Loews ups term loan B size by $100 million, cuts pricing by 50 basis points

By Sara Rosenberg

New York, July 21 - Loews Cineplex Entertainment Corp. increased the size of its seven-year term loan B to $630 million from $530 million and decreased pricing on the tranche to Libor plus 225 basis points from Libor plus 275 basis points, according to a market source.

"Nobody turned it down. They recommitted," a market source said regarding investor reaction to the price cut.

There had previously been some speculation that pricing on the term loan B had been lowered to Libor plus 250 basis points from Libor plus 275 basis points, but, according to the source, that was pure rumor.

On the flip side, the company opted to downsize its proposed senior subordinated notes offering by $100 million to $315 million. The roadshow for the bonds, which are talked at 8¾% to 9%, began July 12 and pricing is expected Thursday.

"Strong bank reception is being taken advantage of," the market source explained.

Citigroup and Credit Suisse First Boston are the joint lead arrangers and joint bookrunners on the deal, with Citi listed on the left. Lehman Brothers, Bank of America and Deutsche Bank are co-documentation agents.

The now $830 million credit facility (B1/B) also contains a $100 million six-year revolver with an interest rate of Libor plus 275 basis points and a 50 basis points commitment fee, and a $100 million delay draw term loan.

The books on the credit facility are closing Thursday.

Proceeds from the facility will be used to help fund the acquisition of Loews by a corporation formed by Bain Capital, The Carlyle Group and Spectrum Equity Investors for C$2.0 billion from Onex Corp. and Oaktree Capital Management LLC.

Under the acquisition agreement, Onex and Oaktree will retain the Loews interest in Cineplex Galaxy, which operates the Loews theatre business in Canada as well as Galaxy Entertainment.

The assets being acquired include Loews' operations in the United States, Grupo Cinemex, and its 50% interests in Megabox Cineplex of Korea and Yelmo Cineplex of Spain.

It is expected that the sale, which is subject to customary regulatory approvals, will close during the third quarter.

Loews is a New York-based movie theater chain.

Alion breaks at plus par

Alion Science & Technology Corp.'s $100 million five-year term loan (B+) broke for trading on Wednesday morning with the paper quoted at par ¼ bid, 101 offered by the end of the day, according to a trader.

"It's pretty wide. On the break it traded a little bit," a trader said explaining that since the deal only went out to a select group during syndication it wasn't all that active during its first day of trading.

The tranche is priced with an interest rate of Libor plus 275 basis points.

Alion's facility also contains a $30 million five-year revolver with an interest rate of Libor plus 275 basis points and a 50 basis points commitment fee.

Credit Suisse First Boston is the sole lead arranger and bookrunner on the deal.

Proceeds will be used by the McLean, Va., global research and development company to refinance debt.

Blount B loan subscribed

Blount Inc.'s $240 million six-year term loan B (B+), which is talked at Libor plus 325 to 350 basis points and is being offered at par, was "basically fully subscribed" less then a full day after the company's Tuesday bank meeting, a market source said.

"It's a full recapitalization. [And], June numbers came in particularly strong. Strong earnings for the first six months of the year," the market source said in explanation of why investors were attracted to the deal.

The facility also contains a $125 million five-year revolver (B+) talked at Libor plus 300 basis points, of which $75 million is expected to be drawn at closing, a $5.2 million six-year Canadian term loan (BB) talked at Libor plus 325 to 350 basis points, and a $50 million 61/2-year non-amortizing second-lien term loan (B-) talked at Libor plus 550 basis points.

"Pro rata people are still looking at [the revolver]. The second lien is not being syndicated. GE is holding a significant piece of that and there are a handful of other investors. It was previously placed. The Canadian term loan [GE is] holding on to," the market source said.

Commitments on the deal are due Aug. 2.

Security is substantially all domestic assets and stock of some subsidiaries. The Canadian term loan will also be secured by the assets of Canadian subsidiaries.

Amortization on the term loan B is quarterly payments of $600,000 with a final payment of $225.6 million due on the maturity date.

Amortization on the Canadian term loan is quarterly payments of $13,000 with a final payment of about $4.9 million due on the maturity date.

Blount is getting the amended and restated credit facility in connection with a $125 million common stock sale and a $175 million senior subordinated notes offering. Proceeds from the transactions will be used to refinance debt.

Blount is a Portland, Ore., international manufacturing and marketing company that operates in the outdoor products, lawnmower and industrial and power equipment segments.

Innophos revolver pricing

Pricing of Libor plus 275 basis points surfaced on Innophos Holdings' $50 million revolver Wednesday in connection with the deal's launch, according to a market source.

Pricing on the $220 million term loan was unavailable prior to press time.

Bear Stearns and UBS are the lead banks on the deal, with Bear Stearns listed on the left.

Proceeds will be used to help fund Bain Capital's acquisition of Rhodia's North American specialty phosphates business for an enterprise value of $550 million. The acquisition, which was first announced on June 11, is expected to close in the third quarter.

Foundation Coal lowers pricing

Foundation Coal Corp. cut pricing on its $470 million seven-year term loan B to Libor plus 200 basis points from Libor plus 250 basis points and added a stepdown to Libor plus 175 basis points under certain conditions, according to a market source. The $350 million five-year revolver remained priced at Libor plus 250 basis points with a 50 basis points commitment fee.

"Most guys are recommitting. But this may push a select few guys out," a market source said regarding the price cut. "But, it was so oversubscribed that it won't really matter."

Just the other week, the term loan B had been increased in size by $35 million as the company opted to decrease the size of its proposed note offering by the same amount to $300 million.

Citigroup and Credit Suisse First Boston are the joint lead arrangers and joint bookrunners on the $820 million credit facility (Ba3/BB-), with Citi left lead and administrative agent, CSFB syndication agent and UBS documentation agent.

Proceeds from the credit facility and the bonds will be used to help fund the acquisition of American Coal by a private equity consortium consisting of First Reserve Corp., The Blackstone Group and American Metals & Coal International from RAG Coal International.

Foundation Coal is a Linthicum Heights, Md., coal mine company.

CenterPoint revolver up

CenterPoint Energy Inc.'s revolver was quoted at 99 5/8 bid, par offered, up about a quarter of a point on the day following news of the Texas Genco Holdings Inc. sale, according to a trader.

"It's up on talk that it's getting taken off. I haven't seen the term loan quoted," the trader said.

On Wednesday, CenterPoint announced that it was selling Texas Genco to GC Power Acquisition LLC, a newly formed entity owned in equal parts by affiliates of The Blackstone Group, Hellman & Friedman LLC, Kohlberg Kravis Roberts & Co. LP and Texas Pacific Group, for about $3.65 billion in cash.

The transaction, subject to customary regulatory approvals, will be accomplished in two steps. The first step, expected to be completed in the fourth quarter of 2004, involves Texas Genco's purchase of the 19% of its shares owned by the public for $47 per share, followed by GC Power Acquisition's purchase of a Texas Genco unit that will be formed to own its coal, lignite and gas-fired generation plants. In the second step, which is expected to take place in the first quarter of 2005 following receipt of approval by the Nuclear Regulatory Commission, GC Power Acquisition will complete the acquisition of Texas Genco, the principal remaining asset of which will then be Texas Genco's interest in the South Texas Project nuclear facility. Total cash proceeds to CenterPoint from both steps of the transaction will be about $2.9 billion, according to a company news release.

"We believe that the sale of Texas Genco is beneficial for both companies," said David M. McClanahan, president and chief executive officer of CenterPoint, in the release. "The sale enables CenterPoint Energy to reduce its debt and concentrate on its energy delivery businesses."

CenterPoint is a Houston energy company.

Nextel up slightly on earnings

Nextel Communications Inc.'s revolver and term loan E were "up maybe an eighth on the day" following the Reston, Va., wireless company's release of strong second quarter earnings, according to a trader.

The revolver was quoted at 99 bid, 99 1/8 offered and the term loan E was quoted at par ¾ bid, par 7/8 offered, the trader said. "The term loan seems to be very quiet since they came out with the revolver," the trader added.

For the quarter, revenue was $3.3 billion, up 29% from last year's second-quarter revenue of $2.6 billion; income was $1.3 billion, or $1.17 per share, up from last year's second-quarter income of $281 million, or $0.27 per share; and OIBDA was $1.26 billion, up 25% from last year's second-quarter OIBDA of $1 billion.

"Our second-quarter results reflect continued progress on multiple fronts and we are on track to meet or exceed our 2004 guidance," said Tim Donahue, president and chief executive officer, in a company news release.

"Nextel continues to build on its track record of delivering strong operating results, industry leading margins and the highest lifetime value per subscriber," added Paul Saleh, executive vice president and chief financial officer, in the release. "We are also continuing to take steps to further enhance our financial flexibility and strengthen our balance sheet. During the second quarter, Nextel reduced debt by approximately $700 million and so far this year has been upgraded by all rating agencies. During July, Nextel extended and refinanced its credit facility and increased liquidity to $4.6 billion on a pro forma basis."

Blockbuster price talk

Price talk of Libor plus 200 basis points has surfaced on all three of Blockbuster Inc.'s tranches ahead of Thursday's bank meeting, according to a market source.

The $1.45 billion credit facility consists of a $500 million seven-year revolving credit facility, of which $150 million will be reserved for a Viacom letter of credit, a $200 million seven-year term loan A and a $750 million seven-year term loan B.

JPMorgan, Citigroup and Credit Suisse First Boston are the lead banks on the deal, with JPMorgan listed on the left.

Security is pledges of the stock of some of Blockbuster's direct and indirect subsidiaries.

Blockbuster is looking to get the new credit facility to help fund the Viacom Inc. "split off".

This new facility will replace the company's existing revolver.

Proceeds will be used to pay a special distribution of $5 per share, or about $905 million, to its stockholders and to pay some of the transaction costs related to the special distribution, the split-off and credit agreement. The credit facility will also be available for working capital and general corporate purposes.

Viacom currently owns 81.5% of Blockbuster's outstanding shares. This means Viacom will receive a cash payment of $738 million in the special distribution.

The special distribution is part of the plan to separate Blockbuster and Viacom. This separation will occur through an exchange offer under which Viacom stockholders will have the chance to exchange some or all of their shares of Viacom class A or class B common stock for shares of Blockbuster class A and class B common stock held by Viacom. The exchange ratio for the offer will be set prior to the beginning of the offer.

The divestiture is expected to be completed in the third quarter of 2004.

Blockbuster is a provider of in-home movies and game entertainment.

Repricing season upon us

It is the time of repricings as the bank loan market continues to be incredibly strong, with Nebraska Book Co. Inc. looking to get a new term loan C to replace its $180 million term loan B at a lower interest rate, Sealy Corp. looking to reprice its senior secured loan, and Empi Inc., Polypore International Inc. and Berry Plastics Corp. also looking to reprice as well, according to market sources.

"[And], more repricings are expected next week," a fund manager added.

Nebraska Book is a Lincoln, Neb., provider of products and services to the college marketplace. Sealy is a Trinity, N.C., bedding company. Empi is a St. Paul, Minn., manufacturer and provider of non-invasive medical products for physical rehabilitation. Polypore is a Charlotte, N.C., developer, manufacturer, and marketer of specialized microporous filtration products. And, Berry Plastics is an Evansville, Ind., maker of injection-molded plastic products.

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