Loews Cineplex breaks for trading with term loan hitting 101 levels

By Sara Rosenberg

New York, July 29 - Loews Cineplex Entertainment Corp.'s $830 million credit facility (B1/B) broke for trading on Thursday with its term loan B quoted in the 101 context pretty steadily following its entrance into the secondary.

More specifically, the $630 million seven-year term loan B was quoted at 101 bid, 101¼ offered, according to traders. The tranche is priced with an interest rate of Libor plus 225 basis points.

Originally, the term loan was sized at $530 million and priced at Libor plus 275 basis points but was upsized last week after the $100 million downsizing of the senior subordinated notes offering to $315 million and reverse flexed on strong bank reception.

The deal broke into a relatively calmer market when compared to Wednesday's overwhelming onslaught of new-issue paper on the secondary at which time somewhere around eight or nine deals broke for trading. Those deals included Accredo Health Inc., Allied Security Inc., Foundation Coal Corp., Merrill Corp., Refco Group Ltd. LLC, Rockwood Specialties Group Inc., United Industries Corp. and Valor Communications Group Inc., traders said.

Loews' facility 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.

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.

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.

PlayCore ups second-lien pricing

PlayCore Inc. increased pricing on its recently upsized second-lien term loan to Libor plus 1,150 basis points, according to a syndicate document.

As was previously reported by Prospect News earlier in the week, the company upsized its first-lien five-year term loan to $55 million from $50 million, upsized its six-year second-lien term loan to $55 million from $40 million and decreased its 61/2-year third-lien term loan to $20 million from $40 million.

At the time of the size shifts, it was expected that pricing on the second-lien term loan would increase to Libor plus 950 basis points from Libor plus 900 basis points. The tranche is being obtained at the operating company level.

Pricing on the first-lien term loan, which is being obtained at the operating company level, remained at Libor plus 500 basis points throughout syndication, and pricing on the third-lien term loan, which is being obtained at the holding company level, remained unchanged throughout syndication at 18%, split into 5% cash and 13% PIK.

Market speculation regarding the shuffling of some funds from the third-lien tranche into its first- and/or second-lien term loans has been circulating since early last week, with some saying that the changes are a result of oversubscription on the first- and second-lien tranches allowing the company to lower the cost of capital and others saying that the third lien was short on commitments so the syndicate needed to reshuffle some funds to get the deal done.

The credit facility also contains a $15 million five-year revolver with an interest rate of Libor plus 500 basis points at the operating company level.

Leverage multiple include 3.7x second-lien debt at the operating company, 1.7x first-lien debt at the operating company and 5.7x total debt at the holding company.

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

Proceeds will be used by the Chattanooga, Tenn., playground equipment manufacturer to refinance existing debt.

IKON closes

IKON Office Solutions Inc. closed on its $200 million four-year senior secured revolver, according to a company news release. Wachovia Capital Markets is the sole administrative agent on the facility.

The revolver, which is priced with an initial interest rate of Libor plus 175 basis points, will be used for general corporate purposes.

Financial covenants of the credit facility are consistent with IKON's long-term financial objectives for share repurchases, dividends, and other investment opportunities," the release added.

IKON is a Malvern, Pa., provider of products and services that help businesses manage document workflow and increase efficiency.

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