Natural Products upsizes; Vulcan, LifeCare break; Blockbuster rollercoasters; Delphi edges higher

By Sara Rosenberg

New York, Aug. 9 - Natural Products Group LLC increased the size of its credit facility and added a limited-time accordion feature to the deal. Meanwhile, Vulcan Energy Corp. and LifeCare Holdings Inc. allocated and freed up for trading, with both deals seeing their institutional term loans top 101.

Also in trading, Blockbuster Inc.'s term loan fell off immediately after earnings came out but rebounded before the session was through as investors got slightly more comfortable with the latest financials. And, Delphi Corp. continued to regain some ground as market sentiment continued to shift to a more positive place since Monday's conference call.

Natural Products upsized its first-lien term loan by $11.5 million, bringing the new size to $186.5 million from an original size of $175 million, according to a buyside source.

Furthermore, the credit agreement was revised to allow the company to issue up to $75 million of incremental term loans at any time for up to 18 months after closing, the source said.

Proceeds from the additional $11.5 million of first-lien debt will be used to increase the dividend payment being made with this new deal to $136.5 million from $125 million.

The incremental term loans can be used to finance permitted expenditures, including additional dividends, subject to no event of default, maximum leverage ratio of 4.25x and customary mark to market provisions.

Pricing on the first-lien term loan was left unchanged at Libor plus 325 basis points - a move that could come to the relief of investors since some market players were previously and none-too happily anticipating a price change as the deal was oversubscribed.

Natural Products' facility also contains a $15 million revolver with an interest rate of Libor plus 325 basis points and a $63.5 million second-lien term loan with an interest rate of Libor plus 700 basis points. Both of these tranches have been unchanged since launch.

CIBC is the lead bank on the now $265 million credit facility that will be used not only to make the dividend payment but to refinance existing debt as well.

Natural Products Group is a California-based natural personal care products company owned by Harvest Partners.

Conseco cuts spread

Conseco Inc. reverse flexed pricing on its $475 million term loan to Libor plus 200 basis points from Libor plus 225 basis points, according to a market source.

Furthermore, pricing on the term loan can now step down to Libor plus 175 basis points if ratings improve to Ba3/BB-, the source said. Originally, the deal contained a step down to Libor plus 200 basis points.

Banc of America Securities LLC and J.P. Morgan Securities Inc. are lead arrangers and joint bookrunners on the deal, which went out to existing lenders only, with Banc of America the left lead.

Conseco plans to issue $300 million through a private offering of convertible debentures that will be used to pay down some of the existing $767 million of term loan debt, which carries an interest rate of Libor plus 350 basis points.

The new term loan will be used to refinance the remaining term loan debt at a lower interest rate with more relaxed financial covenants and increased flexibility to enter into capital markets transactions.

Conseco is a Carmel, Ind.-based insurance company.

Vulcan tops 101

Vulcan Energy's $288 million six-year senior secured term loan B (Ba2) freed up for trading, with the paper quoted at 101¼ bid, 101¾ offered, according to a trader.

Bank of America is the lead bank on the deal.

Vulcan's sole function is to hold 18% of Plains All-American Pipeline LP's common equity units and pro forma 54.3% ownership of Plains All American GP, LLC.

LifeCare breaks

LifeCare's $255 million seven-year term loan B freed up for trading on Tuesday, with the paper quoted at 101 bid, 101¼ offered pretty steadily throughout the session, according to a trader.

The term loan is priced with an interest rate of Libor plus 225 basis points after recently reverse flexing from initial price talk at launch of Libor plus 250 basis points. Furthermore, pricing on the term loan B can drop to Libor plus 200 basis points based on leverage.

LifeCare's $330 million senior secured credit facility (B2/B) also contains a $75 million six-year revolver with an interest rate of Libor plus 225 basis points.

JPMorgan and GE Capital are the lead banks on the deal, with JPMorgan on the left.

Proceeds from the credit facility along with proceeds from a recently priced bond offering will be used to help fund the leveraged buyout of LifeCare by The Carlyle Group.

On Friday, LifeCare priced $150 million of eight-year senior subordinated notes at par to yield 9¼% - the wide end of the 9% to 9¼% price talk.

LifeCare is a Plano, Texas, operator of long-term acute care hospitals.

Blockbuster wavers on numbers

Blockbuster's term loan gave up about a point immediately after the company released second quarter numbers but managed to regain the ground it lost by day's end to close out the session at basically unchanged levels.

On Tuesday morning, the term loan was quoted at 95½ bid, 96½ offered compared to Monday's closing levels of 96½ bid, 97 offered, according to a trader. However, by close, the paper was being quoted unchanged on the day at 96¼ bid, 97 offered, the trader added.

"Everyone was expecting earnings to be bad any way because of the amendment. I think it came in better than people expected," the trader explained.

On Monday, the company amended its credit facility to provide for, among other things, a waiver of the second- and third-quarter leverage ratio covenant and third-quarter fixed charge coverage covenant, and increasing interest rates by 50 basis points. Without the waiver, Blockbuster would have been in default of the leverage ratio covenant for the second quarter. The company will have full access to its revolver during the waiver period.

For the second quarter, Blockbuster reported total revenues of $1.4 billion, down 1.6% from $1.42 billion for the second quarter of 2004. Net loss for the second quarter totaled $57.2 million, or $0.31 per share, compared with net income of $48.6 million, or $0.27 per diluted share, last year. And, free cash flow was negative $118.7 million for the quarter compared with positive $23 million for the same period in 2004.

The company believes that the continuation of overall industry weakness will adversely impact its performance during the third quarter. Results of operations are expected to improve in the fourth quarter, supported by a more favorable release schedule, significantly lower operating costs and growth in active members, according to a company news release.

Blockbuster is a Dallas-based provider of in-home movie and game entertainment.

Delphi continues upward climb

Delphi's revolver and term loan continued to head higher in Tuesday's market as investors were still feeling good about Monday's earnings numbers and tone of the company's conference call.

The revolver was quoted at 95 bid, 95½ offered, compared to Monday's closing levels of 94¾ bid, 95¾ offered, and the term loan was quoted at 102 bid, 102½ offered, compared to Monday's closing levels of 101 bid, 102½ offered, according to a trader. At the open on Monday, the revolver was being quoted at 93½ bid, 94½ offered and the term loan was being quoted at par ½ bid, 101½ offered - bringing total gains so far this week to about 2 points on each tranche.

All eyes have been on Delphi ever since Friday, when the company announced that it initiated the draw under its $1.8 billion revolving credit facility - a move that sparked downgrades from all three rating agencies.

Moody's Investors Service downgraded Delphi's senior secured credit facility to B3 from B1 and corporate credit rating to Caa1 from B2, with the outlook remaining negative. Standard & Poor's downgraded Delphi's senior secured credit facility to B- from BB- and corporate credit rating to CCC+ from B+, with a developing outlook. And, Fitch Ratings downgraded Delphi's credit facility to B from BB-, with the company remaining on Rating Watch negative.

Then on Monday, Delphi reported quarterly numbers that included revenues of $7.0 billion, down from $7.5 billion in the prior year, and a net loss of $338 million, or a loss of $0.60 per share, compared to net income of $143 million, or earnings of $0.25 per share last year.

The company also announced that it is in talks with its major unions about modifications required to implement its restructuring plan, as well as with GM to seek related financial support.

Delphi then went on to say that the revolver draw was made to make additional cash readily available to finance operations to the extent required during the restructuring discussions with the unions and GM.

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

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.