Lion Gables cuts term loan spread, adds soft call; Primary Energy Finance, Aveta ready allocations

By Sara Rosenberg

New York, Aug. 16 - Lion Gables Realty LP reduced pricing on its term loan by 50 basis points Tuesday and added soft call protection to the deal.

Meanwhile Primary Energy Finance LLC and Aveta Holdings LLC are targeting to allocate and break for trading next week now that changes to the deals have been recommitted to and books have closed.

Lion Gables reverse flexed pricing on its $1.825 billion one-year term loan (which contains an extension option) to Libor plus 175 basis points from Libor plus 225 basis points and added 101 soft call protection to the tranche, according to a market source.

Pricing on the company's $300 million three-year revolver remained unchanged at Libor plus 225 basis points, the source added.

The deal was marketed to some banks who were asked to commit to both the revolver and the term loan as a strip and institutional guys who were asked to buy the term loan on a stand-alone basis.

Lehman Brothers is the lead arranger and bookrunner on the $2.125 billion credit facility (Ba2), with ING Real Estate acting as syndication agent.

Proceeds from the credit facility will be used to fund the leveraged buyout of Gables Residential Trust by ING Clarion Partners for $43.50 per common share in cash. The total purchase price is about $2.8 billion, which includes the assumption and refinancing of about $1.2 billion of Gables' outstanding debt and outstanding series C-1, series D and series Z preferred shares, which have a liquidation preference of about $120 million.

Completion of the transaction, which is expected to occur by the end of the third quarter, is subject to shareholder approval and certain other customary closing conditions.

ING has agreed to contribute $400 million in equity for acquisition financing as well.

Gables is a Boca Raton, Fla.-based real estate investment trust focused on multifamily apartment communities.

Primary Energy, Aveta allocations

Primary Energy Finance and Aveta Holdings are aiming to allocate their recently upsized and reverse flexed credit facilities early next week now that syndication has wrapped, according to market sources.

Primary Energy Finance's $150 million term loan B (Ba2/BB-), which was increased from $135 million, is priced with an interest rate of Libor plus 200 basis points. Original price talk on the tranche had been in the Libor plus 300 basis points area, but pricing came down after the deal received better-than-expected ratings.

The final credit agreement for Primary Energy was posted on Intralinks Tuesday and the syndicate is now making sure that lenders are OK with all the terms, one source explained.

Lehman Brothers is the lead bank on the Primary Energy Finance deal, with Royal Bank of Canada acting as documentation agent.

Proceeds from the term loan will be used to refinance debt at the portion of the Primary Energy company that is remaining private. Currently and separately, Primary Energy Holdings LLC is getting a new $150 million credit facility that is being obtained in connection with plans to take a portion of the company public in an Enhanced Income Securities Offering in Canada.

Primary Energy is an Oak Brook, Ill.-based developer, owner and operator of on-site combined heat and power and recycled energy projects.

Meanwhile, Aveta's $420 million credit facility (B2/B-) consists of a $420 million six-year term loan, which was upsized from $400 million, and a $20 million five-year revolver.

Both Aveta's term loan and revolver are priced with an interest rate of Libor plus 350 basis points. Originally, the term loan was launched with price talk of Libor plus 375 to 400 basis points but was reverse flexed on strong demand at the end of last week.

Bear Stearns is the lead bank on the Aveta deal that will be used will be used to help fund MMM Healthcare's acquisition of NAMM (with Aveta being the holding company for the merged entity), refinance MMM debt and pay a dividend to MMM shareholders. Proceeds from the recent $20 million term loan upsizing will be used to increase the size of the dividend payment being made.

MMM is the largest Medicare advantage provider in Puerto Rico. NAMM is a provider of outsourced medical management in California and Illinois.

Flowserve closes

Flowserve Corp. closed on its new $1 billion credit facility (Ba3/BB-) consisting of a $600 million seven-year term loan B with an interest rate of Libor plus 175 basis points and a $400 million five-year revolver with an initial interest rate of Libor plus 174 basis points.

Proceeds from the new term loan B were used to repay the company's $322 million of outstanding term loan A and term loan C debt, which had an effective interest rate equal to Libor plus 248 basis points as of June 30. A portion of the proceeds also will be used to redeem both tranches of the company's outstanding 12.25% senior subordinated notes with face values of $188.5 million and €65 million. The note redemption will take place on Sept. 12.

The new revolver replaces a $300 million revolver that carried the same interest rate as of June 30, as well as $89.3 million of backup liquidity facilities.

Bank of America and Merrill Lynch & Co. acted as lead banks on the refinancing deal, with Bank of America the left lead.

"We are extremely pleased to complete this refinancing and take the next step in significantly strengthening our capital structure," said Mark A. Blinn, chief financial officer, in a company news release. "By refinancing at more favorable rates, including replacing the 12.25% coupon rate under the senior subordinated notes, we expect to substantially reduce our cash interest expense and other bank-related fees.

"In addition, the less restrictive lending covenants provide us with considerably more flexibility in our capital structure, including the ability to better utilize our cash flow. As we have in the past, we will continue to manage interest rate risk in connection with this new financing. Bottom line, we currently expect to save more than $20 million of interest expense annually over the current interest rate structure."

Flowserve is an Irving, Texas, provider of fluid motion and control products and services.

Huntsman closes

Huntsman International LLC closed on its new $2.375 billion senior credit facility (Ba3/BB-) consisting of a $650 million five-year revolver with an interest rate of Libor plus 175 basis points, a $1.725 billion seven-year term loan B with an interest rate of Libor plus 175 basis points and a €100 million term loan B with an interest rate of Libor plus 200 basis points.

During syndication, pricing on the U.S. term loan B came was reverse flexed from Libor plus 200 basis points, the revolver was upsized from $600 million and the euro term loan B was downsized from €150 million.

Deutsche and Citigroup acted as the lead banks on the Salt Lake City-based chemical company's deal, with Deutsche the left lead.

Proceeds were used to help fund the merger of Huntsman LLC and Huntsman International LLC, two subsidiaries of Huntsman Corp., into one entity with Huntsman International being the surviving entity.

The purpose of the merger is to simplify Huntsman's financing and SEC reporting structure, facilitate cost reductions for Huntsman's bank credit facilities and other financing arrangements, and for other organizational efficiencies.

As part of this merger, the existing bank debt at both Huntsman LLC and Huntsman International was retired using proceeds from this new deal. As of March 31, Huntsman International had a $375 million revolver that was undrawn and $1.178 billion of term loan B debt outstanding, as well as a €45.1 million term loan. Huntsman LLC had about $715 million of term loan B debt outstanding as of March 31 and about $61.3 million drawn under its $350 million revolver.

La Paloma closes

La Paloma Generating Co. LLC closed on its new $525 million first- and second-lien senior secured credit facility, according to a news release.

The first-lien institutional debt (Ba3/BB-), which includes a pre-funded letter-of-credit facility and a term loan B, are priced with an interest rate of Libor plus 175 basis points and contain soft call protection for one year. Pricing on these first-lien tranches was reverse flexed from Libor plus 225 basis points with the addition of the soft call during syndication.

The first-lien revolver (Ba3/BB-) is priced with an interest rate of Libor plus 225 basis points.

And, the second-lien term loan (B2/B) is priced with an interest rate of Libor plus 350 basis points and contains call protection of 102 in year one and 101 in year two. Pricing on this tranche was reverse flexed from Libor plus 400 basis points during syndication.

Morgan Stanley and WestLB served as joint lead arrangers, bookrunners and co-syndication agents on the deal.

Proceeds were used to help fund Complete Energy Holdings LLC's acquisition of La Paloma, a gas-fired, four-unit combined-cycle facility located in Kern County, Calif., for $580 million.

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