Venetian Macau sets talk, prepares U.S. launch; Coinmach cuts spread; Hawaiian Telcom dips on rating

By Sara Rosenberg

New York, Dec. 7 - Venetian Macau Ltd., a subsidiary of Las Vegas Sands Corp., has come out with price talk on its credit facility now that the deal has already launched to Asian investors and has scheduled an early round meeting for U.S. lenders.

In other primary news, Coinmach Corp. reverse flexed pricing on its term loan B and added a step down under certain conditions as the deal was met with good demand.

On the trading front, Hawaiian Telcom Communications Inc. fell on news of a rating downgrade and Smurfit-Stone Container Corp. weakened as the company launched an amendment proposal to avoid non-compliance with some financial covenants.

Venetian Macau has come out with price talk of Libor plus 275 basis points on all tranches contained in its $2.5 billion senior secured credit facility now that the company has completed a Tuesday bank meeting in Macau that kicked the deal off into syndication, according to a market source.

In addition, the syndicate has scheduled an early round meeting for U.S. lenders for Thursday morning, with mostly the larger banks being approached at this time, the source said.

A meeting to launch the deal to U.S. institutional investors is expected to take place in January.

The $2.5 billion credit facility consists of a $500 million revolver, a $100 million equivalent local currency term loan, a $700 million delayed-draw term loan and a $1.2 billion funded term loan.

Asian lenders are being offered a specific strip of the credit facility and they will factor into the term loan as well, the source added.

Goldman Sachs, Lehman and Merrill Lynch are the lead banks on the deal, with Goldman the left lead.

Proceeds from the deal will be used to fund design, development, construction and pre-opening costs for the company's development projects in Macao, including The Venetian Macao Resort-Hotel-Casino and other projects on the Cotai Strip, and to pay related fees and expenses.

Closing is expected to take place in the first quarter of 2006.

Las Vegas Sands is a Las Vegas-based hotel, gaming, resort and exhibition/convention company.

Coinmach lowers pricing

Coinmach reduced pricing on its $570 million term loan B to Libor plus 250 basis points from original price talk at launch of Libor plus 275 basis points being that the tranche was well received by investors, according to a market source.

Furthermore, a step down in pricing was added to the term loan B, under which the spread can drop to Libor plus 225 basis points based on the company meeting leverage and/or ratings tests, the source said.

Pricing on Coinmach's $75 million revolver was left unchanged at Libor plus 300 basis points, the source added.

Deutsche Bank Securities Inc. and J.P. Morgan Securities Inc. are joint lead arrangers on the $645 million credit facility (B2/B), with Deutsche the left lead.

Proceeds from the term loan will be used to refinance about $230 million of existing term debt and to retire the company's 9% senior notes due 2010.

Coinmach is a Plainview, N.Y., provider of outsourced laundry equipment services for multifamily housing properties.

Mirant revolver talked at Libor plus 225 bps

Mirant Corp.'s $800 million six-year revolver that is part of its exit financing package is being talked at Libor plus 225 basis points, not Libor plus 200 basis points as was previously heard by some market sources, an informed source told Prospect News Wednesday.

The $500 million seven-year term loan and $200 million pre-funded letter-of-credit facility, however, are in fact being talked at Libor plus 200 basis points as was previously reported.

JP Morgan, Deutsche Bank and Goldman Sachs are the lead banks on the $1.5 billion exit financing credit facility (Ba3), with JPMorgan the left lead.

Proceeds will be used to fund intercompany restructuring transactions and help pay claims against the consolidated Mirant Americas Generation LLC debtors.

Mirant is an Atlanta-based power company.

Hawaiian Telcom falls on downgrade

Hawaiian Telcom's bank debt dropped by about an eighth to three eighths of a point after Standard & Poor's announced that it downgraded, among other things, the company's senior secured credit facility rating to B from B+ with negative implications, according to a trader.

Following the news, the bank debt fell to par ¼ bid, par ¾ offered from previous levels of par 5/8 bid, par 7/8 offered, the trader said.

"The downgrades reflect pressure on credit protection measures because of the additional expense associated with the recently announced delay in transitioning back office operations from Verizon Communications, Inc. to BearingPoint, Inc., the service provider chosen by Hawaiian Telcom to build and operate its back office systems," said S&P credit analyst Susan Madison, in the rating release.

The downgrades also reflect the impact of a heightened competitive environment, S&P said. Oceanic Time Warner began commercial deployment of cable telephony in Oahu in mid-2005, and Hawaiian Telcom has suffered recent access-line losses in the 5% to 6% range.

Hawaiian Telcom is a Hawaii-based local telephone operator, and print directory, long distance and internet service provider.

Smurfit-Stone softens on amendment

Smurfit-Stone's bank debt weakened by about an eighth of a point in light trading as the company launched an amendment proposal that would relax some financial covenants, while at the same time changing pricing and adding soft call protection to the term loan, according to a trader.

The bank debt was quoted at par ½ bid, 101 offered, down from previously being wrapped around the 101 area, the trader said.

On Wednesday, the company approached lenders with the proposed amendment being that it needs additional room under the consolidated senior secured leverage ratio and the interest coverage ratio for the fiscal quarters ending Dec. 31, 2005 through Sept. 30, 2007.

Furthermore, under the proposal, interest rates on the term loan would range from Libor plus 200 to 225 basis points, based on leverage, and on the revolver, interest rates would range from Libor plus 150 to 225 basis points, based on leverage.

The interest rate would increase by 25 basis points if at any time the company's senior secured debt is rated lower than Ba3/BB-.

In addition, the proposed amendment would give lenders 101 soft call protection on the term loan for one year against a repricing.

The need for the amendment did not come as much of a shock to the market being that the company admitted in early November that it planned on seeking an amendment from loan lenders during the fourth quarter to revise certain financial covenants.

The company had said that it anticipated needing the amendment based on expected operating performance in the fourth quarter potentially leading to non-compliance with those financial covenants at Dec. 31.

Smurfit Stone is a Chicago-based manufacturer of paperboard and paper-based packaging.

Calpine lower

Calpine Corp.'s second-lien bank debt closed the session lower by about 2 points as the markets in general felt weaker, according to a trader.

The second-lien paper was quoted at 76 bid, 77 offered at the end of the day, but it was seen trading as high as 77 bid, 78 offered earlier in the session, the trader said. By comparison, on Tuesday, the bank debt was quoted at 78 bid, 80 offered.

On Wednesday, news surfaced that Wilmington Trust Co., trustee for bondholders, notified Calpine that it could default on $3 billion in second-lien secured debt unless it immediately repays the approximately $313 million that was ruled to be improperly spent on asset purchases, to the Bank of New York collateral account.

Under the recent court ruling, the San Jose, Calif., power company was given until Jan. 22 to repay the funds.

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