Cendant, American Greetings, Burlington talk; Maneely, Sagittarius cut pricing; Reliant dips on downgrade

By Sara Rosenberg

New York, March 16 - Price talk on Cendant Car Rental Group LLC's (Avis Budget Car Rental LLC) credit facility, American Greetings Corp.'s term loan and Burlington Coat Factory Warehouse Corp.'s revolver surfaced Thursday as all three deals were launched to investors.

In other primary happenings, John Maneely Co. came out with a reverse flex on its term loan Thursday that was pretty much expected as the deal was so oversubscribed that the syndicate had to shut the book down early.

Also reducing pricing was Sagittarius Restaurants LLC, which cut the spread on its term loan and firmed up pricing on its revolver at the low end of talk.

On the secondary front, Reliant Energy Inc.'s bank debt softened as Standard & Poor's downgraded the company's ratings, and Movie Gallery Inc.' term loan headed to lower levels as an amendment fee is no longer being priced into the paper.

Cendant Car Rental set price talk on its proposed $2.375 billion credit facility (BBB-) as syndication on the deal officially kicked off with the holding of a bank meeting during market hours, according to a market source.

Both Cendant's $1.5 billion five-year revolver and $875 million six-year term loan were launched with opening price talk of Libor plus 150 basis points, the source said.

JPMorgan and Deutsche Bank are the lead banks on the deal that is scheduled to launch with a bank meeting on Thursday, with JPMorgan the left lead.

Proceeds from the credit facility, along with $1 billion in senior unsecured notes, will be used to help fund the car rental group's - which includes Avis Rent A Car System Inc. and Budget Rent A Car System Inc. - spinoff from Cendant Corp. into an independent company that will be renamed Avis Budget Car Rental LLC.

American Greetings price talk

American Greetings also came out with price talk on its delayed-draw term loan during Thursday's session as it too was launched to investors via a bank meeting, according to a market source.

The company's $350 million delayed-draw term loan was presented to lenders with opening price talk of Libor plus 150 basis points, the source said. There is a 62.5 basis point ticking fee on the tranche.

American Greetings' $650 million credit facility also contains a $300 million revolver.

UBS and NatCity are the lead banks on the deal that will be used to refinance existing debt.

American Greetings is a Cleveland-based greeting card company.

Burlington revolver guidance

Burlington released price talk on its $800 million ABL revolver at its Thursday bank meeting, with the $735 million tranche talked at Libor plus 150 basis points and the $65 million first-in, last-out tranche A+ talked at Libor plus 325 basis points, according to a market source.

Price talk on the company's $775 million term loan B (B) has not yet emerged since the syndicate is waiting on a rating from Moody's Investors Service, the source said.

Bear Stearns and Bank of America are the joint lead arrangers and joint bookrunners on the $1.575 billion credit facility.

Borrowings under the revolver are limited by a borrowing base, which is calculated periodically based on specified percentages of the value of eligible inventory and eligible credit card receivables, subject to certain reserves and other adjustments.

Security for the revolver is a perfected first-priority lien on all inventory and accounts of the company and its subsidiaries and a perfected second-priority lien on substantially all other real and personal property.

Security for the term loan is a perfected first-priority lien on substantially all real and personal property and a perfected second-priority lien on all inventory and accounts.

Proceeds will be used to help fund Bain Capital Partners LLC's leveraged buyout of the Burlington, N.J., retailer of branded apparel for $45.50 per share in cash, or $2.06 billion.

In addition to the facility, Burlington also plans on issuing $500 million in bonds - split into a $200 million senior unsecured notes offering and a $300 million senior subordinated notes offering - and up to $500 million in equity.

If the notes are not issued, the company intends to put in place a $200 million senior bridge facility and a $300 million subordinated bridge facility.

Up to $100 million of the term loan can be transferred to the notes and/or bridge facilities prior to closing.

Maneely reverse flexes

John Maneely lowered pricing on its term loan by 50 basis points on Thursday, one day after the book was shut down ahead of schedule due to strong oversubscription, according to a market source.

The $290 million seven-year term loan (B2/B) is now priced with an interest rate of Libor plus 300 basis points, down from original price talk at launch of Libor plus 350 basis points, the source said.

Because of the market reception that the deal had received, investors had been expecting this reverse flex in term loan pricing for a while now, with the anticipation being that the spread would drop by at least 25 basis points and at most 50 basis points.

John Maneely's $490 million credit facility also contains a five-year asset-based revolver (Ba3/BB-) with an interest rate of Libor plus 150 basis points.

Goldman Sachs and Citigroup are the lead banks on the deal, with Goldman on the left.

Proceeds will be used to help fund The Carlyle Group's acquisition of Collingswood, N.J.-based John Maneely, parent company of Wheatland Tube Co., a manufacturer of steel pipe and tubular products, and Seminole Tubular Products Co., a manufacturer of plumbing and electrical fittings.

Sagittarius lowers pricing

Sagittarius Restaurants (Captain D's Inc.) also reverse flexed pricing on its term loan and at the same time finalized pricing on its revolver at the low end of original guidance, according to a market source.

The $270 million term loan is now priced with an interest rate of Libor plus 225 basis points, down from original price talk at launch of Libor plus 250 to 275 basis points, the source said.

As for the revolver, pricing firmed up at Libor plus 250 basis points - the tight end of original price talk of Libor plus 250 to 275 basis points, the source added.

JPMorgan is the lead bank on the $330 million credit facility (B) that will be used to help fund the acquisition of Del Taco Inc.

Private equity investors in the acquisition are Grotech Capital Group, Charlesbank Capital Partners, Leonard Green & Partners LP and Stockwell Capital LLC.

Captain D's is a Nashville, Tenn., seafood quick-service restaurant chain. Del Taco is a Lake Forest, Calif., Mexican quick-serve chain.

Stratus Tech ups second-lien talk

Stratus Technologies Inc. increased price talk on its second-lien term loan and is now marketing its first-lien term loan at the high end of original guidance, according to a market source.

The $125 million second-lien term loan (Caa1/CCC) is now talked in the Libor plus 800 basis points area, up from original price talk at launch of Libor plus 700 to 750 basis points, the source said.

In addition, the $175 million first-lien term loan (B1/B-) is now talked at Libor plus 300 basis points - the top end of original guidance at launch of Libor plus 275 to 300 basis points, the source added.

Stratus Technologies' $330 million credit facility also contains a $30 million revolver (B1/B-).

Goldman Sachs and Deutsche Bank are the lead banks on the deal, with Goldman the left lead.

Proceeds from the credit facility will be used to a tender offer for all of the company's outstanding 10.375% senior notes due 2008.

Stratus Technologies is a Maynard, Mass., solutions provider to customers in telecommunications, financial services, banking, manufacturing, life sciences, public safety, transportation & logistics and other industries.

Reliant dips on downgrade

Switching to trading, Reliant Energy's bank debt weakened slightly as S&P downgraded the company's ratings in a move that really wasn't unexpected but still managed to soften the paper up, according to a trader.

The B1 tranche was quoted at par bid, par ½ offered, down about a quarter of a point on the bid side, and the B2 tranche was quoted at par ½ bid, 101 offered, down about a quarter of a point on both the bid side and the offer side, the trader said.

On Thursday, S&P cut Reliant's senior unsecured rating to B- from B and corporate credit rating to B from B+. The outlook is negative.

The negative outlook reflects the expectation that Reliant's financial ratios will deteriorate in 2006. The rating agency also said that it is concerned that there could be a financial covenant breach in 2006, if the company's financial performance deviates from its plan.

"Any significant, sustained reduction in cash flow from operations from projections due to adverse business conditions may cause Standard & Poor's to lower the rating," said S&P credit analyst Arleen Spangler, in the release. "The outlook could stabilize or the rating could improve post-2006, if the cash flow from the retail operation improves and there is a track record of cash flow with transparency in the regulatory and political arenas."

On Monday, Moody's Investors Service had downgraded Reliant's senior implied, corporate family and senior secured debt ratings to B2 from B1 and left the ratings are on review for possible further downgrade.

Moody's attributed the downgrades to the rising business and operating risks of the consolidated enterprise, a significantly weakened financial profile and a modest available liquidity position, given the company's exposure to volatile commodity markets.

Reliant Energy is a Houston-based provider of electricity and energy services to retail and wholesale customers.

Movie Gallery dips

Movie Gallery saw quotes on its term loan drop during Thursday's session to compensate for an amendment fee no longer being priced into trading levels, according to a trader.

The term loan closed the session quoted at 93¼ bid, 94 offered, down half a point from Wednesday's closing levels of 93¾ bid, 94½ offered, the trader said.

The reason for the drop is that the 50 basis point amendment fee that was previously being calculated into bid/offer levels is no longer in the mix since the company's amendment has passed, the trader explained.

Movie Gallery had approached lenders on March 6 about amending its credit facility to protect itself against possible non-compliance with covenants soon.

Consents were due from lenders on Wednesday, and on Thursday morning, the Dothan, Ala.-based operator of video retail stores announced that the amendment was successful.

Under the amended facility, financial covenants were relaxed for the next four fiscal quarters, interest rates have been increased, certain mandatory prepayment provisions have been modified, and the company's ability to incur indebtedness, pay dividends, redeem its capital stock, make capital expenditures, make acquisitions, and other covenants have been made more restrictive.

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