Airlines seen all over the place; Nortek talk emerges; CKX buyout moving forward; O'Reilly fills out

By Sara Rosenberg

New York, May 28 - Airlines were a mixed bag on Wednesday, with UAL Corp., Northwest Airlines Corp. and Delta Air Lines Inc.'s second-lien moving lower and US Airways Group Inc. moving higher.

In other news, Nortek Inc. came out with price talk on its credit facility as the deal was launched during the session, the buyout of CKX Inc. has gotten back on track now that the company agreed to the buyer's proposal of a lower purchase price and some other renegotiated terms, and O'Reilly Automotive Inc.'s revolver is basically fully subscribed.

The airline sector was hard to figure out in Wednesday's trading session as some names were down, some were up and some were unchanged, according to a trader.

For example, UAL's term loan was down to 76¼ bid, 78¼ offered from 76½ bid, 78½ offered, while US Airways term loan was up to 68 bid, 70½ offered from 67 bid, 70 offered, the trader said.

What makes Chicago-based UAL and Tempe, Ariz.-based US Airways an interesting case is that market chatter during the day was that the merger talks between the two companies have stalled, which would create the expectation that both names would trade lower.

Meanwhile, Eagan, Minn.-based Northwest Airlines was one of the biggest losers in the sector as its term loan dropped by a point to 76½ bid, 78½ offered from 77½ bid, 79½ offered, the trader said, with no credit specific news seen behind the fall.

Atlanta-based Delta Air Lines saw its first-lien term loan quoted tighter at 84 bid, 85 offered, compared to 83¾ bid, 85¾ offered on Tuesday, but its second-lien term loan was down two points to 73 bid, 75 offered from 75 bid, 77 offered, the trader continued.

Lastly, Fort Worth, Texas-based American Airlines' term loan was completely unchanged in trading with levels seen at 89½ bid, 91 offered.

"The whole sector just doesn't make sense to me. Yesterday you had a drop in oil and everything was down a point. Oil was up today by almost $1.31. [Airlines] are sort of all over the place," the trader added.

General Motors slips

Also in trading, General Motors Co.'s term loan slid lower again on Wednesday on no credit specific news, according to a trader.

The loan was quoted at 88 ¾ bid, 89 ¾ offered, down from 89 1/8 bid, 90 1/8 offered, the trader said.

General Motors is a Detroit-based automotive company.

LCDX rises, cash steady

LCDX 10 headed higher in trading while the cash market in general was unchanged to maybe up a touch, according to a trader.

The index went out around 98.90 bid, 99.05 offered, compared to 98.75 bid, 98.85 offered on Tuesday, the trader added.

Nortek price talk

Moving to the primary market, Nortek held a bank meeting on Wednesday to kick off syndication on its $350 million five-year senior secured asset-based revolving credit facility, and in connection with the launch, price talk surfaced, according to an informed source.

The revolver was presented to lenders with talk of Libor plus 275 basis points, the source said.

Bank of America, Credit Suisse and Goldman Sachs are the lead banks on the deal that already closed on May 20.

Initially, availability under the revolver is limited to $175 million.

The company drew $50 million under the revolver at close and used those funds, along with $750 million in senior secured notes, to repay its existing senior secured credit facility.

Nortek is a Providence, R.I.-based manufacturer and distributor of building products for residential, light commercial and commercial applications.

CKX acquisition progressing

CKX's pending buyout by 19X Inc. has cleared a hurdle now that CKX has agreed to a revised purchase proposal, according to a news release.

Under the changes, 19X will pay each CKX stockholder $12.00 per share in cash, down from the original $13.75 per share agreement that was entered into last year, the outside deadline for closing the transaction has been extended to Oct. 31, 2008, and 73% of CKX stockholders must approve the deal as opposed to 50%.

CKX will conduct a new "go-shop" period that will last not less than 45 and no more than 60 days, during which time the company's special committee will actively solicit superior offers.

The revisions to the buyout agreement have previously been attributed to changes in the market for media companies and buyout transactions in general.

"Simon and I are pleased that, in this climate of market turmoil, we have agreed with the CKX special committee and with the plaintiffs in the current stockholder litigation to a revised transaction that delivers significant value to the CKX stockholders and provides for greater certainty of closing. We will press forward to a swift closing of the transaction and beginning CKX's future as a private company," said Robert F.X. Sillerman, chairman and chief executive officer of CKX, in the release.

Under the original transaction structure, 19X had received a commitment for a $650 million credit facility, consisting of a $50 million 41/2-year revolver expected at Libor plus 450 bps, with a 75 bps commitment fee, a $400 million five-year first-lien term loan expected at Libor plus 450 bps and a $200 million 51/2-year second-lien term loan expected at Libor plus 750 bps.

The 2007 commitment letter also said that the first- and second-lien term loans were expected to be sold at an original issue discount of 97, and the second-lien term loan was to have call protection of 103 in year one, 102 in year two and 101 in year three.

Details on whether the financing structure has changed with the lower purchase price have yet to emerge.

Credit Suisse and Deutsche Bank are the joint bookrunners and joint lead arrangers on the deal, with Credit Suisse the administrative agent.

19X is a private company owned and controlled by Robert Sillerman and Simon R. Fuller, a director of CKX and the CEO of 19 Entertainment Ltd., a CKX subsidiary. CKX is a New York-based company engaged in the ownership, development and commercial use of entertainment content.

O'Reilly basically done

O'Reilly Automotive's $1.2 billion asset-based revolving credit facility is going really well as the book is just about completely full, according to a market source.

The deal had a pre-launch to agents that went over very successfully and the retail launch, which took place about two weeks ago, yielded positive results as well.

The facility consists of a $125 million first-in, last-out tranche that is talked at Libor plus 375 bps and a $1.075 billion conforming borrowing base tranche that is talked at Libor plus 250 bps.

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

Proceeds from the revolver will be used to refinance existing debt, fund the cash portion of the acquisition of CSK Auto Corp. and provide liquidity.

Under the transaction agreement, O'Reilly will acquire all of the outstanding common shares of Phoenix-based CSK in an exchange offer in a transaction valued at about $1 billion, including about $500 million of debt.

CSK shareholders will receive $12.00 in value per share, including $11.00 of O'Reilly common stock plus $1.00 in cash.

Following the close of the transaction, Springfield, Mo.-based O'Reilly will be the third largest national auto parts retailer with about 3,200 stores located across the United States. The combined company had pro forma revenues of $4.4 billion in 2007.

Bright Horizons closes

Bain Capital Partners LLC completed its acquisition of Bright Horizons Family Solutions Inc. for $48.25 in cash per share, according to a news release.

To help fund the buyout, Bright Horizons got a new $440 million senior secured credit facility (Ba3), consisting of a $75 million six-year revolver that is priced at Libor plus 350 bps and a $365 million seven-year term loan B that is priced at Libor plus 400 bps with a 3.5% Libor floor, and was sold at an original issue discount of 96.

During syndication, the term loan B was upsized from $265 million as a $100 million term loan A was removed from the capital structure, and the original issue discount firmed from revised guidance of 95 to 96 and initial guidance at launch in the mid-90s context.

The $100 million six-year term loan A that was eliminated from the deal was being talked at Libor plus 350 bps. It was removed because the lack of amortization on the B loan, compared to the A loan, was better for the company and there was enough market interest to warrant the change.

By making this change, the deal actually reverted back to its original structure. Based on filings with the Securities and Exchange Commission, the term loan B had been expected to be sized at $365 million, but prior to launch, the company carved out $100 million to create the term loan A.

Goldman Sachs acted as the lead arranger and bookrunner on the deal.

Other financing came from $300 million of senior subordinated mezzanine notes and $110 million of PIK holdco notes provided by GS Mezzanine Partners V LP, and $640 million in equity.

Bright Horizons is a Watertown, Mass., provider of employer-sponsored child care, early education and work/life services.

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