Allegheny Energy Supply, Mylan break for trading; MotorCity adds new tranche, cuts institutional spread

By Sara Rosenberg

New York, July 18 - Allegheny Energy Supply Co. LLC allocated its $1.075 billion term loan, with the paper breaking for trading wrapped around 101. Also, allocating Monday was Mylan Laboratories Inc.'s new deal, with the term loan quoted in the 101 context.

Meanwhile, in the primary market, details on the tweaks made to MotorCity Casino's in-market credit facility emerged. Included in the changes are the addition of a delayed-draw tranche, a cut in term loan pricing and an upsizing of the proposed revolver.

Allegheny Energy Supply's term loan freed up for trading with the paper seen quoted around par ¾ bid, 101¼ offered on the open and at the close, according to a market source.

The paper is priced with an interest rate of Libor plus 175 basis points. It was reverse flexed from original price talk of Libor plus 200 basis points during syndication on strong demand.

Furthermore, the tranche contains a step down to Libor plus 150 basis points, effective under a ratings upgrade. The term loan was originally launched with a step down to Libor plus 175 basis points, but this was changed in connection with the reverse flex in pricing.

Citigroup is the lead bank on the deal that will be used to refinance the company's existing term loan, under which there is currently $744 million outstanding, and approximately $331 million principal amount of the 10.25% senior notes due November 2007. Also, Allegheny Energy Supply will redeem $35 million of its 13% senior notes due November 2007.

The company anticipates closing on the new facility by the end of July, with the funding for the refinancing of the 10.25% senior notes expected in August.

Allegheny Energy Supply is the subsidiary of Greensburg, Pa.-based Allegheny Energy Inc. that owns and operates electric generating facilities.

Mylan tops 101

Mylan also freed up for trading during the session, with the term loan seen quoted at 101¼ bid, 101¾ offered earlier in the session and then moving a touch lower on the offer side to 101½ by close, according to a market source.

The $275 million term loan is priced with an interest rate of Libor plus 150 basis points. The tranche was initially launched with price talk of Libor plus 175 basis points but was reverse flexed during syndication.

Merrill Lynch is the sole bookrunner on the $475 million five-year credit facility (Ba1/BBB-) that also contains a $200 million revolver.

Proceeds from the Canonsburg, Pa., pharmaceutical company's term loan will be used to help fund its Dutch auction self-tender offer for up to approximately 48.8 million shares, or up to $1 billion, of its common stock.

Under the tender offer, shareholders will have the opportunity to tender some or all of their shares at a price not less than $18.00 per share or more than $20.50 per share.

On Monday, Mylan said the offer was oversubscribed at a price of $19.50 per share and that it was exercising its right to buy an additional 2% of its stock. The offer expired on July 15.

Mylan also plans on issuing $500 million in 10-year unsecured senior notes via Merrill Lynch to fund the stock buyback.

Revolver borrowings will be available for general corporate purposes.

MotorCity upsizes, cuts spreads

MotorCity Casino made a round of changes to its credit facility, including increasing the overall size by $125 million and lowering pricing on the institutional term loan, according to a market source.

One way in which the deal was upsized was through the addition of a $100 million delayed-draw term loan that is price with an interest rate of Libor plus 200 basis points and carries a 75 basis point undrawn fee, the source said. The delayed draw is for six months, with final maturity in seven years.

The last way in which the deal was upsized was through an increase in the revolver size, under which the revolver went up to $100 million from $75 million, the source continued. Pricing on the revolver remained unchanged at Libor plus 250 basis points.

In addition, pricing on the $550 million seven-year term loan B was reverse flexed to Libor plus 200 basis points from Libor plus 250 basis points.

The potential for a delayed-draw term loan in the credit structure was being contemplated from the very start with the decision set to be based on demand. Being that the deal was hugely oversubscribed, the company and the syndicate decided to go ahead with the extra tranche, the source explained.

Deutsche Bank and Merrill Lynch are the lead banks on the now $750 million credit facility (B1/B+), with Deutsche the left lead.

Late last week, the company priced an eight-year senior unsecured notes offering that was upsized to $300 million from $200 million. The deal priced at par to yield 8% - the tight end of the 8% to 8¼% price talk range that was previously heard in the market.

Proceeds from the debt financings will be used to fund the acquisition of MotorCity Casino by Ilitch Holdings Inc. from MGM Mandalay.

The extra liquidity gained through the delayed-draw term loan, the revolver upsizing and the bond upsizing will be used to fund the expansion project that is planned for the Detroit-based gaming company and will also be used to help fund the LBO as well.

Blair closes

Blair Corp. closed on its new $100 million credit facility, consisting of a $75 million five-year revolver and a $25 million secured second-lien term loan due July 1, 2010.

PNC Capital Markets Inc. acted as lead arranger on the deal.

Blair also amended its receivables purchase agreement to provide for a purchase limit of $100 million.

Proceeds from the credit facility and the purchase agreement will be used to help fund a proposed self tender offer for stock and for general corporate purposes.

However, the company plans on using proceeds from the sale of its credit portfolio to World Financial Capital Bank, which is expected to close in the fourth quarter, to repay and terminate its outstanding receivables purchase facility, repay and terminate the second-lien term loan and, if any proceeds are remaining, to repay any outstanding balance under the revolver.

Blair is a Warren, Pa., multi-channel direct marketer of women's and men's apparel and home products.

Jarden closes

Jarden Corp. completed its acquisition of The Holmes Group Inc. from Berkshire Partners LLC for about $420 million in cash and 6.2 million shares of Jarden common stock, according to a company news release.

To help fund the transaction, Jarden got a new $380 million senior secured term loan B2 (B1/B+) priced with an interest rate of Libor plus 175 basis points. Originally, the incremental term loan debt was launched with a size of $350 million and price talk of Libor plus 200 basis points, which is where the existing term loan B is priced, but the deal was upsized and the spread came down during syndication on strong demand.

Because the spread on the new term loan debt is different than the spread on the existing term loan B, the syndicate essentially structured it as new term loan B2 rather than it just being an add-on to the existing B loan tranche.

The term loan B2 was marketed to existing lenders only.

Citigroup and CIBC acted as the lead banks on the deal.

Jarden is a Rye, N.Y., provider of niche branded consumer products. Holmes is a Milford, Mass., manufacturer and distributor of select home environment and small kitchen electrics.

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