HCA, Greenwood free to trade; Oceania Cruises trims first-, second-lien pricing; BA Energy sets talk

By Sara Rosenberg

New York, Nov. 14 - HCA Inc.'s mammoth transaction stole the spotlight as it freed for trading with the term loan A quoted in the high 99's and the term loan B quoted in upper par's. Also hitting the secondary Tuesday was Greenwood Racing Inc.'s term loan, with levels seen atop par.

Meanwhile, in the primary, Oceania Cruises Inc. reduced pricing on all tranches under its credit facility as the deal was well-oversubscribed, and BA Energy Inc. released price talk on its facility as the transaction was launched with a bank meeting during market hours.

HCA was the main focus in the secondary market on Tuesday as its gigantic credit facility broke for trading and was quite active, according to a trader.

The company's $8.8 billion seven-year term loan B (Ba3/BB) was quoted at par ½ bid, par ¾ offered throughout the session, while the $2.75 billion six-year term loan A (Ba3/BB) opened at 99½ bid, 99¾ offered and then traded up to 99 5/8 bid, 99 7/8 offered, where it ended the day, the trader said.

The term loan B is priced with an interest rate of Libor plus 275 bps, in line with original price talk at launch, although during syndication a step down to Libor plus 250 bps was added to the tranche.

The term loan A is priced at Libor plus 250 bps, also in line with original talk.

HCA's $16.8 billion credit facility also includes a $2 billion six-year senior secured revolver (Ba3/BB) at Libor plus 250 bps, a $2 billion six-year asset-based revolver (Ba2/BB) at Libor plus 175 bps and a $1.25 billion seven-year European term loan (Ba3/BB) at Euribor plus 250 bps.

Pricing on the European term loan was reverse flexed during syndication by 25 bps from original talk at launch of Euribor plus 275 bps.

Bank of America, Citigroup, JPMorgan, Merrill Lynch, Deutsche Bank and Wachovia are the bookrunners on the deal, with Bank of America acting as the left lead.

Proceeds from the bank deal, along with $5.7 billion in high-yield notes, will be used to help fund the leveraged buyout of HCA by Bain Capital, Kohlberg Kravis Roberts & Co., Merrill Lynch Global Private Equity and company founder Thomas F. Frist Jr.

The financing structure contemplates a leverage multiple of 6.6 times based on latest 12 months EBITDA of $4.241 billion at June 30. EBITDA to cash interest expense would be 1.8 times, and total debt to total capitalization would be 84.1%.

Under the LBO agreement, the consortium will acquire HCA for $51.00 in cash for each share. The transaction is valued at about $33 billion, including the assumption or repayment of $11.7 billion of debt.

The consortium is anticipated to contribute around $5.3 billion in equity for LBO financing as well.

HCA is a Nashville, Tenn., health care services company.

Greenwood breaks

Greenwood Racing's $265 million first-lien senior secured term loan (B2/B+) also freed for trading during market hours, with quotes seen at par 3/8 bid, par ¾ offered throughout the day, according to a trader.

The term loan is priced at Libor plus 225 bps with a step down to Libor plus 200 bps at less than 2x leverage. During syndication, pricing on the loan was reverse flexed from revised talk of Libor plus 250 bps and original price talk at launch of Libor plus 250 to 275 bps, with the addition of the step.

The step down in pricing cannot take effect until the company has delivered its Dec. 31, 2007 financials, so lenders are protected for about 18 months.

The term loan has a $200 million accordion feature.

Starting in 2008, the loan will be subject to a 3.5 times leverage test, dropping down to 3.0 times by the end of 2008.

There also will be an EBITDA to interest coverage test of 2.5 times staring in 2008, the source said.

Bear Stearns is the lead bank on the deal that will be used to repay existing debt, fund renovation costs, purchase slot machines, furniture, fixtures and other equipment and provide initial liquidity.

Greenwood Racing is Bensalem, Pa., owner and operator of racetracks and wagering facilities.

Oceania lowers spreads

Oceania Cruises reverse flexed pricing on its $400 million credit facility by 25 basis points across the board due to the overwhelming demand that the transaction has been met with since launching in late October, according to a market source.

With the changes, the $25 million five-year revolver (B1/B) and $300 million six-year first-lien term loan B (B1/B) are now both priced at Libor plus 275 bps, down from original price talk at launch of Libor plus 300 bps, the source said. Rumors of this first-lien flex had been floating around the market for over a week based on the amount of investor interest.

In addition, the $75 million seven-year second-lien term loan (Caa1/CCC+) is now priced at Libor plus 675 bps, down form original talk at launch of Libor plus 700 bps, the source remarked.

Some positives that have been said to be working in favor of the deal include asset coverage and good visibility of bookings.

UBS and Lehman are the lead banks on the Miami-based upscale cruise line's deal, with UBS the left lead.

Proceeds will be used to buy cruise ships that the company currently leases.

BA Energy spread guidance

BA Energy announced opening price talk of Libor plus 300 to 325 bps on both tranches under its proposed credit facility (B1) as the deal was presented to lenders with a bank meeting on Tuesday, according to a market source.

Tranching on the facility is comprised of a $450 million term loan B and a C$60 million revolver.

TD Securities and Scotia Capital are the lead banks on the deal.

Proceeds will be used to fund construction of a low-cost oil sands upgrader.

BA Energy is a Calgary, Alta.-based company involved in the business of upgrading bitumen and heavy oil feedstock into high-quality crude oils.

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