Georgia-Pacific shifts funds, trims pricing; Ineos upsizes, cuts institutional spreads; NRG breaks

By Sara Rosenberg

New York, Jan. 26 - Georgia-Pacific Corp. reverse flexed pricing on its term loan B and term loan C on Thursday, shifted some funds between the two tranches and added a step down in spread to the term loan B.

Also in the primary, Ineos Group Ltd. reworked its credit facility structure by increasing the size of its institutional term loans, lowering pricing on those upsized term loans and adding a second-lien tranche to the deal.

In the secondary, the main focus of the afternoon was NRG Energy Inc.'s multi-billion dollar credit facility freeing for trading as levels on the term loan B and synthetic letter-of-credit facility were seen in the low-101 context from the break until the close.

Georgia-Pacific moved $250 million out of its second-lien term loan C and into its first-lien term loan B to take advantage of more attractive pricing, and then proceeded to reduce pricing on both institutional tranches being that they were so well received by the market.

The seven-year term loan B (Ba2/BB-) is now sized at $5.25 billion, up from $5 billion, and pricing on the paper came down to Libor plus 200 basis points from original price talk of Libor plus 225 basis points, according to a market source.

Furthermore, pricing on the term loan B can now step down to Libor plus 175 basis points, effective upon the company reaching leverage of 4.3x.

Meanwhile, the eight-year second-lien term loan C (Ba3/B+) is now sized at $2.25 billion, down from $2.5 billion, and pricing was lowered to Libor plus 300 basis points from original price talk of Libor plus 350 basis points, the source said.

Georgia-Pacific's $2 billion five-year term loan A (Ba2/BB-) and $1.5 billion five-year revolver (Ba2/BB-) were left unchanged in terms of size and pricing, which is currently set at Libor plus 225 basis points, the source added.

Citigroup is the administrative agent, joint bookrunner and joint lead arranger on the $11 billion senior secured credit facility, Bank of America is syndication agent, joint bookrunner and joint lead arranger on the revolver and term loan A, Deutsche Bank is syndication agent, joint bookrunner and joint lead arranger on the term loan B, and JPMorgan is syndication agent, joint bookrunner and joint lead arranger on the second-lien loan.

Proceeds from the term loan A, term loan B and second-lien loan will be used to repay a $6.356 billion bridge loan that was used to fund Koch Forest Products Inc.'s tender offer for all of Georgia-Pacific's shares, to refinance, repurchase or redeem certain outstanding debt securities of Georgia-Pacific and its subsidiaries and to refinance Georgia-Pacific's existing credit facility.

Revolver borrowings will be available for general corporate purposes.

Under the merger agreement, Koch paid $48 per Georgia-Pacific share for an equity value of $13.2 billion and a total enterprise value of $21 billion, including all Georgia-Pacific debt. And, now that the tender offer was completed in December 2005, Georgia-Pacific is being operated as a privately held, wholly owned subsidiary of Koch Industries Inc.

Georgia-Pacific is an Atlanta-based manufacturer and marketer of tissue, packaging, paper, building products and related chemicals.

Ineos tweaks loan

Ineos came out with a round of changes to its credit facility, including upsizing and reverse flexing the term loan B and term loan C tranches, and adding a new second-lien loan to the mix, according to a market source.

The term loan B was increased to €1.775 billion from an original size of €1.6 billion, but the amount of the U.S. dollar carve out under the tranche remained sized at approximately $732 million, the source said.

Pricing on the euro portion of the term loan B was reverse flexed to Euribor plus 250 basis points from original price talk of Euribor plus 275 basis points and pricing on the dollar portion of the tranche was reverse flexed to Libor plus 225 basis points from original price talk of Libor plus 275 basis points, the source said.

Like the term loan B, the term loan C was also increased to €1.775 billion from an original size of €1.6 billion, while the amount of the U.S. dollar carve out under the tranche remained sized at about $732 million, the source continued.

Pricing on the euro portion of the term loan C was reverse flexed to Euribor plus 300 basis points from original price talk of Euribor plus 325 basis points, and pricing on the dollar portion of the tranche was reverse flexed to Libor plus 275 basis points from original price talk of Libor plus 325 basis points.

In addition, 101 soft call protection for one year was added to the U.S. dollar portion of the term loan B and the term loan C, the source said.

Lastly, the syndicated decided to add a new €400 million 91/2-year second-lien term loan to the capital structure with pricing set at Euribor plus 375 basis points. This tranche is non-callable for one year, then at 102 in year two and 101 in year three, the source added.

Ineos' €1.57 billion term loan A and €700 million revolver were left unchanged in terms of size and pricing, which is currently set at Euribor plus 225 basis points.

The now €7.395 billion (up from €6.645 billion) senior secured credit facility (Ba3/B+) also contains a €1.175 billion securitization facility.

Funds added to the credit facility on Thursday were shifted out of the company's proposed bond offering, which is now sized at €2.355 billion as opposed to €3.105 billion as was originally planned.

Recommitments are due from loan lenders on Friday and allocations are hoped to go out early to mid next week.

Morgan Stanley, Merrill Lynch and Barclays are the lead banks on the deal, which was already funded prior to syndication.

Proceeds from the credit facility were used for the $9 billion acquisition of Innovene from BP plc that was completed on Dec. 16.

Ineos is a U.K.-based manufacturer of specialty petrochemicals. Innovene is an olefins, derivatives and refining group.

NRG frees to trade

NRG Energy allocated its credit facility on Thursday, with the $3.575 billion seven-year term loan B quoted in the 101 1/8 bid, 101 3/8 offered context pretty much from the break until the close, but managing at one point to reach a high of around 101¼ bid, 101½ offered, according to a trader.

As for the $1 billion five-year synthetic letter-of-credit facility, it was seen quoted at 101 bid, 101 3/8 offered steadily throughout the trading day, the trader said.

Both the term loan B and the synthetic letter-of-credit facility are priced with an interest rate of Libor plus 200 basis points with a step down to Libor plus 175 basis points when leverage falls below 31/2x.

During syndication, the term loan B was upsized from $3.2 billion and pricing on both the term loan B and synthetic letter-of-credit facility was reverse flexed from Libor plus 225 basis points with the addition of the step down.

NRG's $5.575 billion senior secured credit facility (Ba2/BB-/BB) also contains a $1 billion five-year revolver with an interest rate of Libor plus 200 basis points and a 50 basis point undrawn fee.

Morgan Stanley and Citigroup are joint lead arrangers and joint bookrunners on the deal, with Morgan Stanley on the left.

Co-managers on the deal include Lehman Brothers, Goldman Sachs, Credit Suisse, Bank of America, Deutsche Bank and Merrill Lynch.

Senior managing agents on the deal include CIT, Commerce Bank, General Electric Capital Corp., ING and Royal Bank of Scotland.

Proceeds from the credit facility will be used to help finance NRG's acquisition of Texas Genco LLC.

Princeton, N.J.-based energy company NRG announced in early October that it will pay $5.8 billion for Houston-based Texas Genco, $4 billion in cash and $1.8 billion in NRG shares representing about 25% of the combined company's stock.

Hart-Scott-Rodino clearance and approvals from the Federal Energy Regulatory Commission and Nuclear Regulatory Commission have already been received for the acquisition, resulting in a target closing timeframe for the week of Jan. 30.

AMC closes

AMC Entertainment Inc. closed on its new $850 million senior secured credit facility (Ba3/B+/BB) consisting of a $650 million term loan with an interest rate of Libor plus 212.5 basis points and a $200 million revolver with an interest rate of Libor plus 175 basis points.

During syndication, pricing on the term loan was reverse flexed from Libor plus 250 basis points on strong investor demand.

Citigroup Global Markets Inc., JPMorgan Chase Bank and Credit Suisse acted as the lead banks on the deal.

The facility was obtained in connection with AMC's merger with Loews Cineplex Entertainment Corp., which was completed on Thursday, and proceeds were used to refinance both Loews' and AMC's existing senior secured credit facilities.

The merged theatrical exhibition company is called AMC Entertainment and will be based in Kansas City, Mo.

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