Ameristar breaks; Level 3 rises; Community Health drops on lawsuit; Lee gains with refi

By Sara Rosenberg

New York, April 11 - Ameristar Casinos Inc.'s credit facility made its way into the secondary market on Monday, with the term loan B quoted above its original issue discount price, and Level 3 Financing Inc.'s term loan headed higher as the company announced plans to acquire Global Crossing Ltd.

Also in trading, Community Health Systems Inc.'s bank debt weakened on news of a lawsuit by Tenet Healthcare Corp., and Lee Enterprises Inc.'s revolver and term loan A rose on refinancing news.

Over in the primary market, Hillman Group Inc. released details on its term loan B repricing and credit facility amendment, and Paetec Holding Corp. revealed price talk on its new B loan as both transactions were launched with calls in the morning.

Additionally, Golden Living and Open Link Financial Inc. surfaced with plans for new deals, and the sell-down of Mold-Masters' existing term loan as been met with some interest already, with investors still having more than a week to place their order.

Ameristar frees up

Ameristar Casinos' credit facility started trading on Monday, with the $700 million seven-year term loan B quoted at par 5/8 bid, 101 1/8 offered on the open and then it moved to par 7/8 bid, 101 1/8 offered, according to a market source.

Pricing on the term loan B is Libor plus 300 basis points with a 1% Libor floor, and it was sold at an original issue discount of 993/4. There is 101 soft call protection for one year.

During syndication, pricing on the term loan B was reduced from Libor plus 325 bps and the discount tightened from 991/2.

The company's $1.4 billion credit facility (Ba3/BB+) also includes a $200 million five-year term loan A and a $500 million five-year revolver, both priced at Libor plus 275 bps.

Deutsche Bank Securities Inc., Wells Fargo Securities LLC, Bank of America Merrill Lynch and J.P. Morgan Securities LLC are the lead banks on the deal.

Ameristar buying shares

Proceeds from Ameristar's credit facility, along with $800 million of senior notes, will be used to fund a share repurchase, and to retire $1.5 billion of existing loan borrowings and senior notes as well as for general working capital.

Under the share repurchase, the company is buying 26.15 million shares of its common stock held by the Craig H. Neilsen Estate at a price of $17.50 per share, for a total price of roughly $457.6 million. This represents about 45% of Ameristar's outstanding shares and 83% of the Neilsen Estate's current ownership in the company.

Closing is expected in the second quarter, subject to financing and customary conditions, including receipt of any necessary gaming and other regulatory approvals.

Ameristar is a Las Vegas-based gaming and entertainment company.

Level 3 trades up

Level 3's term loan gained some ground in the secondary market as the company revealed that it will be buying Global Crossing and getting new debt in connection with the transaction, according to traders.

The term loan was quoted by one trader at 98¼ bid, 98¾ offered, up from 97¼ bid, 97 5/8 offered, and by a second trader at 98¼ bid, 99 offered, up from 97¼ bid, 98¼ offered.

Under the agreement, parent company Level 3 Communications Inc. is giving Global Crossing shareholders 16 shares of Level 3 common stock for each share of Global Crossing common stock or preferred stock that is owned at closing.

The transaction is valued at about $3 billion, including the assumption of $1.1 billion of net debt as of Dec. 31.

With the transaction, the company's net debt to adjusted EBITDA, post synergies, is anticipated to move to 4.4 times from 6.8 times as of Dec. 31.

Level 3 plans debt

As part of the acquisition, Level 3 Financing has received a commitment for $650 million of senior secured debt and a $1.1 billion 12-month senior unsecured financing, the company disclosed on Monday.

Bank of America Merrill Lynch and Citigroup Global Markets Inc. are leading the deal, a market source added.

Closing is expected before the end of this year, subject to regulatory approvals relating to competition law, licensing, financing and foreign ownership and the approval of the stockholders of each company.

Level 3 is a Broomfield, Colo.-based provider of fiber-based communications services. Global Crossing is a Florham Park, N.J.-based IP, Ethernet, data center and video services provider.

CHS slides with lawsuit

Community Health Systems' (CHS) non-extended and extended bank debt strips moved lower in trading following word that the company is being sued by Tenet over allegations of overbilling, according to traders.

One trader had the company's non-extended strip quoted at 97¾ bid, 98¼ offered, down from 99 3/8 bid, 99 5/8 offered, and the extended strip quoted at 98¾ bid, 99 1/8 offered, down from par 1/8 bid, par 3/8 offered.

And, a second trader had the non-extended strip quoted at 97¾ bid, 98¼ offered, down from 99 bid, 99½ offered, and the extended strip quoted at 98¾ bid, 99¼ offered, down from par bid, par ½ offered.

According to an 8-K filed with the Securities and Exchange Commission on Monday, Tenet is alleging that Community Health Systems overbilled Medicare and likely other payers as well by causing patients to be admitted to its hospitals unnecessarily when these patients should have been treated in outpatient observation status.

CHS sought to buy Tenet

Community Health Systems announced last year that it offered to by Tenet for $6 per share, including $5 per share in cash and $1 per share in common stock. The total value of the transaction would be $7.3 billion, including $3.3 billion of equity and about $4 billion of net debt.

The offer was made in a letter to Tenet's board of directors on Nov. 12 and rejected on Dec. 6. On Dec. 20, Community Health announced its intention to nominate directors for election at the 2011 annual meeting of Tenet. Tenet's entire board is up for reelection this year.

Tenet said it discovered the alleged overbilling as a result of due diligence conducted while evaluating Community Health Systems' unsolicited buyout proposal.

Tenet also remarked in its 8-K filing that the implications of the allegations are that Community Health Systems' stock is worth less than stated and the ability to finance the cash portion of the offer may be impaired.

CHS responds to allegations

In the afternoon, Community Health Systems put out a news release stating that the "allegations are completely without merit" and that it will defend itself against the claims.

"The bottom line is that these self-serving allegations are an attempt by Tenet's management and board to continue their entrenchment strategy and to distract Tenet shareholders from CHS's pending offer. Its actions today prove that Tenet has adopted a 'scorched earth' defense without regard for the best interests of shareholders," the news release said.

In addition, the company remarked that it is still committed to its offer to acquire Tenet and that both Credit Suisse and Goldman Sachs have reaffirmed their confidence in financing the transaction.

Community Health Systems is a Franklin, Tenn.-based hospital company. Tenet is a Dallas-based health care services company.

Lee up on refi

Lee Enterprises' revolver and term loan A were stronger as the company revealed that it plans to refinance substantially all of its existing debt, which is due in April 2012, according to a trader.

The revolver was quoted at 93 bid, 95 offered and the term loan A was quoted at 94 bid, 96 offered, both up from 89½ bid, 91 offered on Friday, the trader said.

As of March 27, remaining principal under the company's credit agreement totaled $878.8 million, and the remaining balance on its Pulitzer notes totaled $147 million, which constitutes basically all of its existing debt.

Funds for the refinancing of this debt will come from $1.05 billion of notes broken down into a $675 million first-lien senior secured offering and a $375 million second-lien senior secured offering.

Lee Enterprises is a Davenport, Iowa-based provider of local news, information and advertising.

Hillman repricing talk

Moving to the primary, Hillman held a conference call on Monday morning to launch its previously announced credit facility repricing and amendment, and in connection with the event, specifics were revealed to lenders, according to a market source.

Under the proposal, the Cincinnati-based distributor of fasteners, key duplication systems, engraved tags and related hardware items is looking to lower pricing on its roughly $290 million term loan B to Libor plus 350 bps with a 1.5% Libor floor from Libor plus 375 bps with a 1.75% Libor floor, the source said.

The repriced term loan is being offered at par, while the original loan had been sold at an original issue discount of 99½ when it was obtained in 2010 for a buyout by Oak Hill Capital Partners.

Also, with the repricing, 101 soft call protection for one year will be added to the term loan B, whereas there is currently no call protection, the source remarked.

Hillman revising covenants

In addition to the repricing, Hillman is looking to eliminate the total leverage and interest coverage ratios and to reset the senior secured leverage ratio at 4.75 times with no step-downs from 4.0 times currently with step-downs, the source continued.

Additionally, revolver drawings will be subject to a 4.0 times senior secured leverage ratio, and the amendment would modify the acquisition basket, the accordion feature and the company's ability to incur unsecured debt.

The source explained that the amendment is designed to give the company more flexibility to do acquisitions and finance those acquisitions with debt.

Barclays Capital Inc., Morgan Stanley & Co. Inc. and GE Capital Markets are the lead banks on the deal and are asking for consents by April 18. There is amendment fee being offered.

Paetec deal emerges

Paetec held a call on Monday morning as well, launching a $225 million credit facility (Ba3/B), comprised of a $125 million revolver and a $100 million term loan B, according to a market source.

Price talk on the term loan B is Libor plus 350 bps with a 1.5% Libor floor and an original issue discount of 991/2, and there is 101 soft call protection for one year, the source said.

Bank of America Merrill Lynch is the left lead bank on the deal that will be used for acquisition financing and to repay revolver borrowings.

Paetec is a Fairport, N.Y.-based provider of business communications.

Golden Living readies deal

In more primary happenings, Golden Living has set a bank meeting for Wednesday to launch a proposed $1.575 billion credit facility that will be used to refinance existing bank borrowings and CMBS debt, according to a market source.

The facility consists of a $75 million revolver and a $1.5 billion term loan, the source said, adding that price talk is not yet available.

Citigroup Global Markets Inc. and RBC Capital Markets LLC are the lead banks on the deal.

Golden Living is a Fort Smith, Ark.-based provider of post-acute health and wellness services.

Open Link coming soon

Also, Open Link Financial surfaced with plans to hold a bank meeting on Wednesday at 10 a.m. ET at the Le Parker Meridien in New York to launch a proposed $375 million credit facility, according to a market source.

The facility consists of a $50 million five-year revolver and a $325 million seven-year term loan B, the source said.

Bank of America Merrill Lynch, Deutsche Bank Securities Inc. and Credit Suisse Securities (USA) LLC are the lead arrangers on the deal that will be used to refinance existing debt and fund a dividend to shareholders.

Open Link is a Uniondale, N.Y.-based provider of cross-asset trading, risk management and operations processing software services.

Mold-Masters sees interest

Meanwhile, Societe Generale's sell-down of Mold-Masters existing term debt has been going well so far since launching last Wednesday, a market source told Prospect News, adding that the commitment deadline isn't till April 20.

"Only three years to run. Lot of guys finding it matches well with their buckets," the source said in explanation of what has been working in the deal's favor.

The existing term loan, obtained in 2007, is sized at $214 million, but the deal was already partially syndicated, so Societe Generale has less than half of that amount to sell.

As was previously reported, investors are being offered the term loan at a discount price of 95. Pricing on the tranche is Libor plus 350 bps with no Libor floor.

Mold-Masters is an Ontario-based designer, manufacturer and supporter of hot runner products, including hot runner systems, temperature controllers, hot halves and gating technologies.

Grande closes

Grande Communications closed on its $162.5 million credit facility on Monday that consists of a $15 million five-year revolver and a $147.5 million five-year term loan, with both tranches priced at Libor plus 425 bps with no Libor floor, according to a market source.

During syndication, the San Marcos, Texas-based telecommunications company's revolver was downsized from $20 million and the term loan A was downsized from $165 million, pricing on both was lifted from Libor plus 400 bps and the A loan maturity was shortened from six years.

Societe Generale and SunTrust Robinson Humphrey Inc. are the co-lead arrangers on the deal, and TD Securities (USA) LLC signed on as an arranger as well. Raymond James & Associates Inc., ING Financial Markets LLC and Natixis signed on as agents.

Proceeds were used to refinance existing debt and fund a dividend that was reduced when the loan was downsized.

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