Easton-Bell breaks; Allied Waste falls on repricing; Movie Gallery drop continues; Nuance cuts spread

By Sara Rosenberg

New York, March 27 - Easton-Bell Sports Inc.'s credit facility freed for trading on Monday, with the term loan quoted north of 101. Also in trading, Allied Waste Industries Inc.'s institutional bank debt moved lower on news of a repricing proposal and Movie Gallery Inc.'s term loan continued to weaken, still spurred on by the material weaknesses and future covenant compliance problems that were disclosed on Friday.

In primary happenings, Nuance Communications Inc. lowered pricing on its term loan by 25 basis points as the deal has been met with strong investor interest.

Easton-Bell's credit facility broke for trading during the session, with levels on the term loan quoted at 101½ bid, 101¾ offered pretty steadily throughout the day, according to a trader.

The $335 million term loan B is priced with an interest rate of Libor plus 175 basis points and contains a step down in pricing to Libor plus 150 basis points if leverage is less than 4x. During syndication, pricing on the tranche was reverse flexed from Libor plus 200 basis points with the addition of the step down as about $2.4 billion in commitments flooded the book.

Prior to the bank meeting taking place, the term loan was actually talked in the Libor plus 200 to 225 basis points context, but being that commitments had already started to come in before the launch, lenders were told that the deal was essentially being marketed at the low end of that talk.

Easton-Bell's approximately $415 million senior credit facility (B1/B+) also contains a $70 million revolver and a C$12 million revolver.

Wachovia and Goldman Sachs acted as joint lead arrangers and joint bookrunners on the deal, with Wachovia the left lead.

Proceeds from the facility were used to help fund the recently completed merger of Riddell Bell Holdings with Easton Sports, forming the newly named branded sports company Easton-Bell, to refinance existing debt, and will be also be available for working capital and other general corporate requirements.

York Street Capital Partners, a U.S.-based mezzanine debt fund principally sponsored by Teachers' Private Capital, increased its existing equity investment in Riddell Bell as part of the transaction.

Riddell, a portfolio company of Fenway Partners and Teachers' Private Capital, is a Dallas-based designer, developer and marketer of head protection equipment and related accessories for numerous athletic and recreational activities. Easton is a Van Nuys, Calif.-based developer, manufacturer, marketer and distributor of baseball, softball, hockey and cycling equipment.

Allied Waste softens on repricing

Allied Waste's term loan B and institutional letter-of-credit facility, which trade as a strip, fell by almost a point during market hours as news surfaced that the company is looking to lower pricing on these tranches by 50 basis points, according to a trader.

The institutional bank debt closed the day quoted at par 3/8 bid, par 5/8 offered, down from previous levels of 101¼ bid, 101 5/8 offered, the trader said.

Under the repricing proposal, the company is looking to reduce the spread on the two institutional loan tranches to Libor plus 150 basis points from current pricing of Libor plus 200 basis points.

JPMorgan is leading the repricing for the Scottsdale, Ariz., waste services company.

Movie Gallery spirals downward

Movie Gallery's term loan spent another day grinding lower as investors continued to react to the company's Friday announcement that materials weaknesses were found in its internal controls over financial reporting and that it anticipates facing more financial covenants compliance issues in the future, according to a trader.

The Dothan, Ala.-based video rental company's term loan closed the day quoted at 89 bid, 90½ offered, down about three quarters of a point on the bid side from the 89¾ bid, 90¾ offered level that was seen on Friday, the trader said.

The fall is still being attributed to the company's 10-K filing on Friday that revealed the finding of four material weaknesses in internal controls- ineffective management review of account analyses and reconciliations, ineffective communication of accounting policy for capitalizing costs and lack of effective review process, inaccurate or lack of timely updating of accounting inputs for key estimates, and assumptions and ineffective procurement and receiving processes.

As a result of these reporting deficiencies, the company warned that investor confidence in the reliability of its financial statements could diminish, which ultimately could negatively impact market prices for its securities.

In addition, Movie Gallery revealed in its 10-K that it may not be able to comply with some financial covenants for the first quarter of 2007 without further amendments to its credit facility.

The facility was just amended on March 15 to relax certain financial covenants, including the leverage ratio, fixed charge coverage ratio and interest coverage ratio; however, these covenants get stricter once first-quarter 2007 rolls around.

Following the filing of the 10-K on Friday, Movie Gallery's term loan had dropped a quarter of a point from Thursday's levels of 90 bid, 91 offered.

Since March 16, the day after the company completed its latest amendment process, the term loan has given up about 4 points as levels have steadily been inching lower because of poor fourth-quarter and full-year earnings that were announced last week and the various 10-K revelations.

Nuance trims pricing

Switching to the new deal market, Nuance Communications reverse flexed pricing on its $355 million seven-year term loan B to Libor plus 200 basis points from Libor plus 225 basis points on strong market demand, according to a source.

UBS Investment Bank and Credit Suisse are joint lead arrangers on the deal; UBS, Credit Suisse and Citigroup are joint bookrunners; Citigroup and Bank of America are co-arrangers; UBS is administrative agent; and Citigroup is documentation agent.

Nuance's $430 million senior secured credit facility (B1/B) also contains a $75 million six-year revolver that carries a 50 basis point commitment fee.

Proceeds from the facility will be used to fund the acquisition of Dictaphone Corp. for $357 million in cash.

The companies have already been granted early termination of the antitrust waiting period by the U.S. Department of Justice under the Hart-Scott-Rodino Act for the acquisition.

The acquisition has also been approved by both companies' boards of directors and is expected to close by March 31.

Nuance is a Burlington, Mass.-based provider of speech and imaging solutions for businesses and consumers. Dictaphone is a Stratford, Conn.-based provider of dictation, transcription, speech recognition and natural language processing systems in the health care market.

American Airlines closes

American Airlines Inc. closed on its amended and restated credit facility through which the term loan size was increased by $200 million to $448 million while the revolver size was decreased by $200 million to $325 million, and pricing on both the term loan and the revolver was reduced.

Term loan pricing was lowered to Libor plus 325 basis points from Libor plus 525 basis points. Originally, the company was only looking to cut term loan pricing to Libor plus 350 basis points, but during the amendment process it was decided to lower pricing even lower.

Meanwhile, revolver pricing was lowered to Libor plus 350 basis points from Libor plus 475 basis points.

In addition, under the amendment, the fixed charge coverage ratio was relaxed to 1.00:1.00 for the period ending March 31, slowly tightening over time to 1.50:1.00 for the period ending June 30, 2009 and thereafter.

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

American Airlines is a subsidiary of Fort Worth, Texas-based airline operator AMR Corp.

USI closes

USI Holdings Corp. closed on its new $285 million senior secured credit facility due 2011 (B1) consisting of a $210 million term loan and a $75 million revolver, with both tranches priced at Libor plus 225 basis points.

JPMorgan was the lead bank on the deal.

Proceeds from the new term loan were used to refinance all outstanding amounts under the company's existing credit facility, and revolver borrowings will be used for general corporate purposes.

USI is a Briarcliff Manor, N.Y., distributor of insurance and financial products and services to businesses.

Ball closes

Ball Corp. completed its acquisition of U.S. and Argentinean operations of U.S. Can Corp., according to a company news release.

To fund the purchase and to help refinance existing U.S. Can debt, Ball got a new $500 million term loan (BB+) with an interest rate of Libor plus 87.5 basis points.

Deutsche and JPMorgan were the lead banks on the deal.

Ball is a Broomfield, Colo., supplier of metal and plastic packaging products.

Delta closes

Delta Air Lines Inc. completed the repricing of all three term loans under its $1.9 billion debtor-in-possession financing facility, according to a company news release.

Under the amendment, the company's $600 million term loan A (Baa3/BB) was repriced to Libor plus 275 basis points from Libor plus 450 bps, the $700 million term loan B (Ba3/B+) was repriced to Libor plus 475 basis points from Libor plus 650 basis points and the $600 million term loan C (B3/B) was repriced to Libor plus 725 basis points from Libor plus 900 basis points.

In addition, the term loan A structure was amended to include a cash collateralized letter-of-credit subfacility totaling $200 million.

Furthermore, the amendment allows the company to grant additional liens to GE Commercial Finance with respect to unrelated financing arrangements and with respect to current and future lease obligations.

And, lastly, the amendment permits ordinary course fuel hedging to be secured by cash deposits not to exceed the greater of $300 million and 15% of outstanding unrestricted cash.

GE Commercial Finance is the administrative agent on the DIP and led the amendment.

Delta is an Atlanta-based airline.

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