Martin Midstream firms timing, floats price talk; Kodak pricing steps up on downgrade

By Sara Rosenberg

New York, Sept. 30 - Martin Midstream Partners LP has firmed up timing for the launch of its credit facility and has started whispering price talk levels to potential investors. Meanwhile, following a rating downgrade, spreads on Eastman Kodak Co.'s credit facility increased based on pricing grids that were announced to lenders at launch.

Martin Midstream finalized timing on its credit facility, with a bank meeting scheduled for Monday to launch the $225 million deal, according to a market source.

Originally, the deal had been hoped to launch in the late-September timeframe, however, it was delayed to the first week of October because of Hurricane Rita and the uncertainty over what sort of affect the storm would have on the Houston area.

Furthermore price talk in the Libor pus 300 basis points region is being circulated to potential investors on both the revolver and the term loan tranches contained in the facility, the source said.

Both tranches will contain some sort of a pricing grid based on leverage being that the partnership may end up deleveraging relatively quickly, the source explained.

The partnership has previously said that, subsequent to closing, it expects to refinance a portion of the new facility with new equity capital.

Under the proposed facility, the working capital revolver is sized at $95 million and the term loan is sized at $130 million with an optional $100 million accordion feature.

Royal Bank of Canada is the lead bank on the deal.

Proceeds will be used to help fund the approximately $100 million acquisition of Prism Gas Systems I LP and refinance existing bank debt.

Martin Midstream Partners is a Kilgore, Texas-based provider of marine transportation, terminalling, distribution and midstream logistical services for producers and suppliers of hydrocarbon products and by-products, lubricants and other liquids. Prism is a natural gas gathering and processing company.

Kodak spreads change on downgrade

Pricing on Kodak's $2.7 billion credit facility stepped up to new levels as Standard & Poor's downgraded the company's credit facility by one notch to BB- from BB, according to market sources.

The $1.5 billion seven-year term loan debt was launched with a pricing grid, under which, with this latest S&P announcement, interest rates would now be Libor plus 225 basis points as opposed to original price talk of Libor plus 175 basis points based on the initial B rating, sources explained.

And, the $1.2 billion five-year revolver was also launched with a pricing grid, under which the interest rate would now be Libor plus 200 basis points as opposed to original price talk of Libor plus 150 basis points based on the initial B rating, sources said.

The change in pricing is not a result of a lack of demand and is not even technically considered a flex up; it's simply "based on the terms disclosed at the launch," one source added. In fact, as of two weeks ago, the term loans had about $2.3 billion in commitments from lenders.

On Sept. 28, the company announced that its digital profitability may fall well short of the target it reiterated on July 21, despite faster revenue growth, that its digital health imaging results remain weak and that its free cash flow, including asset sales, is expected to be at the low end of its forecast, regardless of its expectation for significant asset sales by year-end.

"The downgrade reflects increased concern about Kodak's profitability and cash flow, as well as its continued difficulty in forecasting results, amid the transition of its businesses to digital technologies and broad economic uncertainty," explained credit analyst Steve Wilkinson, in the S&P release.

Moody's Investors Service has not changed its Ba2 credit facility rating, which was announced on Sept. 21.

Kodak's $1.5 billion in term loan debt is comprised of $1 billion that will be funded at close and $500 million that is delayed draw. The delayed-draw portion is available until June 2006.

The term loans are being offered at par. Upfront fees on the revolver are 100 basis points for $100 million commitments, 75 basis points for $75 million commitments, 50 basis points for $50 million commitments and 37.5 basis points for $25 million commitments.

Citigroup Global Markets Inc. is the lead arranger on the deal.

Borrowings under the revolver, which will replace the company's existing $1.225 billion five-year revolver expiring in July 2006, will be available for general corporate purposes.

Term loan proceeds will be used to repay existing company debt primarily arising out of the acquisition of Creo, which was completed on June 15.

Kodak is a Rochester, N.Y.-based digital imaging products, services and solutions company.

Rosetta wraps syndication

Rosetta Resources Inc. closed syndication on its $475 million senior secured credit facility, according to a news release. BNP Paribas acted as the lead bank on the deal.

The facility is comprised of a $400 million first-lien revolver and a $75 million second-lien term loan. Both tranches were substantially oversubscribed and priced at the tight end of expectations, the release said.

Proceeds were used to back the recent purchase of some of Calpine Corp.'s oil and gas assets.

Rosetta Resources is a Houston-based independent energy company.

Rite Aid closes

Rite Aid Corp. closed on its amended $1.75 billion five-year revolver that's priced with an interest rate of Libor plus 150 basis points and carries a 25 basis point commitment fee, according to a company news release.

The amended facility replaces the company's previous $950 million revolver that carried an interest rate of Libor plus 175 basis points and a commitment fee of 37.5 basis points, and repaid the previous $445.5 million senior secured term loan that carried an interest rate of Libor plus 175 basis points.

Citigroup and JPMorgan acted as the lead banks on the Camp Hill, Pa., drugstore chain's deal, with Citigroup the left lead.

Lamar closes

Lamar Media Corp. closed on its new $800 million senior secured credit facility (Ba1/BB) consisting of a $400 million revolver and a $400 million term loan, with both tranches priced at Libor plus 100 basis points.

The credit agreement also contains a $500 million incremental facility.

JPMorgan acted as the lead bank on the deal that was used to refinance existing debt.

Lamar is a Baton Rouge, La., outdoor advertising company.

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