Clarke sets talk; Knology flexes; National Mentor revises repricing; Charter, US Airways down; autos up

By Sara Rosenberg

New York, Feb. 28 - Clarke American Corp. came out with price talk on its credit facility as the deal was launched with a bank meeting on Wednesday, Knology Inc. lowered pricing on its term loan B and National Mentor Holdings Inc. decided to modify its repricing proposal to increase the pricing cut.

Over in the secondary, Charter Communications Inc.'s term loan headed lower as investors showed some resentment toward the recent size and price changes, US Airways Group Inc.'s term loan fell on refinancing news, and General Motors Corp., Ford Motor Co. and Visteon Corp. bank debt levels bounced back as the market in general had a better tone.

Clarke American held a bank meeting on Wednesday to officially kick off syndication on its proposed $1.9 billion credit facility (B+), and in conjunction with the launch, price talk of Libor plus 250 basis points was announced on both tranches contained in the transaction, according to market sources.

Tranching on the deal is comprised of a $1.8 billion term loan B and a $100 million revolver.

Credit Suisse, Bear Stearns, Citigroup and JPMorgan are the bookrunners on the deal, with Credit Suisse and Bear the joint lead arrangers.

Proceeds from the term loan, along with $615 million of debt securities, will be used to fund the acquisition of John H. Harland Co.

Under the agreement, parent company M&F Worldwide Corp. is buying Harland for $52.75 per share in cash, representing an approximate transaction value of $1.647 billion, including the refinancing of about $211 million of existing Harland debt.

In addition to funding the acquisition, the new financing will repay Clarke American's existing credit facility debt and senior notes.

The revolver is expected to be undrawn at close.

M&F is a New York-based producer of licorice products for the tobacco, food, pharmaceutical and confectionery industries. Harland is a Decatur, Ga.-based provider of printed products and software and related services sold to the financial institution market.

Calpine launches

Calpine Corp. also held a bank meeting on Wednesday, launching its proposed $5 billion two-year debtor-in-possession credit facility to investors.

The facility consists of a $4 billion term loan and a $1 billion revolver with a 50 bps commitment fee.

Pricing on the DIP facility will be based on ratings. For ratings of Ba3/BB- with stable outlooks, pricing will be Libor plus 200 bps; for ratings of B1/B+ with stable outlooks, pricing will be Libor plus 225 bps; for ratings of B2/B with stable outlooks, pricing will be Libor plus 275 bps; and for ratings of B3/B- or lower, pricing will be Libor plus 325 bps.

Because ratings have yet to emerge on the deal, specific price talk was not announced at the meeting, sources said.

Credit Suisse, Goldman Sachs, JPMorgan and Deutsche Bank are the lead banks on the deal.

The facility has a $2 billion accordion feature that can be used to repay project-level debt.

In addition, the DIP facility can be converted into an exit financing facility if the company meets certain requirements. These requirements include having a minimum liquidity of $250 million, being in compliance with total debt/EBITDA, facility debt/EBITDA and EBITDA/interest covenants, getting credit facility and corporate credit ratings, and providing financial projections for five years.

Proceeds will be used to refinance the company's existing DIP facility and repay $2.516 billion of operating subsidiary Calpine Generating Co., LLC's secured pre-bankruptcy debt.

With the new DIP facility, lenders would get a beefed up collateral package through the addition of a direct lien on CalGen assets.

The commitment deadline is set for March 15 and funding and closing is targeted for March 29.

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

Knology trims spread

Knology reverse flexed pricing on its $555 million five-year term loan B to Libor plus 225 bps from Libor plus 250 bps, according to a market source.

Pricing on the company's $25 million five-year revolver was left unchanged at Libor plus 250 bps, the source added.

The revolver carries an unused fee of 50 bps that can drop to 37.5 bps if more than $12.5 million is drawn.

Credit Suisse is the lead bank on the $580 million senior secured credit facility (B2/B).

Proceeds from the credit facility will be used to fund the $255 million acquisition of PrairieWave Communications and refinance the company's existing first- and second-lien credit facility.

The credit facility will not be drawn down immediately at close since the acquisition of PrairieWave is not expected to be completed until around April 15, and even that expected closing date could be wrong due to the necessary regulatory approvals.

Due to this delay in funding, the revolver and the term loan B both have a ticking fee of 50 bps from May 1 through June 30. This ticking fee will be revised to half the coupon on July 1.

Knology is a West Point, Ga., provider of interactive communications and entertainment services. PrairieWave is a Sioux Falls, S.D., provider of telephone, cable television, internet, phone directory and cable advertising services.

National Mentor tweaks repricing

In other primary news, National Mentor changed its term loan repricing amendment, asking lenders to now approve a reduction to Libor plus 200 bps from Libor plus 250, according to a market source.

Under the original repricing proposal, the company was looking to lower the spread to Libor plus 225 bps with a step down to Libor plus 200 bps, the source added.

JPMorgan is the lead bank on the deal.

National Mentor is a Boston-based provider of home and community-based human services for individuals with developmental disabilities and acquired brain injuries, as well as for at-risk youth.

Charter softens on pushback

Moving to the secondary, Charter Communications' existing term loan debt dropped on Wednesday as lenders are pushing back on the heels of pricing being reverse flexed and the amount of debt being increased, according to a trader.

The term loan closed the day at par bid, par 3/8 offered, down from Tuesday's levels of par ½ bid, par ¾ offered, the trader said.

On Tuesday, news emerged that Charter upsized its first-lien term loan (B1/B+) to $6.5 billion from $6 billion and lowered pricing to Libor plus 200 bps from original talk of Libor plus 225 bps. The 101 soft call protection for one year was left in place. Of the total first-lien term loan amount, $1.5 billion is new debt (up from $1 billion) and $5 billion is for refinancing.

In addition, the company eliminated the $550 million second-lien term loan at Charter Communications Operating and added a $350 million third-lien term loan at CCO Holdings (Caa1). Price talk on the third-lien is Libor plus 250 bps, same as the price talk was on the second lien.

Charter's senior secured credit facility also includes a $1.5 billion revolver (B1/B+) at Libor plus 200 bps.

JPMorgan, Bank of America and Citigroup are the lead banks on the $8.35 billion senior secured credit facility.

Proceeds will be used to refinance the company's $6.85 billion senior secured credit facility, to redeem up to $550 million floating-rate notes due 2010 issued by CCO Holdings, LLC and up to $187 million 8 5/8% senior notes due 2009 issued by Charter Communications Holdings, LLC, and for general corporate purposes.

The $300 million of additional term loan funds being raised through the modifications will be used for extra liquidity.

Charter is a St. Louis-based broadband communications company.

US Airways drops with refi

US Airways' term loan weakened in trading after news of a refinancing hit the market, simply because investors are awaiting a paydown, according to a trader.

The term loan closed the session quoted wide at par bid, 101 offered, down from previous levels of 101 1/8 bid, 101½ offered, the trader said.

Tempe, Ariz.-based US Airways is scheduled to hold a conference call on Thursday to launch a proposed $1.6 billion term loan that will be used to refinance $1.25 billion of the company's existing senior secured credit facility, refinance $325 million of unsecured debt and raise incremental liquidity.

Citigroup and Morgan Stanley are the joint lead arrangers on the airline' deal, which is being talked at Libor plus 200 bps, with Citi the administrative agent, Morgan Stanley the syndication agent and GE Commercial Finance the documentation agent.

Autos up with market

Generically speaking, the secondary market felt about an eighth of a point better on Wednesday, now that the stock market is back on a positive course, creating an environment in which General Motors, Ford and Visteon could improve, according to a trader.

General Motors, a Detroit-based automaker, saw its term loan close the day at 101 bid, 101 3/8 offered, up from par ¾ bid, 101 offered, the trader said.

Ford, a Dearborn, Mich.-based automaker, saw its term loan close the day at 101 bid, 101 3/8 offered, up from par 7/8 bid, 101 1/8 offered, the trader continued.

And, Visteon, a Van Buren Township, Mich., automotive parts supplier, saw its term loan close the day at 101¼ bid, 101½ offered, up on the bidside from 101 bid, 101½ offered, the trader added.

LandSource closes

LandSource Communities Development LLC closed on its new $1.55 billion credit facility consisting of a $200 million five-year revolver priced at Libor plus 300 bps, a $1.106 billion six-year term loan B priced at Libor plus 275 bps and a $244 million seven-year second-lien term loan priced at Libor plus 450 bps, according to a company news release.

The second-lien loan has call protection of 102 in year one and 101 in year two.

During syndication, the term loan B was upsized from $1.05 billion and pricing was reduced from Libor plus 300 bps, and the second-lien term loan was downsized from $300 million and pricing ended up at the high end of guidance that was in the Libor plus 400 bps to 450 bps area.

Barclays Capital acted as the lead arranger and bookrunner on the deal.

LandSource is a joint venture between Lennar Corp. and LNR Property Corp., and now the companies completed the addition of a new partner into the venture, MW Housing Partners.

The completion of the financing and transaction resulted in a cash distribution to Lennar of approximately $700 million.

LandSource's primary investment is The Newhall Land and Farming Co., which owns 15,000 acres in Santa Clarita Valley, Calif.

Pacific Ethanol closes

Pacific Ethanol Inc. closed on its new $325 million senior secured credit facility consisting of a $300 million secured construction and term loan and a $25 million working capital and letter-of-credit facility, according to a company news release.

Proceeds from the construction loan will be used to recapitalize the company's Madera, Calif., ethanol plant, to provide take-out financing on the completion of the its Boardman, Ore., ethanol plant, and to provide both construction and term loan financing for its Burley, Idaho, ethanol plant and two additional ethanol plants that are under development.

WestLB acted as the joint lead arranger, sole bookrunner and administrative agent, and Mizuho Corporate Bank acted as joint lead arranger and syndication agent.

Pacific Ethanol is a Fresno, Calif., owner and operator of ethanol plants.

Longview closes

Longview Power, LLC closed on its $1.1 billion credit facility (Ba3/BB-) consisting of a $75 million revolver priced at Libor plus 250 bps, a $25 million synthetic revolver priced at Libor plus 225 bps, a $250 million construction term loan priced at Libor plus 250 bps, a $100 million synthetic letter-of-credit facility priced at Libor plus 225 bps, a $350 million delayed-draw term loan priced at Libor plus 225 bps and a $300 million term loan B priced at Libor plus 225 bps, according to a market source.

During syndication, the revolver was downsized from $100 million, while the synthetic revolver was added to the capital structure, and pricing on the synthetic letter-of-credit facility, delayed-draw term loan and term loan B was reverse flexed from original talk of Libor plus 250 bps.

The revolver and the construction term loan have an undrawn fee of 50 bps. The construction loan is expected to be drawn up in 2008.

The delayed-draw term loan has a delayed-draw period of 24 months but is expected to be almost entirely drawn within the first 12 months. The undrawn fee on this tranche is 75 bps for the first six months, with step ups by 25 bps every six months thereafter.

Goldman Sachs and WestLB acted as the lead banks on the deal, with Goldman the left lead.

Proceeds are being used to fund the construction of the Longview 769 megawatt supercritical, pulverized coal-fired generating facility located in Maidsville, W.Va.

The power plant will have a five-year power and capacity purchase agreement with PPL.

First Reserve Corp. is the financial sponsor.

Paetec closes

Paetec closed on its new $850 million credit facility (B2/B) consisting of an $800 million six-year first-lien term loan B priced at Libor plus 350 bps and a $50 million five-year revolver priced at Libor plus 350 bps with a 50 bps unused fee.

During syndication, the term loan B was upsized from $625 million and a $175 million seven-year second-lien term loan (Caa1/CCC+) that was talked at Libor plus 650 bps with call protection of 102 in year one and 101 in year two was eliminated from the capital structure.

Deutsche Bank and Merrill Lynch acted as the joint lead arrangers and joint bookrunners on the deal, with Deutsche the left lead and administrative agent, Merrill the syndication agent and CIT Group the documentation agent.

Proceeds from the credit facility were used to help fund the company's merger with US LEC Corp., to refinance both companies' debt and to fund the repurchase of US LEC's series A preferred stock held by Bain Capital and Thomas H. Lee Partners LP.

Under the merger agreement, Paetec and US LEC became wholly owned subsidiaries of a new publicly owned holding company, Paetec Holding Corp.

The new holding company is based in Fairport, N.Y., and operates as a communications provider.

Valley National Gases closes

Valley National Gases Inc. closed on its $305 million senior secured credit facility consisting of a $165 million seven-year first-lien term loan (Ba3/B) with no maintenance covenants at Libor plus 225 bps, a $50 million six-year revolver (Ba3/B) at Libor plus 225 bps with a 50 bps unused fee, and a $90 million 71/2-year second-lien term loan (B3/CCC+) at Libor plus 600 bps.

During syndication, the second-lien term loan was upsized from $75 million as the equity component to back the buyout of the company was reduced, and the maintenance covenants were eliminated from the first-lien term loan structure.

Credit Suisse, UBS and Morgan Stanley acted as the lead banks on the deal, with Credit Suisse the left lead.

Proceeds were used to help fund Caxton-Iseman Capital's leveraged buyout of the company in a transaction valued at about $304 million, including the assumption of debt, according to a news release.

Valley National is a Washington, Pa., packager and distributor of industrial, medical and specialty gases, welding equipment and supplies, propane and fire protection equipment.

Arizona Chemical closes

Rhone Capital III LP completed its acquisition of Arizona Chemical from International Paper for about $485 million, according to a company news release.

To help fund the transaction, Arizona Chemical got a new $435 million credit facility consisting of a $150 million first-lien U.S. term loan B (B1/B) priced at Libor plus 200 bps, a $100 million first-lien euro-equivalent term loan B (B1/B) priced at Euribor plus 225 bps, a $125 million second-lien term loan (Caa1/CCC+) priced at Libor plus 550 bps with 101 call protection for one year and a $60 million revolver (B1/B) priced at Libor plus 225 bps.

During syndication, the U.S. first-lien term loan B was upsized from $140 million and pricing was reduced from original talk of Libor plus 250 bps, pricing on the euro first-lien term loan B was lowered from original talk of Euribor plus 250 bps, the second-lien term loan was downsized from $136 million, pricing was reverse flexed from original talk of Libor plus 600 bps and call protection was changed from 102 in year one and 101 in year two, and the revolver was upsized from $50 million and reverse flexed from original talk of Libor plus 250 bps.

Goldman Sachs acted as the lead bank on the deal.

Arizona Chemical is a Jacksonville, Fla., supplier of pine chemicals to the adhesives, inks and coatings and oleochemicals markets.

GateHouse closes

GateHouse Media Inc. completed its acquisition of SureWest Directories for about $110 million, according to a news release.

To help fund the transaction, and to refinance existing debt, GateHouse got a new $960 million credit facility (B1/B+) consisting of a $670 million term loan B priced at Libor plus 175 bps, a $250 million delayed-draw term loan priced at Libor plus 175 bps and a $40 million revolver priced at Libor plus 200 bps.

Both the term loan B and the delayed draw carry 101 soft call protection for one year.

During syndication, pricing on the term loan B and delayed-draw was reduced from original talk of Libor plus 225 bps with the addition of the soft call.

The company was also contemplating upsizing the delayed-draw tranche to $400 million, but the upsizing didn't end up going through.

Wachovia Securities and Goldman Sachs acted as the lead banks on the deal.

GateHouse Media is a Fairport, N.Y., publisher of locally based print and online media.

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