Reynolds, Ntelos break; PanAmSat widens on amendment; Fairchild sets talk; Crown Castle firms spread

By Sara Rosenberg

New York, May 31 - Reynolds American Inc. and Ntelos Inc. freed for trading on Wednesday, with levels on the Reynolds term loan B and the Ntelos term loan add-on seen in the low-par context.

In other trading news, PanAmSat Holding Corp.'s term loan B saw levels drift wider as the company launched an amendment to investors that would switch the loan over to a covenant-light structure.

Meanwhile, in the primary, Fairchild Semiconductor International Inc. came out with price talk on its credit facility as the deal launched with a bank meeting during market hours and Crown Castle Operating Co. firmed up pricing on its credit facility, coming in at the high end of original guidance.

Reynolds American's credit facility hit the secondary Wednesday, with the $1.55 billion six-year term loan B quoted at par 1/8 bid, par 3/8 offered fairly consistently from the break until the close, according to a trader.

The term loan B is priced with an interest rate of Libor plus 187.5 basis points and contains a step down to Libor plus 175 basis points at less than 2x leverage. During syndication, pricing on this tranche was reverse flexed from original talk at launch of Libor plus 200 basis points with the addition of the step down.

Reynolds' $2.1 billion credit facility (Ba1/BBB-/BBB-) also contains a $550 million five-year revolver with an interest rate of Libor plus 200 basis points. During syndication, this tranche was upsized from $500 million, but pricing was left unchanged.

Lehman Brothers and JPMorgan acted as joint lead arrangers and joint bookrunners on the deal, with Lehman on the left. Citigroup and General Electric Capital Corp. acted as joint lead arrangers as well. Lehman and Citi acted as co-syndication agents, GECC acted as documentation agent and JPMorgan acted as administrative agent.

Proceeds from the term loan, along with proceeds from $1.65 billion in senior notes and $375 million of available cash, were used to fund the acquisition of Conwood, which was completed on Wednesday.

The revolver will be available for working capital.

Under the acquisition agreement, Reynolds paid $3.5 billion for the holding company that owns Memphis, Tenn.-based Conwood, the nation's second-largest manufacturer of smokeless tobacco products.

Reynolds American is a Winston-Salem, N.C.-based manufacturer and marketer of cigarettes and other tobacco products.

The headquarters of the newly combined companies will be located in Memphis, and full integration is expected to be completed by the end of 2007.

Ntelos breaks atop par

Ntelos' $235 million first-lien term loan add-on (B2/B) freed for trading late in the day Wednesday, with levels quoted at par 1/8 bid, par 3/8 offered, according to a trader.

The term loan add-on is priced at Libor plus 225 basis points - in line with existing first-lien term loan pricing - and contains 101 soft call protection for one year.

Proceeds are being used to repay the company's $225 million second-lien term loan in full.

This refinancing reduces the company's overall cost of borrowing, simplifies its capital structure and permits the payment of an up to $15 million dividend to parent company Ntelos Holdings Corp.

Morgan Stanley is the lead bank on the deal.

Ntelos is a Waynesboro, Va., provider of wireless and wireline communication services.

PanAmSat levels drift apart

PanAmSat's term loan B saw bids head lower and offers head higher during Wednesday's session as the company launched an amendment to lenders that would, among other things, turn the loan into a covenant-light deal, according to a trader.

The term loan B was quoted at par 1/8 bid, par 7/8 offered, compared to previous levels of par 3/8 bid, par ¾ offered, the trader said.

Around 2 p.m. ET on Wednesday, PanAmSat held a bank meeting to discuss a proposed amendment that would change the $1.639 billion term loan B to a covenant-light structure and extend the maturity on the tranche to 7½ years.

The company is also asking to extend the maturities on its $250 million revolver and $356 million term loan A to six years.

PanAmSat is looking for this amendment in connection with its acquisition by Intelsat Ltd. for $25 per share in cash, or $3.2 billion.

Intelsat is looking for similar amendments as it asked lenders on Wednesday to extend the maturity on its $300 million revolver to six years, to extend the maturity on its $346 million term loan to seven years and to change the term loan into a covenant-light structure.

Citigroup is the lead bank on the amendments for both credit facilities.

Intelsat is a Pembroke, Bermuda, satellite company. PanAmSat is a Wilton, Conn., satellite company.

Fairchild price talk

Switching to the primary, Fairchild Semiconductor released price talk on its $500 million credit facility Wednesday as the deal was presented to lenders through a bank meeting during the session, according to a market source.

Both the $400 million term loan B and the $100 million revolver were launched with opening price talk of Libor plus 150 basis points, the source said.

Deutsche Bank and Bank of America are the lead banks on the deal, with Deutsche the left lead.

Proceeds will be used to refinance existing bank debt.

Fairchild is a South Portland, Maine, supplier of power analog, power discrete and nonpower semiconductor solutions.

Crown Castle finalizes pricing

Crown Castle firmed up pricing on its $1.25 billion credit facility (B1/BB), with the term loan coming in at the wide end of talk and the revolver falling out exactly where expected, according to a market source.

Pricing on the $1 billion eight-year term loan shook out at Libor plus 225 basis points, the high end of original talk at launch of Libor plus 200 to 225 basis points, the source said.

Meanwhile, pricing on the $250 million 364-day revolver ended up at Libor plus 200 basis points. At launch, it was said that the revolver would be priced 25 basis points inside of the term loan, which proved to be the case in the end.

Morgan Stanley and RBS Securities are joint lead arrangers on the deal, with Morgan Stanley the left lead.

Proceeds will be used to refinance existing bank debt and fund the acquisition of Mountain Union Telecom LLC.

Under the acquisition agreement, Crown Castle will acquire more than 98% of the outstanding equity interest of Mountain Union for about $304 million at the closing date and, starting in 2007, will have a right to call the remaining equity interest for about $5 million.

The revolver is expected to be undrawn at closing.

The transaction is expected to close on or about July 1.

Crown Castle is a Houston-based owner, operator and manager of wireless communications sites. Mountain Union is an Alexandria, Va.-based owner, operator and manager of wireless communications sites.

RCN closes

RCN Corp. closed on its new $130 million credit facility (Ba3) consisting of a $75 million seven-year term loan with an interest rate of Libor plus 175 basis points and a $55 million five-year revolver with an initial interest rate of Libor plus 200 basis points, according to a company news release.

Pricing on the revolver can step down to Libor plus 175 basis points if the company receives an increase in its debt ratings in the future.

During syndication, pricing on the term loan was reverse flexed from original talk at launch of Libor plus 200 basis points.

Deutsche Bank acted as the lead bank on the deal.

Proceeds from the term loan are being used to refinance the company's existing $34 million first-lien term loan and $41 million third-lien term loan, and proceeds from the revolver are being used to replace the company's existing letter-of-credit facilities.

The new facility also contains a revised covenant package with fewer and less restrictive financial covenants, and provides enhanced baskets for asset sales, acquisitions and additional debt, as well as greater flexibility regarding the use of cash resources.

In connection with the new credit facility, RCN amended its existing second-lien indenture to allow for the early repayment of its third-lien facility and to revise the second-lien covenants to make them consistent with the new credit facility.

"After reducing our debt by nearly $300 million and receiving a multiple-notch upgrade in our debt ratings from Moody's Investors Service, we launched this refinancing effort and are extremely pleased with the results. We have simplified our capital structure, improved our strategic and financial flexibility, and lowered our interest expense, all in one transaction," said Michael T. Sicoli, chief financial officer, in the release.

RCN is a Princeton, N.J., provider of communications services.

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