Blockbuster breaks; Sunny Delight sets pricing; TransWestern Publishing second lien flexes up

By Sara Rosenberg

New York, Aug. 19 - Blockbuster Inc. allocated and broke for trading, with its term loan B hovering around the par area pretty steadily throughout the day - just like PanAmSat Corp. did on its break Wednesday - as once again in this case investors seemed to be pretty full on allocations. Meanwhile, Sunny Delight Beverages Co. finalized pricing on its in-market deal as it begins readying allocations, and TransWestern Publishing Co. LLC increased pricing on its second-lien term loan add-on.

Blockbuster's $550 million seven-year term loan B was quoted at par bid, par ¼ offered, according to a fund manager.

"Allocations were pretty decent," the fund manager added.

The term loan B is priced with an interest rate of Libor plus 250 basis points and contains soft call protection of 101 in year one. Originally, the tranche was priced at Libor plus 200 basis points but was flexed higher with the soft call added once the company's bonds priced at a wider-than-expected level. Furthermore, the term loan was initially sized at $750 million but was reduced once the company opted to come to market with the bond offering.

The $1.15 billion credit facility (Ba2/BB/BB) also contains a $500 million seven-year revolver with an interest rate of Libor plus 200 basis points and a $100 million seven-year term loan A that was reduced from $200 million during syndication because of the addition of the bond deal, with an interest rate of Libor plus 200 basis points.

At the time of the term loan B and term loan A size changes, the syndicate also added a 50% cash flow sweep to the loan.

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

Blockbuster is getting the new credit facility and issued the bonds to help fund the split off from Viacom Inc.

This new facility will replace the company's existing revolver and will be used, along with the bond deal, 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 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.

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

PanAmSat better bid

PanAmSat Corp.'s $1.66 billion seven-year term loan B was about an eighth better on the bid side with "more activity" in Thursday's market, according to a trader, who placed the paper at par 1/8 bid, par ¼ offered.

On Wednesday, when the paper broke for trading, it was quoted at par bid, par ¼ offered consistently throughout market hours since most investors got the positions they wanted from allocations. Also, although the paper did trade, it did not move around as much as people had anticipated, especially for such a large deal.

PanAmSat is a Wilton, Conn., satellite operator.

Sunny Delight sets pricing

Sunny Delight finalized pricing on its $295 million credit facility, with the $170 million first-lien term loan (B1/B+) at Libor plus 425 basis points, the $85 million second-lien term loan (B2/B-) at Libor plus 750 basis points and the $40 million revolver (B1/B+) at Libor plus 400 basis points with a step down to Libor plus 350 basis points if leverage falls below 2.5x, according to a market source.

Originally, the $170 million first-lien term loan was talked at Libor plus 400 to 450 basis points and the $85 million second-lien term loan was talked at Libor plus 700 to 800 basis points. The revolver was always expected to come 25 basis points inside of the first-lien term loan pricing.

The first-lien term loan contains call protection of 101 in year one, and the second-lien term loan contains call protection of 102 in year one and 101 in year two.

The deal is expected to "allocate shortly," the source added.

UBS is the lead bank on the deal.

Proceeds will be used to help fund J.W. Childs Associates LP's acquisition of the Sunny Delight and Punica juice-based drink businesses from The Procter & Gamble Co.

This is the second time that the company came to market with a credit facility for this acquisition. In mid-July Cincinnati-based Sunny Delight put its then proposed $250 million credit facility on hold since the company had "experienced softness in certain markets," a source previously told Prospect News.

TransWestern ups second-lien pricing

TransWestern Publishing increased pricing on its $50 million add-on to its second-lien term loan to Libor plus 450 basis points from Libor plus 375 basis points because earlier this week Moody's Investors Service downgraded the company's second-lien bank debt to B3 from B2, according to a market source.

The $100 million add-on to its first-lien term loan (B1/B+) remained priced at Libor plus 225 basis points, the source added.

Goldman Sachs and Wachovia are the lead banks on the deal, with Goldman listed on the left.

Proceeds will be used by the San Diego telephone directory publisher to pay a dividend.

Entravision allocations Friday

Entravision Communications Corp. is expected to allocate its $400 million senior secured credit facility (B1/B+) on Friday, according to a market source.

The deal consists of a $175 million 71/2-year term loan B with an interest rate of Libor plus 175 basis points, a $75 million delayed-draw term loan B with an interest rate of Libor plus 175 basis points and a $150 million 61/2-year revolver with an interest rate of Libor plus 200 basis points.

Originally, pricing guidance on all tranches was set at Libor plus 200 to 225 basis points and then was lowered to the Libor plus 200 basis points area soon after launch on oversubscription. The term loan B and delayed-draw term loan were then reverse flexed to current pricing because demand was so high.

In fact, Entravision was oversubscribed within a few hours of the July 28 bank meeting as several orders came in pre and post meeting, with some attributing the success to positive investor sentiment toward deals in the broadcasting sector.

Goldman Sachs and Union Bank of California are the lead banks on the deal, with Goldman listed on the left.

Proceeds will be used to refinance outstanding bank borrowings under the company's existing $400 million credit facility, for general corporate purposes and to fund the potential repurchase of the remaining shares of its series A preferred stock.

Entravision is a Santa Monica, Calif., diversified Spanish-language media company.

Bear wins auction

Bear Stearns emerged victorious on the Angelo Gordon $240 million loan portfolio auction that took place Thursday, according to a market source. The cover bid was 100.76.

Last week, two auctions took place - one held by TCW for a $300 million portfolio that JPMorgan Chase won with a 100.76 cover bid and one held by Bain Capital for a $250 million portfolio that Wachovia won.

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