Axcan reworks structure; Tropicana dips as revenues fall; $460 million BWIC sells; LCDX slides

By Sara Rosenberg

New York, Feb. 11 - Axcan Pharma Inc. revised the structure of its credit facility, eliminating the term loan B and adding a smaller term loan A, while compensating for the lost bank funds through an upsizing to its bond deal.

Over in trading, Tropicana Entertainment LLC's first-lien term loan moved lower on Monday as news came out that Atlantic City revenues fell in January, a $460 million BWIC was sold to one buyer, and LCDX 9 was down despite stocks being up.

Axcan Pharma came out with changes to its credit facility on Monday morning that resulted in an overall downsizing to the deal as the term loan B was removed from the capital structure and a smaller term loan A took its place, according to a buyside source.

The new six-year term loan A tranche is sized at $165 million and is talked at Libor plus 350 basis points, with an original issue discount of 96 and soft call protection of 102 in year one and 101 in year two, the source said.

Amortization on the term loan A is 5% in year one, 7.5% in year two, 7.5% in year three, 10% in year four, 12.5% in year five and 57.5% in year six.

The seven-year term loan B that was eliminated from the deal was sized at $385 million, with price talk of Libor plus 350 bps, an original issue discount that was guided in the range of 96 to 97 and call protection of 102 in year one and 101 in year two.

Axcan's now $290 million (down from $510 million) senior secured credit facility (Ba2/BB-) still includes a $125 million six-year revolver that is talked at Libor plus 350 bps, the source continued.

To make up for the lost term loan funds, the company increased the size of its bond offering to a $460 million two-tranche deal from a $240 million single-tranche senior unsecured deal.

The restructured bond deal consists of $225 million of senior secured notes due 2015 that are pari passu with the term loan A and $235 million of senior unsecured notes due 2016.

Price talk on the notes will be out within the next day, the source added.

Bank of America, HSBC Bank and RBC are the lead banks on the credit facility and the bonds.

Proceeds from the debt will be used to help fund the buyout of the company by TPG Capital for $23.35 per common share. The all-cash deal has a total value of $1.3 billion.

When details on the buyout financing first came out in filings with the Securities and Exchange Commission, it was said that the credit facility would include a $350 million term loan B and a $125 million revolver for a total size of $475 million and that the bond deal would consist of a $275 million senior unsecured notes offering.

However, prior to the launch of the credit facility, the term loan B was upsized to $385 million and the bond deal was downsized to $240 million.

Axcan is a Mont-Saint-Hilaire, Quebec-based pharmaceutical company focused on the treatment of gastrointestinal disorders.

Tropicana softens

Switching to trading news, Tropicana Entertainment's first-lien term loan weakened during market hours on news that Atlantic City gaming revenues declined in January, according to a trader.

The first-lien term loan was quoted at 95¼ bid, 96½ offered, down a quarter to a half a point, the trader said.

According to reports, Atlantic City gaming revenues for the month of January, as a whole, fell by 10% as weakening consumer spending, a smoking ban and additional competition continued to hurt the market.

Tropicana's Atlantic City property was one of the biggest losers, with revenues declining by 21.1%.

As was previously reported, the Tropicana Atlantic City property is currently in the hands of a trustee and is expected to go to auction over the next few weeks, with an expected closing in June.

Late last year, the New Jersey Casino Control Commission refused to renew the company's license to operate the Tropicana Casino and Resort in Atlantic City, at which time a trustee was appointed and an agreement was reached with senior lenders not to declare a default for up to one year under the company's senior credit facility.

The company is planning on selling its Atlantic City operation, as well as its casino property in Evansville, Ind., and its casino property in Vicksburg, Miss. Proceeds from all three of these sales are anticipated to be used to repay the credit facility.

However, bondholders have now claimed that the company defaulted on $960 million of notes when the Atlantic City property was placed with a trustee and are suing to get paid now.

Tropicana Entertainment is a Fort Mitchell, Ky.-based gaming entertainment provider.

BWIC sells to one buyer

Also in the secondary, a $460 million BWIC was sold to one buyer in the low 80s, according to a trader.

The auctioned off portfolio consists of par names, the trader added.

LCDX falls

LCDX 9 lost some ground in trading on Monday even though equities were a touch higher, according to a trader.

The index went out around 91.00 bid, 91.20 offered, down from around 91.45 bid, 91.55 offered on Friday, the trader said.

As for stocks, Nasdaq closed up 15.21 points, or 0.66%, Dow Jones Industrial Average closed up 57.88 points, or 0.48%, S&P 500 closed up 7.84 points, or 0.59%, and NYSE closed up 45.16 points, or 0.51%.

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