Penn National term B slides some more; Fresenius holds steady; Broadlane firms timing

By Sara Rosenberg

New York, July 7 - Penn National Gaming Inc.'s term loan B continued to lose some ground on Monday as investors were still reacting to the recent news that the company's proposed leveraged buyout has been called off.

Also in trading, Fresenius Medical Care AG & Co. KGaA's term loan B held firm during the session as the news about the acquisition of APP Pharmaceuticals Inc. is not really expected to affect the company's debt.

In other news, Broadlane has firmed up the new date for its credit facility launch, while details on the structure of the deal continue to be unavailable.

Penn National Gaming's term loan B was once again quoted lower, although activity in the name was light on the back of the company's late last week announcement that its leveraged buyout agreement has been terminated, according to a trader.

The term loan B was quoted at 94 bid, 95 offered, down from Thursday's levels of 94½ bid, 95½ offered, the trader said. Last Wednesday, prior to the buyout news, the term loan B was quoted at 96½ bid, 97½ offered.

On Thursday, Penn National revealed that it will no longer be purchased by Fortress Investment Group LLC and Centerbridge Partners LP. Fortress and Centerbridge were going to buy the company for $67 in cash per share. The all-cash transaction was valued at $8.9 billion, including the planned repayment of $2.8 billion of Penn National's outstanding debt.

The parties' reasons for terminating the agreement were litigation and the lack of desire to renegotiate a reduced purchase price.

Penn National said that the likelihood of successfully navigating the remaining regulatory approvals for the buyout, credit facility conditions for funding and likely litigation required to complete these tasks was highly uncertain.

As a result, the company determined that terminating the agreement would bring the most certain value to its shareholders given current economic conditions, the state of the capital markets and the gaming industry outlook.

According to previous filings with the Securities and Exchange Commission, Penn National was planning on getting $7.1 billion in new debt for the buyout, consisting of a $4.6 billion senior secured seven-year term loan, a $500 million senior secured 61/2-year revolver and a $2 billion eight-year unsecured term loan.

Deutsche Bank and Wachovia were going to act as the lead banks on the debt, with Wachovia the left lead on the senior secured credit facility and Deutsche the left lead on the unsecured term loan.

Other financing was going to come from up to $3.061 billion in equity.

In connection with the termination of the agreement, Penn National will receive $1.475 billion, which will consist of a $225 million cash termination fee and the purchase of $1.25 billion of Penn National's redeemable preferred equity due 2015 by Fortress, Centerbridge, Wachovia and Deutsche Bank.

The company is receiving the termination payment as a $700 non-refundable deposit that was supposed to be wired last week and $775 million to the escrow agent by July 18, with funds released upon the issuance of the series B redeemable preferred.

Net proceeds from the investment and the after tax proceeds from the termination fee will be used by the company to repay existing debt, to acquire or develop pari-mutuel and gaming facilities and for such other uses as may be authorized from time to time by the board of directors, including repurchases of its common stock.

Penn National is a Wyomissing, Pa., owner and operator of casino and horse racing facilities.

Fresenius stays firm

Fresenius' term loan B was steady in trading as traders expect that no debt in the United States will be affected by the newly announced acquisition of APP Pharmaceuticals Inc.

The term loan B was quoted at 97 bid, 98 offered, in line with previous levels, traders said.

On Monday morning, Fresenius announced that its subsidiary Fresenius Kabi will purchase APP for $23 per share and a registered and tradeable contingent value right that could deliver up to $6 per share, payable in 2011, if APP exceeds a cumulative adjusted EBITDA target for 2008 to 2010.

Fresenius Kabi is planning on getting a new credit facility via Deutsche Bank, Credit Suisse and JPMorgan to help fund the acquisition and other financing will come from equity.

The transaction is expected to close at the end of 2008 or beginning of 2009, subject to certain conditions, including regulatory approvals, and approvals under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

Fresenius is a Bad Homburg, Germany, provider of dialysis products and services. Fresenius Kabi is a Bad Homburg, Germany, infusion therapy and clinical nutrition company. APP is a Schaumburg, Ill., hospital-based injectable pharmaceutical company.

Broadlane sets new date

Moving to the primary, Broadlane came out with the revised bank meeting date for its credit facility as the launch has been scheduled to now take place on July 17, according to a market source.

Originally, the deal was expected to be presented to lenders on July 10, but that date was changed because of scheduling conflicts.

As of the end of last week, it was known that the launch would end up taking place sometime during the week of July 14, but the specific day had been unavailable.

Jefferies is the lead bank on the credit facility.

Proceeds will be used to help fund TowerBrook Capital Partners LP's acquisition of the company from Tenet Healthcare Corp. for about $155 million in cash.

Broadlane's senior management team will continue to retain a significant ownership interest in the company.

Closing on the transaction is expected to occur in the third quarter, subject to approval by regulatory authorities and other conditions.

Broadlane is a Dallas-based technology-oriented healthcare services company.

Krotz Springs closes

Krotz Springs closed on its new $702 million credit facility, according to a news release.

The facility consists of a $252 million six-year first-lien term loan (B1/B+), a $50 million letter-of-credit facility (B1/B+) to support substantial hedging and a $400 million revolver.

The term loan and letter-of-credit facility are priced at Libor plus 750 bps with a 3.25% Libor floor, and were sold at an original issue discount of 96. The debt is non-callable for one year, then at 101 in year two.

The revolver has a $100 million accordion feature to support ongoing working capital needs.

Credit Suisse acted as the lead bank on the term loan and letter-of-credit facility, and Bank of America ended up arranging the revolver.

During syndication, the term loan was upsized from $245 million, pricing on the term loan and the letter-of-credit facility was increased from Libor plus 550 bps and the original issue discount on the term loan and the letter-of-credit facility widened from an originally proposed 98 level.

In addition, under the original financing plans, the company's revolver was expected to be sized at $425 million with a $75 million accordion feature, and Wachovia was said to be arranging the deal.

Proceeds were used to help fund Alon USA Energy, Inc.'s acquisition of the Krotz refinery from Valero Energy Corp. for $333 million in cash plus about $140 million for working capital, including inventories.

Other funds for the acquisition were provided through an $80 million equity investment by Alon Israel in preferred stock of a new Alon holding company subsidiary, which may be exchanged for shares of Alon common stock after three years.

Furthermore, Alon Israel provided for the issuance of $55 million of letters of credit at favorable rates to Alon to support increased borrowing capacity under the Bank of America revolver.

Krotz Springs is an 85,000 barrel-per-day refinery located in Louisiana. Alon is a Dallas-based refiner and marketer of petroleum products.

Denison closes

Denison Mines Corp. closed on its new $125 million three-year revolving credit facility, according to a news release.

Bank of Nova Scotia acted as the lead bank on the deal.

Pricing on the revolver can range from Libor plus 125 bps to 200 bps, and the unused fee can range from 40 bps to 55 bps.

Proceeds will be used to finance mining operations in Canada and the United States, and the development of uranium projects at Midwest, in Canada, in Zambia and Mongolia.

Denison is a Toronto-based uranium producer.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.