Bombardier tweaks B loan terms; Visteon breaks; NRG, Mirant marginally up on bid withdrawal

By Sara Rosenberg

New York, June 12 - Bombardier Recreational Products Inc. made a number of changes to its term loan B, including increasing the spread and adding a pricing grid, soft call protection and a new covenant.

In the secondary, Visteon Corp.'s term loan freed for trading in the upper-par context but then headed lower as some selling pressure emerged. Also, NRG Energy Inc. and Mirant Corp. saw levels on their bank debt quoted a touch better as Mirant withdrew its offer to acquire NRG.

Bombardier Recreational announced a couple of modifications to its $790 million seven-year term loan B (B1/B+), such as increasing the interest rate, adding a pricing grid with both a step up and a step down provision, including soft call protection under the tranche and putting in a new covenant, according to a market source.

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

At the same time, a grid was added to the term loan, under which pricing can step up to Libor plus 300 basis points at 41/2x net leverage and pricing can step down to Libor plus 250 basis points at 3x net leverage, the source continued.

Furthermore, the source said that 101 soft call protection for one year was added to the loan.

Lastly, the term loan B will now include a net debt to EBITDA covenant of 51/2x that was not previously part of the transaction, the source added. Originally, the term loan B only contained incurrence covenants.

Recommitments on the deal are due this coming Friday, with allocations possibly going out next week.

Bombardier's C$250 million five-year revolver (Ba2/BB) was completely unchanged, which includes leaving pricing at Libor plus 225 basis points.

Merrill Lynch is the global transaction coordinator on the entire deal. Merrill Lynch and RBC Capital are joint lead arrangers on the term loan B, with Merrill Lynch, RBC and UBS the joint bookrunners. BMO Nesbitt Burns and Merrill Lynch are joint lead arrangers on the revolver, with BMO, Merrill Lynch and RBC the joint bookrunners.

Proceeds will be used to help fund a recapitalization that will include tendering for the company's $200 million 8 3/8% senior subordinated notes due 2013.

The tender offer expires on June 16.

Bombardier is a Valcourt, Quebec, motorized recreational vehicles company.

Visteon frees to trade

Switching to the secondary, Visteon's $800 million seven-year term loan (B1/B+) broke for trading with levels opening up at par ½ bid, par ¾ offered but then, as better sellers than buyers surfaced, the paper traded all the way down to 99 7/8 bid, par ¼ offered where it closed the session, according to a trader.

The term loan is priced with an interest rate of Libor plus 300 basis points and contains call protection of 102 in year one and 101 in year two on optional prepayments.

Visteon's $1.5 billion secured credit facility also contains $700 million in revolver tranches that will be divided into two five-year facilities for the United States and Europe. These tranches have not been launched into syndication as of yet.

JPMorgan and Citigroup are the lead banks on the deal that will be used to repay amounts outstanding under the company's existing secured facilities scheduled to mature in June 2007 and for general corporate purposes.

The bank debt that will be refinanced includes the company's $241 million term loan, $350 million term loan and its revolving credit facility.

Visteon is Van Buren Township, Mich., automotive supplier.

NRG, Mirant slightly better

NRG Energy and Mirant saw levels move a touch higher during Monday's market hours as Mirant decided to take back its unsolicited offer to purchase NRG for about $8 billion, plus the assumption of debt, according to a trader.

NRG's term loan closed the day quoted at par 3/8 bid, par 5/8 offered, up by about a sixteenth of a point, while the company's letter-of-credit facility was unchanged at par ¼ bid, par ½ offered, the trader said.

Meanwhile, Mirant's term loan closed the day quoted at par bid, par ¼ offered, up an eighth of a point the bid side, the trader remarked.

Mirant's acquisition offer has been contested since it was first made public at the end of May as NRG claimed that the proposal significantly undervalued it, that Mirant's lack of liquidity and trading history made Mirant stock an unacceptable currency and that trends and developments in the wholesale power generation sector made it an inappropriate time to engage in a sale process.

Shortly after, Mirant tried to sue NRG arguing that it was unfairly blocking the acquisition proposal.

"We are disappointed that NRG was unwilling to sit down with us to discuss what would have been a compelling opportunity to create significant value for both companies' shareholders," said Edward R. Muller, Mirant chairman and chief executive officer, in a news release Monday announcing the withdrawal of the bid.

"It is clear, however, that a long and contested pursuit is not in the best interests of Mirant and its shareholders and, as a result, we are withdrawing our proposal to acquire NRG. We will continue our efforts to create value for Mirant's shareholders," Muller added in the release.

In response to the rescinding of the proposal, NRG put out this comment: "Over the past 24 months, NRG's stock has appreciated 120% as the market has recognized the value of our asset mix, the soundness of our strategy and our history of returning capital to shareholders. We are poised for further value creation and look forward to the continued execution of our strategic plan."

Mirant is an Atlanta-based energy company. NRG is a Princeton, N.J.-based owner and operator of a diverse portfolio of power-generating facilities.

PaeTec closes

PaeTec Corp. closed on its new $400 million credit facility, according to a company news release. The facility consists of a $275 million first-lien term loan B (B1/B) with an interest rate of Libor plus 350 basis points, a $25 million revolver (B1/B) with an interest rate of Libor plus 375 basis points and a $100 million second-lien term loan (B3/CCC+) with an interest rate of Libor plus 750 basis points and call protection of 102 in year one and 101 in year two.

During syndication, the first-lien term loan was upsized from $240 million and pricing on the paper was reduced from original talk at launch of Libor plus 375 basis points, and the second-lien term loan was downsized from $125 million and pricing was reduced from original talk at launch of Libor plus 775 basis points.

Furthermore, call protection premiums on the second-lien term loan were changed during syndication from 103 in year one, 102 in year two and 101 in year three.

The $10 million of extra first-lien term loan debt that was added into the deal - being that the second lien was only downsized by $25 million and the first lien was upsized by $35 million - is staying at the company to enhance liquidity so net leverage is unchanged at around 4x.

Merrill Lynch and Deutsche Bank acted as joint bookrunners on the deal, with Merrill the left lead. CIT and CIBC were involved in the transaction as well.

Proceeds were used to refinance the company's existing $100 million credit facility and buy back $262 million of preferred shares from private equity investors.

PaeTec is a Fairport, N.Y., competitive local exchange carrier.

Thomas Nelson closes

Thomas Nelson Inc. completed its public-to-private transaction through a buyout by InterMedia Partners VII LP - who contributed equity for the transaction - under which stockholders received $29.85 in cash.

To help fund the transaction, Thomas Nelson got a new $235 million credit facility consisting of a $30 million five-year revolver and a $205 million six-year term loan B, both priced with an interest rate of Libor plus 225 basis points. The revolver carries a 50 basis point commitment fee.

During syndication, the term loan was upsized from $195 million and pricing on the term loan B and the revolver was reverse flexed from Libor plus 250 basis points.

In connection with the term loan B upsizing, the amount of equity used for the deal was reduced by $10 million.

Credit Suisse acted as the lead bank on the deal.

Thomas Nelson is a Nashville, Tenn., publisher and distributor of products emphasizing Christian, inspirational and family value themes.

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