible debentures and the assumption of about $2.5 billion in outstanding Mandalay debt.

Financing details are still to be determined. (See story elsewhere in this issue).

Closing on the acquisition is anticipated for the first quarter of 2005.

MGM Mirage is a Las Vegas holding company that operates hotel, casino and entertainment resorts. Mandalay is a Las Vegas hotel-casino operator.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.