Danielson firms up first-lien spreads; Skilled Healthcare shifts funds; GGP still being met with resistance

By Sara Rosenberg

New York, June 9 - Danielson Holding Corp. (Covanta Energy) firmed up pricing on its one billion plus credit facility as the syndicate hopes to allocate and start trading the deal on Friday. Also, Skilled Healthcare Group Inc. shifted some funds from its second-lien tranche to its first-lien tranche and set pricing on the deal as well.

Meanwhile, General Growth Properties Inc.'s term loan B repricing proposal is still seeing strong resistance from investors despite the decision by underwriters earlier this week to seek a less aggressive spread cut than was originally anticipated. And, with all this contention, some now believe that the addition of call protection may be the only savior for this deal and even that might not be enough.

Danielson finalized pricing on its first-lien tranches - which include a $250 million seven-year first-lien term loan B (B1/B+), a $100 million six-year revolver (B1/B+) and a $340 million seven-year pre-funded letter-of-credit facility (B1/B+) - at Libor plus 300 basis points on Thursday, according to market sources.

The revolver contains a 50 basis point commitment fee.

The $1.115 billion credit facility also contains a $425 million eight-year second-lien term loan (B2/B-).

Goldman Sachs and Credit Suisse First Boston are joint lead arrangers on the deal, with Goldman the left lead.

Proceeds will be used to help finance the acquisition of American Ref-Fuel Holdings Corp. and refinance corporate debt.

Danielson is a Fairfield, N.J., renewable energy and waste disposal company. American Ref-Fuel is a Montvale, N.J., owner and operator of waste-to-energy facilities.

Skilled Healthcare shifts funds

Skilled Healthcare increased the size of its seven-year term loan B (B1/B) to $260 million from $225 million and decreased the size of its 71/2-year second-lien term loan (Caa1/CCC+) to $110 million from $145 million, according to a syndicate document.

Furthermore, pricing on the first-lien term loan B firmed up at Libor plus 275 basis points and pricing on the second-lien term loan firmed up at Libor plus 750 basis points, the document said.

Skilled Healthcare's $420 million credit facility also contains a $50 million five-year revolver (B1/B) with an interest rate of Libor plus 275 basis points and a 50 basis point commitment fee.

Credit Suisse First Boston is sole lead arranger and sole bookrunner on the deal.

Proceeds will be used to refinance existing debt and fund a dividend payment.

Skilled Healthcare is a Foothill Ranch, Calif., operator of long-term care facilities and a provider of a full continuum of post-acute care services.

GGP creates discord

General Growth Properties along with lead banks, Credit Suisse First Boston, Lehman Brothers, Wachovia and Bank of America, approached lenders this past Tuesday about reducing the interest rate on its $2 billion four-year term loan to Libor plus 200 basis points from Libor plus 225 basis points - an idea that seems to have upset quite a few loan participants.

The company had already approached lenders about a repricing in April without the help of underwriters, but that deal, which called for a larger reduction in spread as investors were asked to approve a new rate on the tranche of Libor plus 175 basis points, was pulled as few seemed to get on board in favor of the amendment - a trend that seems to be following the company around in this second repricing attempt.

"I am hearing lots of resistance. Maximum, worst-case scenario, they can do is 25 basis points with 101 call protection, although they haven't officially added the call protection yet," a market source said, explaining that investors are currently clamoring to at least see some call protection put into the term loan B credit agreement.

"And, we'll see if they can even get that done," the source added referring to a revised 25 basis point repricing proposal that would contain the call protection.

General Growth Properties is a Chicago-based regional shopping mall real estate investment trust.

Delphi unfazed by resignation

Delphi Corp.'s $2.825 billion credit facility (B1/BB-/BB-) is still on track to close at this week's revised terms as news that the company's treasurer resigned and overstatements were found on the balance sheet were not enough to rock the boat for the almost completed new deal, according to market sources.

On Thursday morning, Delphi announced that current treasurer Pam Geller and former vice president of treasury, mergers & acquisitions, John Blahnik, resigned. John Arle has been named vice president and treasurer, effective immediately, and will report to John Sheehan, the company's acting chief financial officer.

Furthermore, news surfaced that Delphi had a "$374 million cash overstatement going back to 2001 where they said they sold some European AR's and they didn't," a market source added.

"The bonds are definitely down a little bit. But people don't seem to foresee a problem with the bank deal here. No changes [are] expected," the source said.

Delphi's facility contains a $1 billion term loan B with an interest rate of plus 650 basis points that is non-callable for one year and then is callable at 102 in year two and at 101 in year three and was offered to investors at a discount of 991/2.

Earlier this week, the term loan B was upsized from $750 million and pricing came in at the low end of recently revised guidance of Libor plus 650 to 700 basis points but still higher than original price talk at launch of Libor plus 550 basis points.

The call protection provisions contained in the B loan were added to the deal around a week ago at the same time that price talk was modified higher.

Delphi's facility also contains a $1.825 billion revolver with an initial interest rate of Libor plus 500 basis points.

Earlier this week, the revolver was downsized from $2 billion, although the tranche is still adding liquidity to the company's balance sheet being that the existing revolver is only sized at $1.5 billion, and pricing was increased from Libor plus 450 basis points.

JPMorgan and Citigroup are joint lead arrangers on the deal, with JPMorgan the left lead.

Proceeds from the new credit facility will be used to refinance the company's existing credit facility that totals $3 billion.

The new credit facility is targeted to close on or before June 15.

"We are pleased with the support we continue to receive from our financial institutions and will be completing a financing plan next week that we believe will provide us the flexibility to continue to proactively manage our business and transformation activities," said acting CFO Sheehan, in a company news release.

Delphi is a Troy, Mich., supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology to vehicle manufacturers.

24 Hour Fitness closes

24 Hour Fitness Worldwide Inc. closed on its new $700 million credit facility (B2/B) consisting of a $600 million seven-year term loan B with an interest rate of Libor plus 300 basis points and a $100 million six-year revolver with an interest rate of Libor plus 250 basis points.

Price talk on the term loan B had been revised to Libor plus 275 to 300 basis points during syndication from original talk at launch of Libor plus 250 basis points in order to successfully fill out the book.

JPMorgan and Merrill Lynch acted as joint lead arrangers on the credit facility, with JPMorgan on the left.

Proceeds from the credit facility were used to help fund Forstmann Little & Co.'s leveraged buyout of the company. Forstmann financed the approximately $1.6 billion transaction with more than $900 million from its equity and subordinated debt funds.

24 Hour Fitness is a San Ramon, Calif., fitness center company.

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