Lake Las Vegas ups first-, second-lien loan sizes; Tower Automotive pops up by half point

By Sara Rosenberg

New York, Oct. 25 - Lake Las Vegas Resort decided to increase its in-market credit facility by $100 million on Monday, since the deal was so strongly oversubscribed, resulting in a one-notch downgrade by Moody's Investors Service.

In the secondary, Tower Automotive Inc.'s first-lien bank debt traded up with no new company developments seen sparking the uptick, although it could still be follow-through from last week's new accounts receivable securitization facility amendment request.

Lake Las Vegas increased its five-year first-lien term loan to $435 million from $360 million and increased its six-year second-lien term loan to $125 million from $100 million, according to market sources. These tranches were multiply oversubscribed by the end of last week, with the first lien reported two times oversubscribed and the second lien reported as three times oversubscribed.

In reaction to the increased leverage, Moody's downgraded the first-lien term loan to B1 from Ba3 and the second-lien term loan to B2 from B1 but left the outlook at stable.

By late day, Standard & Poor's had made no revision to its previously assigned BB first-lien rating and B second-lien rating.

"Being that it was downgraded, [the syndicate] has to make sure that guys want to recommit," a market source explained. "[But], the deal went great and that's why the additional leverage was put on."

Proceeds from this extra $100 million will be used to increase the dividend being paid to equity holders. A small portion of the facility will also be used to refinance the company's existing credit facility.

Although leverage increased and ratings were lowered, pricing was left unchanged on both tranches, with the first lien still talked at Libor plus 275 basis points and the second-lien term loan still talked at Libor plus 600 basis points.

Credit Suisse First Boston is the lead bank on the Henderson, Nev., residential, golf and resort community's credit facility.

Tower Automotive higher

Tower Automotive's first-lien bank debt was quoted at 98½ bid, 99 offered on Monday, according to a trader, who placed the paper higher by about half a point on the day.

Last Tuesday, the company approached lenders with an amendment to its credit facility that would allow for a $200 million accounts receivable securitization facility - a move that would obviously enhance liquidity. Under the current credit agreement, the company can only get a $50 million accounts receivable securitization facility.

The company is seeking this facility because original equipment manufacturers are canceling off-balance sheet payment programs - which Tower participated in - that were in place to provide liquidity to suppliers.

This accounts receivables facility would have a term of three years, with two one-year extensions, a usage fee of Libor plus 175 basis points and a commitment fee of 25 basis points on unused amounts.

Consents are due this Tuesday from lenders, 51% approval is needed for the amendment to pass, and in return for consents lenders would get a 12.5 basis point amendment fee.

Morgan Stanley is the lead bank on the deal.

Tower Automotive is a Novi, Mich., designer and producer of structural components and assemblies used by automotive original equipment manufacturers.

Cox sets Wednesday launch

Cox Enterprises Inc./Cox Communications Inc. sent out invitations on Monday morning asking lenders to participate in a conference call Wednesday that would launch the companies' $7 billion credit facilities for syndication, according to an informed source.

Previously, it was known that the deal would probably launch this week since the cash tender offer for Cox Communications' stock that is being funded through a portion of this credit facility is kicking off in about a week and closing on the tender offer is anticipated for mid-December, but specific timing had not been nailed down.

More specifically, under the merger agreement, Cox Enterprises will acquire the outstanding publicly held minority shares of Cox Communications for $34.75 per share in a cash tender offer.

Besides funding this tender offer, proceeds from the credit facilities will also be used to refinance debt and provide for working capital.

Cox Enterprises will be getting a total of $2.25 billion in bank debt comprised of a $1.75 billion five-year revolver and a $500 million five-year term loan, while Cox Communications will be getting a total of $4.75 billion in bank debt comprised of a $2.75 billion revolver and a $2 billion five-year term loan.

Price talk on the tranches is expected to surface on Wednesday in connection with the conference call, the source said.

In addition to the credit facilities, Cox Communications is hoping to issue $3.5 billion in senior unsecured notes to help fund the tender offer. However, the company did get a commitment for a $3 billion 18-month bridge loan just in case it does not complete the senior unsecured note offering.

Citigroup Global Markets Inc., Lehman Brothers Inc., and JPMorgan Chase Bank are joint lead arrangers and joint bookrunners on the credit facilities, with Citigroup left lead. JPMorgan Chase Bank is administrative agent, and Citicorp North America Inc. and Lehman Commercial Paper Inc. are syndication agents.

Cox Enterprises is an Atlanta media company. Cox Communications is an Atlanta cable company.

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