Wyndham breaks with levels moving up from the open; Kerr-McGee upsizes, firms pricing

By Sara Rosenberg

New York, May 6 - Wyndham International Inc. allocated its credit facility, freeing it up for trading on Friday morning, with the term loan B and term loan C working their way higher from opening levels throughout the session. Meanwhile, Kerr McGee Corp. upsized its credit facility, eliminating the need for an interim bridge loan, and firmed up pricing, with the expectation being that most would recommit to the deal by Friday's deadline.

Wyndham's $530 million six-year term loan B (B3/B) opened for trading around par ¼ bid, par ¾ offered and then steadily worked its way up during trading hours with bids going from par ¼ to par ½ to par 5/8 and then finally settling at par ¾ by the end of the day, according to a trader. As for the offer side, levels ended the day at 101, the trader added.

The $140 million 61/2-year second-lien term C (Caa1/CCC+) also progressed higher during trading hours, with the paper opening at par ¾ bid, no offers and then moving up to 101 bid, 101½ offered by the end of the day, the trader said.

The term loan B is priced with an interest rate of Libor plus 325 basis points and the second-lien term loan C is priced with an interest rate of Libor plus 800 basis points. The second-lien is non-callable for one year, callable at 103 in year two, 102 in year three and 101 in year four.

Originally, the second-lien term loan was launched with price talk of Libor plus 650 basis points and call protection of 102 in year one and 101 in year two, but pricing was flexed higher and call protection terms were sweetened to attract investors.

Wyndham's $895 million credit facility also contains a $175 million six-year revolver (B3/B) and a $50 million six-year institutional letter of credit facility (B3/B), with both of these tranches priced at Libor plus 325 basis points as well.

Accounts said that if commitments were given towards the revolver or if an institution got in early on the second-lien term loan C - meaning before the price flex and call protection changes - then they got treated very well in terms of allocations.

Proceeds from the credit facility will be used in combination with proceeds from approximately $944 million of new CMBS debt to refinance approximately $1.65 billion of the company's outstanding debt, which would include refinancing its corporate credit facility and the majority of its outstanding mortgage debt.

In addition, through the refinancing the company will have availability to $100 million in pre-funded capital expenditures to invest in owned properties.

As of Dec. 31, 2004, Wyndham had approximately $68.6 million outstanding under its revolver, $870.8 million outstanding on its term loan I, $284.2 million outstanding on its term loan II, outstanding letters of credit totaling $65.5 million and $932.8 million of mortgage debt outstanding that encumbered 30 hotels and capital leases.

JPMorgan and Bear Stearns are the lead banks on the deal, with JPMorgan left lead.

Wyndham is a Dallas-based provider of upscale and luxury hotel and resort accommodations.

Kerr-McGee upsizes

Kerr McGee asked lenders to recommit to its reworked credit facility on Friday after announcing an upsizing and official pricing levels late in the day Thursday, according to a market source. And since the changes weren't overly dramatic, the anticipation is that most, if not all, will confirm the new structure, the source added.

The company increased the total size of its credit facility by $500 million to $5.5 billion by adding $250 million to its revolver tranche and adding $250 million its term loan B tranche. With this upsizing, combined with the fact that the company had over-funded by $500 million, the $1 billion unsecured bridge loan was eliminated. Originally, the bridge loan was intended to be taken out with a bond offering.

Pricing on the upsized $2.25 billion senior secured six-year term loan B was then set at Libor plus 250 basis points - as was expected since early this week - and a step down to Libor plus 225 basis points was added under the conditions that the company repay its term loan X and leverage is below 2x.

At launch, the term loan B was talked at Libor plus 200 basis points and then price talk headed up to the Libor plus 225 basis points to 250 basis points range during syndication.

Pricing on the upsized $1.25 billion senior secured five-year revolver was set at Libor plus 225 basis points - also expected since early this week - and a step down to Libor plus 200 basis points was added under the condition that the company repay its term loan X within nine months. After nine months, regardless of whether the term loan X was repaid or not, revolver pricing will be determined by a leverage-based grid.

At launch, the revolver was talked at Libor plus 175 basis points.

Kerr-McGee's $2 billion senior secured two-year term loan X is priced with an interest rate of Libor plus 225 basis points, up from original price talk of Libor plus 175 basis points as well.

Allocations on the deal are currently hoped to go out around mid-month.

Security for the credit facility is basically a perfected first priority interest in all tangible and intangible U.S. assets and all of the capital stock of direct and indirect subsidiaries.

Proceeds will be used to refinance debt, finance a $4 billion modified Dutch auction self tender offer for shares of the company's common stock that was announced last Thursday and for general corporate purposes.

As a result of the company's self tender offer and financing needs all three agencies downgraded Kerr-McGee's secured debt ratings - Moody's Investors Service to Ba3, Standard & Poor's to BB+ and Fitch Ratings to BB.

Under the tender offer, the company will buy back up to $4 billion of its common stock, at a price not less than $85 per share or more than $92 per share. The tender offer is expected to commence on or about April 18.

Following the tender, the company expects to reduce debt by $3.5 billion to $4.5 billion over a two-year period with net proceeds from the separation of its chemical business and divestiture of certain oil and gas properties, along with cash flow from operations which has been underpinned by an expanded hedging program for 2005 through 2007.

JPMorgan and Lehman Brothers are the lead banks on the credit facility, with JPMorgan left lead.

Kerr-McGee is an Oklahoma City-based energy and inorganic chemical company.

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