Lake Las Vegas breaks; Tower Auto up on earnings; El Paso nets early commitments

By Sara Rosenberg

New York, Oct. 28 - Lake Las Vegas Resort allocated its $560 million credit facility Thursday, with both term loans following the example of other recent new-issue paper by heading into 101 plus territory. Also in trading, Tower Automotive Inc. saw another pop in levels, this time due to positive earnings news.

While on the primary front, syndication of El Paso Corp.'s newly launched term loan seems to be moving along at a nice pace as investors have not only expressed interest in the deal but have actually put up early commitments as well.

Lake Las Vegas' first-lien term loan was quoted at 101¼ bid, 101¾ offered and the second-lien term loan was quoted at 101¾ bid, 102¼ offered, according to a trader, who said that the paper stayed within these levels for most of the day.

"There was tons of trading activity. Over $150 million traded between the two tranches," the trader added.

The $435 million five-year first-lien term loan is priced with an interest rate of Libor plus 250 basis points, and its $125 million second-lien six-year term loan is priced with an interest rate of Libor plus 550 basis points.

Originally, the first-lien term loan was sized at $360 million and priced at Libor plus 275 basis points and the second-lien term loan was sized at $100 million and priced at Libor plus 600 basis points, but both tranches were upsized and reverse flexed during the first half of this week.

In reaction to the extra leverage gained through the upsizings, Moody's Investors Service downgraded the first-lien term loan to B1 from Ba3 and the second-lien term loan to B2 from B1, and Standard & Poor's downgraded the first-lien term loan to B+ from BB and the second-lien term loan to B- from B.

Proceeds from this extra $100 million will be used to increase the dividend being paid to equity holders. A small portion of the facility will also be used to refinance the company's existing credit facility.

Credit Suisse First Boston is the lead bank on the Henderson, Nev., residential, golf and resort community's credit facility.

Tower Auto up with earnings

Tower Automotive's first-lien bank debt was quoted at 99 bid, 99½ offered and the second-lien bank debt was quoted at par ½ bid, 101 offered, according to traders, who placed the paper higher by about a half a point on the day, spurred on by financial results

For the third quarter, revenues increased to $722 million from $623 million in the 2003 third quarter, net loss shrunk to $20.2 million, or $0.35 per diluted share, versus a net loss of $105.9 million, or $1.87 per diluted share, for the year-ago period, and adjusted EBITDA was about $35.4 million.

For the nine months ended Sept. 30, revenues were $2.3 billion compared to $2.1 billion in the prior-year period, and net loss improved to $10.9 million, or $0.19 per diluted share, versus a net loss of $91.6 million, or $1.62 per diluted share, in the first nine months of last year.

"Our focus on operational excellence and expense control helped us through a challenging quarter, despite continued high steel costs and reductions in production volumes on our key North American platforms," said Kathleen Ligocki, president and chief executive officer, in a company news release. "While program launch costs were higher than planned for the quarter, our launches remain on schedule and we continue to meet all customer quality commitments."

For the fourth quarter, Tower anticipates revenues in the range of $830 million to $855 million, with a loss of $0.10 to breakeven per diluted share, excluding restructuring charges, and adjusted EBITDA of about $67 million to $75 million.

For full-year 2004, revenues are estimated in the range of $3.12 billion to $3.14 billion, up from $2.8 billion in 2003, loss per diluted share is expected in the range of $0.50 to $0.40, and adjusted EBITDA is expected between $242 million and $250 million.

The company's bank debt has been doing well over the last couple of sessions, with the first jump up and a relatively feel good investor attitude really being noticed after the company approached lenders early last week with an amendment to its credit facility that would allow for a $200 million accounts receivable securitization facility - a move that would obviously enhance liquidity. Under the current credit agreement, the company can only get a $50 million accounts receivable securitization facility.

Tower Automotive is a Novi, Mich., designer and producer of structural components and assemblies used by automotive original equipment manufacturers.

Meridian Auto rebounds slightly

Unlike Tower, which posted good results, Meridian Automotive Systems Inc.'s recent financials were "bad," according to a trader, who said that following the news the second-lien bank debt plummeted by about 8 points on Wednesday.

However, there was some upside as the second-lien paper pushed its way up by about 2 points during Thursday's session to end at 82 bid, 85 offered, the trader said.

Meridian is a Dearborn, Mich.-based auto parts company.

Calpine up

In other secondary doings, Calpine Corp.'s second-lien bank debt was up about three quarters of a point with levels of 83¾ bid, 84½ offered, according to a trader.

The San Jose, Calif., power company did not put out any news that would account for this movement so the gain was chalked up to market technicals.

El Paso catches commitments

Meanwhile, in the primary market, El Paso presented its $750 million five-year term loan to potential lenders at a bank meeting Thursday afternoon, but even before the actual launch, the deal received a "great deal of interest [as] early commitments have come in," according to a market source.

And, although El Paso is a new issuer to the institutional market, the company itself is a "well known credit because there's so much out there already [in terms of] publicly traded securities that are well regarded," the source said, explaining that the performance of these other securities may be one of the drivers behind the "ton of interest" currently being seen in the bank loan market.

The term loan, which contains the ability to be upsized to $1 billion, is talked at Libor plus 325 to 350 basis points.

Citigroup and JPMorgan are the lead banks on the term loan, with Citigroup left lead.

The Houston-based energy company is already in-market with a $1.75 billion three-year revolver talked at Libor plus 350 basis points that launched Oct. 14. JPMorgan and Citigroup are the lead banks on the revolver, with JPMorgan left lead.

Proceeds from the revolver and term loan will be used to refinance the company's existing $2.5 billion revolver due June 30, 2005 that currently bears interest at Libor plus 350 basis points and carries a 75 basis point commitment fee.

This existing revolver was originally sized at $3 billion but, in connection with the sale of a majority of El Paso's interests in GulfTerra Energy Partners LP to Enterprise Products Partners LP in September, the borrowing capacity was reduced.

As of Sept. 30, El Paso had no borrowings outstanding under its existing revolver and had approximately $1.1 billion of letters of credit issued under the facility, according to a 10-Q filed with the Securities and Exchange Commission Wednesday.

Over the past several months, El Paso received several waivers on its existing revolver because of necessary financial restatements. The company also received an extension until Nov. 30 to file its second quarter 2004 10-Q. These waivers continue to be effective.

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