Crown Castle falls with acquisition news; Transeastern holds steady; Buffets sets price talk

By Sara Rosenberg

New York, Oct. 6 - Crown Castle International Corp.'s term loan headed lower on Friday after the company announced plans for a significantly sized acquisition and plans to get additional debt.

Also in trading, Transeastern's term loan held in at previous levels after spending the last few days on a downward trend as market activity was light in the shortened pre-holiday session.

In primary happenings, Buffets Inc. came out with price talk on its credit facility as the deal was launched to investors with a bank meeting during Friday's market hours.

Crown Castle saw its term loan come in closer to par early on in the day after news emerged that it would be acquiring Global Signal Inc. with new bank debt being used to fund the cash portion of the transaction.

The term loan closed the day quoted at par bid, par ½ offered, down from Thursday's levels of par 3/8 bid, par 5/8 offered, according to traders.

"There's additional debt with the acquisition. Also, guys are trying to figure out what's going to happen with this [existing] term loan," the trader said, explaining that there's always a chance for a refinancing or a repricing in connection with the acquisition.

"That's why the term loan is backed up," the trader added.

When discussing the transaction in a conference call Friday, Crown Castle didn't focus on the possibility of a refinancing or a repricing, rather the company said that it will get $550 million of new borrowings to pay the cash consideration for the deal.

This $550 million of borrowings is expected to come from a $300 million add-on to its senior secured term loan and a funded $250 million revolving credit facility.

Under the acquisition agreement, Global Signal common stockholders can convert each share into 1.61 Crown Castle shares or, alternatively, can elect to receive cash in the amount of $55.95 per Signal share. The total amount of cash consideration is subject to a cap of $550 million. The stock and cash transaction is valued at about $5.8 billion, including the assumption of about $1.8 billion in debt.

At close, Crown Castle expects to have total debt of about $5.4 billion and net debt of about $5.3 billion.

Based on pro forma results for both companies as of June 30, the combined company will have about $16 billion in total enterprise value, annualized site rental revenues of $1.2 billion and annualized adjusted EBITDA of $659 million.

Pro forma for the transaction, net debt to annualized adjusted EBITDA will be 8.16 times and interest coverage will be 2.04 times.

The merger is expected to close in the first quarter of 2007, subject to certain conditions and approvals, including shareholder and regulatory approvals.

Crown Castle is a Houston-based provider of broadcast, data and wireless communications infrastructure services. Global Signal is a Sarasota, Fla.-based renter of telecommunication tower space to wireless service providers, government agencies, private broadcasters and others.

Transeastern steadies

Transeastern's term loan held in at levels of 64 bid, 67 offered on Friday after spending a good portion of the week losing ground, according to a trader.

However, this stability was not attributed to any specific feelings for the credit, but rather was seen as a result of limited investor participation in the secondary as whole due to the early close, the long weekend and the Deutsche Bank High Yield Conference, the trader said.

The Transeastern began weakening early on in the week of Sept. 25 after news emerged that because of the weak Florida housing market, the company cannot support its existing capital structure. Prior to that announcement, the debt was being quoted in the high 90's.

The company said that it is exploring various options to fix the liquidity problem, including requesting waivers from its lenders regarding potential defaults and permitting future advances under the revolver, and restructuring land bank obligations.

Then this past Thursday, at the Deutsche conference, Technical Olympic USA Inc. reiterated the idea that its joint venture Transeastern could not support its capital structure saying that when the venture has about $600 million in debt at annual carrying costs of roughly $60 million and current business conditions only anticipate Transeastern selling between 1,200 and 1,500 homes next year - translating to at least $40,000 of debt service for each home sold.

Technical Olympic went on to say at the conference that the Transeastern situation is expected to take several weeks to sort out.

Neither Technical Olympic nor Falcone Group, the other participant in the joint venture, plan to put any more equity capital into the company until the capital structure problems are resolved.

Technical Olympic is a Hollywood, Fla.-based builder and seller of single family homes.

Buffets price talk

Buffets officially kicked off syndication on its proposed $610 million credit facility on Friday morning with the holding of a bank meeting, and in conjunction with the launch, price talk of Libor plus 325 basis points for all tranches under the facility emerged, according to a market source.

Tranching on the facility is comprised of a $40 million five-year revolver, a $70 million seven-year synthetic letter-of-credit facility and a $500 million seven-year term loan.

Credit Suisse and UBS are joint bookrunners and lead arrangers on the deal, with Credit Suisse the left lead.

Financial covenants under the facility include maximum ratios of total debt to EBITDA and minimum interest coverage ratios.

The facility also includes mandatory prepayment provisions relating to excess cash flow, asset sales and debt issuances.

Proceeds from the facility, along with a proposed $330 million bond offering, will be used to help fund the acquisition of Ryan's Restaurant Group, Inc. and refinance existing debt.

Under the acquisition agreement, Buffets, a Caxton-Iseman Capital, Inc. portfolio company, will purchase Ryan's in a cash transaction valued at about $876 million, including debt that will be assumed or repaid at or prior to closing.

The combined company will have annual revenues of more than $1.7 billion.

Buffets is an Eagan, Minn., operator of buffet-style restaurants. Ryan's is a Greer, S.C., restaurant company.

MedAssets trims spread

MedAssets Inc. reverse flexed pricing on its $170 million term loan to Libor plus 250 basis points from original talk at launch of Libor plus 275 bps, according to a market source.

The company's $230 million credit facility also includes a $60 million revolver priced at Libor plus 250 bps.

Bank of America is the lead bank on the deal.

Proceeds will be used to fund a dividend payment, to refinance existing debt and for working capital and general corporate purposes.

MedAssets is an Atlanta-based company that improves health care providers' margin and cash flow through revenue cycle and supply chain initiatives as well as decision support technology and services.

MultiPlan lifts pricing

MultiPlan Inc. increased pricing on its $360 million term loan add-on (B2/B+) to Libor plus 250 bps from original talk at launch of Libor plus 225 bps, according to a market source.

Earlier on in the syndication process, the syndicate opted to add an original issue discount of 99¾ to the loan, which is still in place.

Bank of America and Goldman Sachs are the lead banks on the deal that will be used to fund the acquisition of Private Healthcare Systems, Inc.

MultiPlan is a New York-based independent preferred provider organization network. Private Healthcare is a Waltham, Mass., provider of network and medical management services.

Insight Midwest closes

Insight Communications said it completed a new $2.445 billion senior secured credit facility (Ba3/BB-/BB+) for Insight Midwest on Friday.

Included is a $260 million revolver, a $385 million term loan A and a $1.8 billion term loan B at Libor plus 225 bps.

Bank of America and JPMorgan were lead banks.

Proceeds will be used to refinance Insight Midwest's existing credit facilities and to redeem all of Insight Midwest's 10½% senior notes due Nov. 1, 2010 and $185 million of its 9¾% senior notes due Oct. 1, 2009.

Insight Communications is a New York-based cable television system operator.

Time Warner Telecom closes

Also announcing closing of a new loan was Time Warner Telecom Inc.

Its $700 million secured credit facility (Ba2/B) has a $100 million revolver at Libor plus 250 bps and a $600 million term loan B at Libor plus 225 bps, with a step down to Libor plus 200 bps at less than 2.5x total leverage.

Wachovia was the lead bank for the deal, which was obtained at the level of Time Warner Telecom's Time Warner Telecom Holdings Inc. subsidiary.

The revolver, which was undrawn at closing, replaces the company's previous $110 million revolver.

At closing, the company drew $200 million on the term loan to replace its previous term loan B. It will use further borrowings to redeem its $240 million of second priority senior secured floating-rate notes which have a coupon of Libor plus 400 basis points.

Remaining borrowings will be used to help fund the acquisition of Xspedius Communications, LLC.

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