La Paloma falls on numbers; Calpine strengthens; Gatehouse flex expected; EnergySolutions upsizes

By Sara Rosenberg

New York, May 26 - La Paloma Generating Co. LLC's first- and second-lien bank debt headed lower in trading during Friday's shortened pre-holiday session in reaction to earnings numbers, and Calpine Corp.'s second-lien term loan headed higher as the market in general felt somewhat better.

In the primary, GateHouse Media Inc.'s term loan B is anticipated by the market to need a flex up in pricing before the deal wraps. And, EnergySolutions increased the size of its in-market term loan B tranche as the company has now decided to take out its existing second-lien term loan.

Also on the new deal front, Vanguard Car Rental USA Inc. has reached oversubscription levels at the wide end of recently revised price talk and with the addition of soft call protection and an equity sweep.

La Paloma saw levels on its first-lien term loan and a second-lien term loan debt come in early on in the day Friday as investors were responding to the company's recent release of financial numbers, according to a trader.

The first-lien term loan dropped to 99¾ bid, par ¼ offered from previous levels of par ¾ bid, 101 offered, and the second-lien term loan fell to par bid, par ½ offered from previous levels of par 3/8 bid, par 5/8 offered, the trader said.

La Paloma is a gas-fired, four-unit combined-cycle facility located in Kern County, Calif., that was acquired by Complete Energy Holdings LLC in 2005.

Calpine stronger

Calpine's second-lien term loan moved into higher territory during morning market hours likely due to improved market technicals as no credit specific news was seen, according to a trader.

The second-lien term loan was quoted at 95½ bid with no offers - stronger by a point on the bid side when compared to prior levels, the trader said.

Calpine is a San Jose, Calif.-based power company.

GateHouse may see price change

GateHouse Media, formerly operating as Liberty Group Publishing Inc., is anticipated by some market players to need an upward revision in term loan B pricing in order for the deal to get done, according to a source.

The $570 million term loan B was launched with opening price talk of Libor plus 200 basis points but pricing is now expected to be headed toward Libor plus 225 basis points, the source said.

GateHouse's $610 million credit facility (B1/BB-) also contains a $40 million revolver. In addition, the company has received a commitment for a $152 million secured bridge loan.

Wachovia Securities and Goldman Sachs are joint lead arrangers and joint bookrunners on the deal, with Wachovia the left lead.

Proceeds from the credit facility, along with the bridge loan, will be used to refinance the company's existing bank debt and fund the acquisitions of CP Media Inc. and Enterprise NewsMedia Holding LLC, two Massachusetts-based community newspaper operators.

Upon the closing of these acquisitions, Northbrook, Ill.-based GateHouse will be one of the largest community newspaper companies in the United States, publishing 77 daily newspapers, 271 non-daily newspapers and 136 shoppers and other publications, with operations in 17 states.

The acquisitions are subject to regulatory approval and other customary conditions to closing.

EnergySolutions ups B loan

EnergySolutions has upsized its term loan B so as to be able to fund the repayment in full of its existing second-lien term loan, according to a market source.

The term loan B is now sized at $770 million, up from an original size of $600 million, with the extra debt going toward terminating the outstanding $170 million second-lien term loan C, the source said.

Previously, the company was planning on leaving the second-lien term loan in place while amending it to allow for the acquisition of Duratek Inc.

Pricing on the term loan B remained in line with original talk at Libor plus 225 basis points.

The company's $75 million revolver and $25 million synthetic letter-of-credit facility were left unchanged in terms of size and pricing, which is also currently set at Libor plus 225 basis points.

In connection with the change in the company's capital structure, senior secured and corporate ratings were affirmed at Ba3/BB-, the source added.

Citigroup is the lead bank on the now $870 million credit facility (up from $700 million).

In addition to funding the acquisition of Duratek and taking out the second lien, proceeds from the new deal are also being used to refinance existing first-lien debt.

Under the acquisition agreement, EnergySolutions will purchase Duratek for $22 per share in cash. The total transaction consideration is about $396 million, including the assumption of Duratek's outstanding debt.

The transaction is scheduled to close promptly after a special Duratek shareholder meeting is held on June 6.

EnergySolutions is a Salt Lake City-based national energy services company. Duratek is a provider of safe, secure radioactive materials disposition and nuclear facility operations for commercial and government customers.

Vanguard oversubscribed

Vanguard Car Rental's $800 million seven-year term loan B has reached the point of oversubscription with pricing falling out at the high end of recently revised guidance, 101 soft call protection for one year added and an equity sweep joining the credit agreement terms, according to a market source.

The term loan B is now officially priced at Libor plus 300 basis points. Original talk on the transaction had been Libor plus 250 basis points and then, during syndication, talk drifted higher to a range of Libor plus 275 to 300 basis points.

Although the new pricing has not been officially posted, the term loan will end up at that spread since that is where the deal got done, the source explained.

Vanguard's $975 million credit facility (B2/BB) also contains a $175 million six-year revolver.

Allocations are expected to go out next week, the source added.

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

Proceeds from the new credit facility will be used for a recapitalization that will include refinancing existing debt, paying a small dividend and enhancing liquidity.

Vanguard is the Tulsa, Okla., owner and operator of Alamo Rent A Car and National Car Rental.

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