Warnaco breaks atop par; Resorts rises despite downgrade; Maxim Crane oversubscribed

By Sara Rosenberg

New York, Feb. 2 - The Warnaco Group Inc. allocated its term loan B on Thursday, with the paper freeing up for trading in the pars. Also, Resorts International Holdings LLC's first-lien term loan managed to squeak out some gains during market hours, despite a two-notch downgrade by Moody's Investors Service.

Meanwhile, in primary doings, Maxim Crane Works refinancing credit facility was already overfilled with commitments prior to the actual Thursday launch as investors flocked to the deal.

Warnaco's $180 million seven-year term loan B (Ba2/BB) hit the secondary during market hours, with the paper quoted at par 3/8 bid, par 7/8 offered pretty steadily from the break until the close as light activity was seen in the relatively small deal, according to a trader.

The term loan is priced with an interest rate of Libor plus 150 basis points. During syndication, pricing on the tranche was flexed down from Libor plus 175 basis points on strong demand.

Proceeds from the term loan were used to fund the acquisition of 100% of the shares of the companies that operate the licenses and related wholesale and retail businesses of Calvin Klein jeans and accessories in Europe and Asia and the CK Calvin Klein "bridge" line of sportswear and accessories in Europe, which was completed earlier this week.

Citigroup Global Markets Inc. and JPMorgan acted as the lead banks on the deal, with Citi the left lead.

Warnaco is a New York-based intimate apparel, sportswear and swimwear company.

Resorts shrugs off downgrade

Resorts International's first-lien term loan seemed to be relatively unaffected by a two-notch downgrade from Moody's that was announced Thursday, and in fact, the paper even managed to end the day on a stronger note, according to a trader.

The first-lien term loan closed Thursday quoted at 99 bid, 99¾ offered, up about half a point on the day, but was seen quoted as low as 98½ bid, 99 offered earlier on in the session, the trader said. By comparison, on Wednesday, the first-lien bank debt was seen trading at 983/4, the trader added.

In the morning, Moody's announced that it downgraded Resorts International's first-lien term loan and revolver to Caa1 from B2 and the second-lien term loan to Caa2 from B3. Furthermore, a negative outlook was assigned.

The downgrade is a result of the company's announcement that it was unable to comply with certain quarterly leverage covenants and that this non-compliance constitutes an event of default under the credit facility agreement, Moody's said.

The non-compliance, which is based on the company's Dec. 31, 2005 results, comes on the heels of bank loan amendments in late 2005 that addressed previous covenant violations.

In addition to the company's deteriorating operating results, particularly for December 2005, and continued covenant violations, the ratings and negative outlook take into account the uncertainty surrounding how bank lenders choose to apply their rights and remedies at this point in time as well as the uncertainty regarding the company's ability to stabilize operating results, even though there are indications that January results will show some improvements, Moody's explained.

Resorts International was already downgraded by Standard & Poor's on Jan. 20, at which time the revolver and first-lien term loan were dropped to CCC+ from B and the second-lien term loan was cut to CCC- from CCC+. S&P also assigned a negative outlook to the ratings.

At the time of the downgrade, S&P attributed the move to the deterioration of operating performance based on publicly available information through December at the company's Atlantic City, N.J.-based property and through November at its Indiana-based property, which signifies management's continued inability to stabilize the business since it took over operations in April.

Resorts International is an owner and operator of casinos in Atlantic City, N.J., the Chicagoland gaming market and Tunica, Miss.

Maxim Crane well received

Maxim Crane Works' proposed $285 million credit facility had already reached the point of being "well oversubscribed" even before the company had a chance to officially launch the deal with a 1 p.m. ET conference call Thursday, a market source told Prospect News.

Goldman Sachs is the lead bank on the deal.

The facility consists of a $235 million term loan talked at Libor plus 225 basis points and a $50 million revolver, the source said.

Early in 2005, the company had completed a $325 million exit financing credit facility consisting of a $50 million revolver at Libor plus 275 basis points, a $175 million first-lien term loan at Libor plus 275 basis points and $100 million second-lien term loan at Libor plus 550 basis points.

Proceeds from this credit facility will be used to refinance the existing bank debt, including taking out the second-lien term loan.

Maxim Crane is a Bridgeville, Pa.-based crane rental company.

Cooper-Standard cuts spread

Cooper-Standard Automotive Inc. reverse flexed pricing on its $215 million term D (B2/B+) by 25 basis points and added a $25 million euro carve out at the company's request, according to a market source.

The term loan D is now priced with an interest rate of Libor plus 250 basis points, down from original price talk at launch of Libor plus 275 basis points, the source said.

Deutsche Bank and Lehman Brothers are the lead banks on the deal.

Proceeds from the term loan D will be used to fund the acquisition of ITT Industries Inc.'s Fluid Handling Systems business in a transaction valued at about $205 million.

The transaction is expected to close in the first quarter of 2006 and is subject to customary closing conditions including regulatory approvals.

Under the company's existing credit agreement, it is allowed to incur up to $250 million in additional term loan debt - meaning that there was already room for the term loan D to be layered in to the capital structure.

Cooper-Standard is a Novi, Mich., automotive supplier specializing in the manufacture and marketing of systems and components for the transportation industry.

NRG closes

NRG Energy Inc. closed on its $5.575 billion senior secured credit facility (Ba2/BB-/BB) consisting of a $3.575 billion seven-year term loan B, a $1 billion five-year revolver and a $1 billion five-year synthetic letter-of-credit facility, with all three tranches priced with an interest rate of Libor plus 200 basis points.

The term loan B and the synthetic letter-of-credit facility both contain step downs to Libor plus 175 basis points if leverage falls below 3.5x.

The revolver has a 50 basis point commitment fee.

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.

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

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

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

Proceeds from the credit facility were used to help finance NRG's acquisition of Texas Genco LLC, which was completed on Thursday, for $4.4 billion in cash, $2.7 billion in assumed Texas Genco debt and 35.4 million shares of NRG common stock.

NRG is a Princeton, N.J.-based energy company.

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