Broadlane, Quicksilver set talk; SemGroup plummets; Harrah's dips on downgrade; Revlon, Huntsman rise

By Sara Rosenberg

New York, July 17 - Broadlane came out with guidance on its credit facility as the deal was launched during market hours and price talk on Quicksilver Resources Inc.'s second-lien term loan surfaced on Thursday, a day after the official launch of the deal took place.

In other news, United Online Inc. and FTD Group Inc. modified their acquisition agreement to increase the per share cash consideration payable to FTD stockholders and get a new term loan at the parent company.

Over in secondary happenings, SemGroup Energy Partners LP's term loan continued to nose-dive on Thursday in reaction to a private call that took place earlier in the week and Harrah's Entertainment Inc. was softer following a downgrade.

Also in trading, Revlon Inc.'s term loan was better following the release of earnings and Huntsman Corp.'s term loan rose with improved second quarter guidance.

Broadlane held a bank meeting on Thursday to kick off syndication on its $150 million credit facility, and in connection with the launch, price talk was announced, according to a market source.

Both the $15 million revolver and the $135 million term loan B were presented to lenders with talk of Libor plus 525 basis points with a 3.25% Libor floor and an original issue discount of 981/2, the source said.

Jefferies is the lead bank on the deal that 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.

Other acquisition financing will come from $67.5 million of mezzanine debt.

Leverage through the first lien is 3.0 times and total leverage is 4.4 times.

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

Originally, the credit facility was expected to launch on July 10, but it was pushed off by one week as a result of scheduling conflicts.

Broadlane is a Dallas-based technology-oriented health care services company.

Quicksilver price talk

Quicksilver Resources came out with price talk on Thursday on its in market $700 million five-year second-lien term loan, according to an informed source.

The term loan is being talked at Libor plus 500 bps with a 3.25% Libor floor and an original issue discount of 971/2, the source said.

Pricing on the term loan will step up by 25 bps after two years and the loan is repayable at par for the first two years, then at 103 in year three, 102 in year four and 101 in year five.

A bank meeting to launch the deal actually took place on Wednesday, but at that meeting, investors were told that price talk was not yet available. However, the Libor floor and the call protection were announced.

Credit Suisse and JPMorgan are the lead banks on the deal that will be used to help fund the acquisition of producing, leasehold, royalty and midstream assets.

Other financing for the acquisition will come from $300 million of borrowings under the company's existing revolver and $307 million of common stock.

The company hopes to repay $500 million of the new debt by year end 2009.

At year end 2008, debt to capital is expected at around 60%, debt to cash flow from operations is expected at around 3.3 times and interest coverage is expected at around 6.5 times.

Under the acquisition agreement, Quicksilver is buying the assets that are associated with the Barnett Shale formation in northern Tarrant and southern Denton counties of Texas from various private parties, including Chief Resources LLC, Hillwood Oil & Gas LP and Collins and Young LLC for $1.307 billion.

The acquisition is scheduled to close on Aug. 8, subject to expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the satisfaction or waiver of other customary conditions.

Quicksilver is a Fort Worth, Texas-based natural gas and crude oil exploration and production company.

United Online opts for term loan

United Online has decided to get a new a $60 million four-year senior secured term loan in connection with its acquisition of FTD, thereby increasing the amount in cash that FTD stockholders receive and eliminating $100 million of United Online 13% senior secured notes due 2013, according to an 8-K filed with the Securities and Exchange Commission Thursday.

The term loan is committed by Silicon Valley Bank and will be priced at Libor plus 350 bps with a 3% Libor floor.

Financial covenants for the term loan include a leverage ratio of 1.25:1.00, a fixed=charge coverage ratio of 1.50:1.00 and a minimum consolidated EBITDA requirement.

Under the original acquisition agreement, FTD shareholders were going to get $7.34 in cash, 0.4087 of a share of United Online common stock and $3.31 in notes per share. Based on United Online's closing stock price of $10.83 on April 29, the total consideration to FTD stockholders would have been around $456 million, consisting of $222 million in cash, 12.35 million shares of United Online stock and $100 million aggregate principal amount of notes.

However, the agreement said that if United Online raised additional debt financing, it could replace the senior notes with additional cash consideration, which is an option that United Online now decided to exercise.

With this amended acquisition agreement, FTD stockholders will now receive a total of $10.15 in cash and 0.4087 of a share of United Online stock per share. Based on United Online's closing stock price of $10.35 on July 16, total consideration to FTD stockholders is about $434 million, consisting of $307 million in cash and 12.35 million shares of United Online stock.

If for some reason the proceeds of the new United Online term loan are unavailable, FTD stockholders will instead receive the original payouts.

Upon closing of the transaction, the former FTD stockholders will own about 15% of United Online.

The acquisition is anticipated to be completed in mid-to-late September, subject to approval of FTD stockholders, a financing condition and customary closing conditions.

After the closing of the transaction, FTD will continue to operate as a wholly owned subsidiary of United Online from FTD's existing facilities, including its U.S. headquarters in Downers Grove, Ill., and its international headquarters in the United Kingdom.

As part of this transaction, FTD is getting a $425 million credit facility that is non-recourse to United Online and will be used to help fund the acquisition.

The FTD credit facility consists of a $50 million five-year revolver priced at Libor plus 350 bps, a $75 million five-year term loan A priced at Libor plus 350 bps and a $300 million six-year term loan B priced at Libor plus 450 bps, with a step down to Libor plus 425 bps at 2½ times total leverage.

The term loan B was sold to investors at an original issue discount of 98, and lenders were offered upfront fees on the revolver and the term loan A that ranges from 50 bps to 100 bps depending on the commitment level.

All tranches under the FTD credit facility have a 3% Libor floor.

Last week, the FTD term loan B was upsized from $200 million since it was well received by the market and the pricing step down was added, the term loan A was downsized from $175 million and the revolver was downsized from $75 million.

At launch, pricing guidance on the term loan B came out in the context of Libor plus 400 bps to 450 bps, with a 3% Libor floor and an original issue discount in the 98 to 99 range, but it was said that the actual talk would be dependent on credit ratings, and once those private ratings were obtained last month, the price talk became more focused.

Financial covenants under the FTD credit facility include a leverage ratio, a fixed-charge coverage ratio and a maximum capital expenditures requirement.

Wells Fargo is the lead arranger, bookrunner and administrative agent on the FTD deal.

Since the closing of the acquisition is still a ways off, term loan B lenders are being paid a 1% ticking fee.

Total and senior leverage at FTD at close will be 3.6 times.

United Online is a Woodland Hills, Calif., provider of consumer internet and media services. FTD is a provider of floral related products and services.

Pittsburgh Casino revises deal

Pittsburgh Casino (previously known as PITG Gaming) came out with a completely new structure on its credit facility that provides for a first-out and a last-out term loan, according to a market source.

The deal now includes a $355 million first-out tranche that is priced at Libor plus 600 bps and a $140 million last-out tranche that is priced at Libor plus 600 bps plus 500 bps PIK.

Both tranches have a 3.25% Libor floor and are being offered to investors at an original issue discount of 94, the source continued.

The credit facility was first launched in April as a $10 million revolver talked at Libor plus 600 bps, a $370 million first-lien term loan talked at Libor plus 600 bps and a $250 million second-lien term loan talked at Libor plus 1,300 bps, of which 1,000 bps was cash and 300 bps was PIK, and all tranches had the 3.25% Libor floor. The first-lien term loan was being offered in the 96 to 97 area and the second-lien term loan was being offered at 96. Call protection on the first-lien term loan was non-callable for 18 months, then at 102, 101, and call protection on the second-lien term loan was non-callable for two years, then at 106, 104, 102.

Then in early May, the deal was changed with the first-lien term loan upsized to $380 million, the discount widened to 94 and call protection became non-callable for 2½ years, then at 102, 101, the second-lien term loan upsized to $260 million, the discount widened to 92, pricing increased to Libor plus 1,500 bps comprised of Libor plus 1,000 bps cash plus 500 bps PIK, and call protection became non-callable for 2½ years, then at 109, 107, 105.

And, in late May, the deal was revised once again, this time upsizing the first-lien term loan to $480 million and downsizing the second-lien term loan to $150 million.

Credit Suisse is the lead bank on the deal that will be used to help fund the construction of the Pittsburgh casino.

Recently news emerged that Neil Bluhm and Walton Street Capital LLC are planning on assuming control of the casino and putting in $120 million into the project and Don Barden, chairman, president and chief executive officer of Majestic Star Casino LLC, will give up his majority ownership in the new casino for a minority stake.

The project was heard to have stalled under Barden's ownership as a result of insufficient funds.

SemGroup crashes

Moving to trading news, SemGroup's term loan plunged as the market continued to react to a private lender call that was held this past Tuesday, the contents of which are not publicly available, according to a trader.

The term loan was quoted at 45 bid, 55 offered, down from Wednesday's closing levels of 65 bid, 75 offered, the trader said.

Prior to the private call, the term loan was being quoted around 96¾ bid, 97¾ offered, the trader continued.

There wasn't a ton of activity in the name during the session, just a few small block trades, the trader added.

Also, on Thursday, Moody's Investors Service downgraded, among other things, SemGroup's corporate family rating to B2 from Ba3 and its bank debt to B1 from Ba2.

The downgrade reflects concern over SemGroup's ability to meet its bank covenant tests at a time when higher oil prices had already driven major increases in borrowing requirements under expanded bank facilities.

Moody's also said that if SemGroup were to breach covenants, given conditions in the debt, equity, and commodity markets, it would likely be a difficult time to seek covenant waivers and/or arrange more borrowing capacity or alternative equity funding.

Also downgrading SemGroup on Thursday was Fitch Ratings as it revised the company's issuer rating to B- from B and the senior secured bank debt rating to B+ from BB-.

Fitch said that the downgrade reflects liquidity pressures related to the sustained elevated level of crude oil prices and SemGroup's ability to continue its marketing and storage businesses in the current price environment.

Specifically, Fitch said that it is concerned that the company may not have sufficient available capacity from its bank facilities to meet requests for additional margin.

SemGroup is a Tulsa, Okla.-based provider of terminalling, storage, gathering, and transportation services for companies engaged in the production, distribution, and marketing of crude oil.

Harrah's weakens

Harrah's term loan B-2 and B-3 moved lower in trading after Moody's downgraded the debt, according to a trader.

The term loan B-2 and B-3 were quoted at 86¾ bid, 87¼ offered, down from previous levels of 87 bid, 87½ offered, the trader said.

On Thursday, Moody's said that it cut, among other things, Harrah's corporate family rating to B3 from B2 and bank debt to Ba3 from Ba2.

Moody's said that the downgrade resulted from the expectation that, given the material softness in the Las Vegas and Atlantic City gaming markets, the company's credit metrics will deteriorate from already weak levels.

Harrah's is a Las Vegas-based provider of branded casino entertainment.

Revlon up with numbers

Revlon's term loan traded higher on Thursday after the company announced preliminary second-quarter earnings results, according to a trader.

The term loan was quoted at 91 bid, 93 offered, up from 90½ bid, 91½ offered on Wednesday, the trader said.

For the quarter, Revlon had net sales of about $375 million, compared to $349.2 million last year, operating income of about $60 million, compared to $16.9 million last year, net income of about $20 million, or $0.04 per fully diluted share, compared to a net loss of $11.3 million, or $0.02 per share, last year, and adjusted EBITDA of about $80 million, compared to $42 million last year.

The company said that operating income, net income and adjusted EBITDA improved significantly compared to last year, primarily driven by higher net sales and the non-recurrence of brand support in the second quarter of 2007 related to the launch of Revlon Colorist hair color.

Revlon is a New York-based cosmetics, hair color, beauty tools, fragrances, skincare, anti-perspirants/deodorants and personal care products company.

Huntsman gains ground

Huntsman's term loan was better in trading on the back of the company's announcement that it expects adjusted EBITDA for the three-month period ended June 30 to increase by about 10%, when compared to the three-month period ended March 31, according to a trader.

The term loan was quoted at 91 bid, 93 offered, up from previous levels of 90½ bid, 91½ offered, the trader said.

"Despite absorbing an additional $75 million in higher raw material, energy and other direct costs in the second quarter as compared to the first quarter, as well as the continued decline in the value of the US dollar, we are successfully implementing increases in our selling prices and sales volumes have improved," said Peter Huntsman, president and chief executive officer, in a news release late Wednesday.

"Our results in the month of June were stronger than those recorded in May, which were stronger than those recorded in April. We expect this trend to continue into the second half of 2008 and would expect Adjusted EBITDA in the second half of the year to be stronger than in the first half," Huntsman added.

Huntsman is a Salt Lake City-based manufacturer and marketer of commodity and differentiated chemicals.

Cash, LCDX strong

The cash market overall felt strong for the second day in a row and LCDX 10 was a touch higher as the loan market followed equities' example, according to a trader.

Generally speaking, the cash market was up by about a quarter of a point and the index was quoted at 97.15 bid, 97.25 offered, up from 97.10 bid, 97.20 offered, the trader said.

Nasdaq closed up 27.45 points, or 1.20%, Dow Jones Industrial Average closed up 207.38 points, or 1.85%, S&P 500 closed up 14.96 points, or 1.20%, and NYSE closed up 82.23 points, or 0.99%.

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