Virgin Mobile pricing seen flexing up; GGP adds one-year non-call; Calpine continues rally on asset sales

By Sara Rosenberg

New York, June 15 - Virgin Mobile Holding plc was heard to have unofficially increased pricing on its institutional term loan on Wednesday by 50 basis points. And, General Growth Properties Inc. has agreed to grant lenders some protection against a future repricing transaction - a move that lenders have been clamoring for since the launch of the current repricing effort.

Also, in the primary, price talk on BI-LO LLC's recently launched credit facility emerged, with both the pro rata tranche and the institutional tranche being marketed in the low-300 bps area.

In secondary activity, Calpine Corp.'s second-lien bank debt surged higher, spurred on by the recent asset sale news, with the bid/offer closing out the session up by about two points on the day, and trades going off during market hours at levels that were up by as much as three points from the open.

Virgin Mobile is said to be in the process of flexing pricing higher on its $500 million 61/2-year term loan B to Libor plus 400 bps from original price talk at launch of Libor plus 350 bps, according to a market source.

Whether pricing on the $100 million five-year revolver is being modified as well was unavailable prior to press time. At launch last week, the revolver was marketed with opening price talk of Libor plus 325 bps.

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

Proceeds from the proposed $600 million credit facility (B3/B-) will be used for a recapitalization that includes making a dividend payment and refinancing existing debt.

Virgin Mobile is a United Kingdom-based mobile virtual network operator.

BI-LO price talk surfaces

BI-LO LLC came out with price talk of Libor plus 325 bps on both its $75 million five-year revolver and $345 million six-year term loan B, according to a market source.

The $420 million credit facility (B1/B), which launched this past Friday, will be used to refinance some acquisition loans that were put in place by the sponsors.

Bear Stearns is the sole lead bank on the deal.

With this new deal, bank leverage will be less than 2x and total debt will be in the mid-3x area.

BI-LO is a Greenville, S.C., supermarket operator that was bought by Lone Star Funds early this year from Royal Ahold.

GGP offers 'call protection'

General Growth Properties has agreed to amend its credit agreement, making the currently negotiated repriced term loan non-callable for one year for repricing purposes only, according to a market source. Under the existing terms in the credit agreement, the company could elect to replace its term loan with another term loan of lower pricing if it so desired.

The company is looking to lower pricing on its $2 billion 31/2-year term loan to Libor plus 200 bps from Libor plus 225 bps.

Ever since the repricing attempt was launched earlier this month, investors seemed to be resisting the proposal, although some admitted that the addition of some form of call protection could be the ticket to successfully completing the transaction.

Credit Suisse First Boston, Lehman Brothers, Wachovia and Bank of America are the lead banks on the deal.

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 bps, was pulled as few seemed to get on board in favor of the amendment.

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

DoubleClick sets guidance

DoubleClick Inc. set price talk on its $455 million credit facility, with the $290 million seven-year senior secured first-lien term loan B (B2) talked at Libor plus 375 to 400 bps and the $115 million eight-year senior secured second-lien term loan (Caa1) talked at Libor plus 775 to 800 bps, according to a market source.

According to a commitment letter previously filed with the Securities and Exchange Commission the term loan B was originally anticipated at Libor plus 400 bps and the second-lien term loan was originally anticipated at Libor plus 725 bps.

The facility, which launched this past Tuesday, also contains a $50 million five-year revolver with a 50 basis point commitment fee.

Bear Stearns and Credit Suisse First Boston are joint lead arrangers on the deal.

Proceeds from the term loans will be used to fund the acquisition of DoubleClick by Hellman & Friedman LLC and JMI Equity for $1.1 billion, or $8.50 a share, and repay existing debt.

Hellman & Friedman has committed to provide up to $327 million in equity financing for the LBO, and JMI Management has committed to provide $15 million in equity financing.

Under some circumstances, the credit facilities may be reduced by up to $85.5 million, with the $342 million equity commitment to be increased by the corresponding amount.

The revolver will be available for general corporate purposes.

DoubleClick is a New York-based internet advertising services company.

Calpine powers up

Calpine's second-lien bank debt rallied by two to three points on Wednesday as the market continued to react positively to the company's recent asset sale news.

The San Jose, Calif., power company's paper closed out the session at 84½ bid, 85½ offered, but traded as high as 85¾ before settling down to those levels, a trader said. By comparison, the bank debt opened in the morning at 82½ bid, 83½ offered.

On Tuesday, Calpine announced that it has entered into exclusive negotiations for the sale of four gas-fired power plants, representing nearly 850 megawatts of capacity.

Calpine is negotiating to sell its Ontelaunee Energy Center to Tenaska Power Fund LP for about $231 million, its Morris Power Plant to Diamond Generating Corp. for about $82 million, its Grays Ferry Power Plant to Tenaska for about $37 million and its Philadelphia Water Works Plant to Tenaska for about $7 million.

Completion of these four asset sales is dependent upon the execution of definitive purchase and sale agreements for each plant and other terms and conditions, including regulatory approvals.

Net proceeds from any power plant sale would be used to reduce debt and as permitted by the company's indentures.

These potential power plant sales are part of Calpine's recently announced strategic program to reduce more than $3 billion of debt by the end of 2005, increase cash flow and optimize its power plant portfolio.

Spanish Broadcasting closes

Spanish Broadcasting System Inc.'s closed on its new $450 million credit facility consisting of a $325 million first-lien term loan (B1/B+) with an interest rate of Libor plus 200 bps, a $100 million second-lien term loan (B2/CCC+) with an interest rate of Libor plus 375 bps and a $25 million revolver (B1/B+) with an interest rate of Libor plus 225 bps.

The second-lien term loan contains call protection of 102 for two years, 101 in year three and par thereafter. However, there is a carve-out that if the company completes the already contracted sale of its Los Angeles KZAB-FM and KZBA-FM radio stations to Styles Media Group within a year it can use proceeds from the sale to repay its second-lien loan at 101 as opposed to at 102.

The first-lien term loan, which was upsized from $300 million during syndication, was originally launched with pricing of Libor plus 225 bps but there was a step down to Libor plus 200 bps conditional on completion of a contract asset sale and the deleveraging associated with that sale. However, because the tranche was oversubscribed, the syndicate decided to take pricing down to that lower level and eliminate the grid entirely.

Proceeds from the new term loans were used to repay existing bank debt. Remaining proceeds will be used to help retire all the company's 9 5/8% senior subordinated notes due 2009.

Lehman Brothers Inc. acted as the lead arranger on the deal, and Merrill Lynch and Wachovia Securities acted as agents.

"We are very pleased with the execution and favorable terms of this transaction, which will significantly lower our interest expense, generate incremental cash flow and strengthen our balance sheet. We are in the final stages of our deleveraging plan, which includes the non-strategic asset sale of our Los Angeles stations KDAY-FM and KDAI-FM to Styles Media that is expected to close on or before July 31, 2005. A portion of these asset sale proceeds will be used to pay down the new second lien credit facility," said Joseph A. Garcia, chief financial officer, in a company news release.

Spanish Broadcasting is a Coconut Grove, Fla., radio broadcaster.

Delphi closes

Delphi Corp. closed on its new $2.8 billion credit facility (B1/BB-/BB-) consisting of a $1 billion term loan B due June 14, 2011 with an interest rate of plus 650 bps and a $1.8 billion revolver due June 18, 2009 with an initial interest rate of Libor plus 500 bps and a 50 basis point commitment fee.

The term loan B is non-callable for one year, and then callable at 102 in year two and at 101 in year three and was offered to investors at a discount of 991/2. During syndication, the tranche was upsized from $750 million and pricing came in at the low end of recently revised guidance of Libor plus 650 to 700 bps but still higher than original price talk at launch of Libor plus 550 bps. The call protection provisions were also added to the deal during syndication.

As for the revolver, it was downsized from $2 billion during syndication, 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 bps.

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

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

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

Washington Group closes

Washington Group International Inc. closed on its new $350 million credit facility consisting of a $247.5 million five-year revolver with an interest rate of Libor plus 200 bps and a 50 basis point commitment fee, and a $102.5 million five-year synthetic letter-of-credit facility with an interest rate of Libor plus 175 bps.

Originally, the revolver and the letter-of-credit facility were sized at $175 million each but funds were shifted around during syndication.

In addition, the syndicate took pricing on the five-year synthetic letter-of-credit facility down from original price talk of Libor plus 200 bps. This tranche was marketed to institutional investors.

Credit Suisse First Boston acted as the sole lead arranger and bookrunner on the deal that was used to refinance the company's existing credit facility. LaSalle Bank and BNP Paribas acted as co-syndication agents.

"The five-year credit facility provides us $350 million of available credit capacity at a reduced cost, speaking volumes about the financial strength of Washington Group International. Our strong cash position, our debt-free balance sheet, and the improved credit facility provide us ample resources and flexibility to help us execute our business strategies for profitable growth," said George H. Juetten, executive vice president and chief financial officer, in a company news release.

"With the amended credit facility, we expect annual interest expense to be $8 to $9 million, compared to $12 to $13 million prior to the amendment."

Washington Group is a Boise, Idaho, provider of design, engineering, construction, construction management, facilities and operations management, environmental remediation and mining services.

HealthSouth closes

HealthSouth Corp. closed on its new $200 million senior unsecured term loan that carries an interest rate of Libor plus 500 bps and is non-callable for one year, and then callable at 102 in year two and 101 in year three.

The term loan was upsized from $150 million and pricing was reverse flexed from Libor plus 550 bps during syndication on strong demand.

Call protection provisions were left unchanged at non-callable for one year, and then callable at 102 in year two and 101 in year three, the source added.

J.P. Morgan Securities Inc. and Citigroup Global Markets Inc. acted as joint lead arrangers and joint bookrunners on the deal, with J.P. Morgan the left lead.

Proceeds from the term loan, along with cash on hand, were used to repay the company's $245 million 6.875% senior notes due June 15

"We are very pleased with the strong, continued show of support from our existing lenders and the commitment of our new investors," said John Workman, chief financial officer, in a company news release. "The new term loan facility and the repayment of the 6.875% senior notes represent important steps in the continued improvement of our cost of capital, available liquidity and financial flexibility."

HealthSouth is a Birmingham, Ala., provider of outpatient surgery, diagnostic imaging and rehabilitative health care services.

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