Domino's, Vivendi Universal Entertainment break for trading at 101; Calpine up on revolver agreement

By Sara Rosenberg

New York, June 23 - Domino's Inc. and Vivendi Universal Entertainment both broke for trading on Monday and both immediately traded higher than the issue price of par to end with quotes around 101, according to a trader. Meanwhile, Calpine Corp. headed higher by about a quarter of a point as an agreement was reached on a new revolver.

Domino's $735 million senior secured credit facility (B1/B+) consists of a $610 million seven-year term loan B (upsized by $50 million during the syndication process) with an interest rate of Libor plus 325 basis points and a $125 million six-year revolver with an interest rate of Libor plus 325 basis points.

JPMorgan is the lead bank on the deal, which is part of the Ann Arbor, Mich. pizza chain's recapitalization plan.

Vivendi Universal Entertainment's $920 million five-year term loan (Ba2/BB+) was priced with an interest rate of Libor plus 300 basis points. There was talk that the term loan would be increased in size to $1.2 billion to $1.4 billion before the end of the syndication process, however, according to one source the deal actually ended up slightly smaller than expected at $920 million as opposed to $950 million.

JPMorgan and Bank of America are the lead banks on the deal that will be used by the Paris media, entertainment and telecom company to refinance a $1.6 billion bridge facility.

Calpine's bank debt was up by about a quarter of a point on Monday with the paper quoted at 98½ bid, 98¾ offered, according to a trader, as negotiations finally came to a close on the term sheet for a new $950 million two-year secured working capital revolver.

"People were kind of expecting this so it didn't affect it too much. I don't think it was an issue. It moved up on affirmation. Had this not been priced in, it probably would have moved up two points," the trader explained.

During the negotiation process, the San Jose, Calif. power company had to extend the maturities on its two working capital facilities totaling $950 million on two separate occasions - once through June 16 and once through June 24.

Furthermore, as was previously announced, the banks have provided an automatic extension to July 16 on the existing facilities so as to provide enough time to complete definitive documentation.

Some Goodyear Tire & Rubber Co. term loan bank debt traded in the earlier part of Monday at 95, according to a trader, basically in line with previous levels.

The Akron, Ohio tire company published and released a monthly update for investors that revealed that in North America the company's shipments of consumer replacement tires increased over last year and the company gained share in the commercial replacement tire market. However, segment operating income declined due to unfavorable raw material, price/mix and conversion costs, partially offset by lower personnel and development costs.

In the primary, Noveon Inc. held a conference call on Monday regarding the repricing of its term loan B to Libor plus 275 to 300 basis points from Libor plus 350 basis points. Deutsche Bank and Credit Suisse First Boston are the lead banks on the deal, which received a healthy amount of interest especially from existing lenders.

The Cleveland specialty chemical company's term loan B is sized at approximately $500 million consisting of $470 million and €30 million, according to a syndicate source.

Market talk is that Worldspan LP's credit facility is going to be upsized by $25 million to a new total of $175 million since the company has opted to downsize its bond offering, which is expected to price on Tuesday.

The syndicate could not immediately be reached to confirm this information.

Originally, the loan was sized at $150 million (B1/BB-) and consisted of a $100 million term loan and a $50 million revolver. Both tranches are talked at Libor plus 450 to 500 basis points.

Lehman Brothers and Deutsche Bank are leading the deal that will be used to help fund a leveraged buyout of the Atlanta travel technology company by Citigroup Venture Capital Equity Partners LP and Teachers' Merchant Bank.

Coming up on Tuesday, Medco Health Solutions Inc. is scheduled to hold a bank meeting for a new $1.15 billion senior secured credit facility, according to a market sources. JPMorgan, Goldman Sachs and Citigroup are the lead banks on the deal.

The facility is expected to consist of a $250 million five-year term loan A with an interest rate of Libor plus 175 to 200 basis points, a $250 million five-year revolver with an interest rate of Libor plus 175 to 200 basis points and a $650 million eight-year term loan B with an interest rate of Libor plus 225 to 250 basis points.

Security will be substantially all assets, other than the company's pharmaceutical manufacturer accounts receivable, including a pledge of the capital stock of the company's subsidiaries.

Amortization on the term loan A will begin on Sept. 30, 2003 and the company will repay principal on a quarterly basis of 10% in the first year, 15% in the second year, 20% in the third year, 25% in the fourth year and 30% in the fifth year.

Amortization on the term loan B will also begin on Sept. 30, 2003 and principal will be repaid at a rate of 0.25% each quarter for the first seven years, with the remaining 93% due in equal quarterly installments during the final year.

Medco is obtaining this facility as part of its spin-off from Merck & Co. Inc. The spin-off is subject to a number of conditions, including the receipt of a favorable ruling from the U.S. Internal Revenue Service, the receipt of required regulatory approvals, final action by Merck to set the record date, distribution date, and distribution ratio for the spin-off, the effectiveness of the registration statement and payment by Medco Health to Merck of dividends aggregating $2 billion.

Proceeds from the term loans, combined with proceeds from a $500 million note offering and a $500 million accounts receivable financing facility, will be used to pay a portion of the cash dividend to Merck.

The revolver is expected to be undrawn at distribution and will be used for working capital and general corporate purposes.

Medco is a Franklin Lakes, N.J. pharmacy benefits management company.

In follow-up news, CSK Auto Inc. closed on its new $325 million credit facility (Ba3/BB-), consisting of a $125 million revolver due June 30, 2008 and a $200 million term loan B due June 30, 2009. JPMorgan and Credit Suisse First Boston were the lead banks on the deal.

Both tranches are priced at Libor plus 275 basis points, which is 25 basis points lower than was reflected in the initial commitment and 75 basis points lower than the company's previous facility.

The term loan amortizes at a rate of 1% annually.

This new facility replaces the company's previous $300 million credit facility.

In conjunction with this bank transaction, the company plans on redeeming the outstanding balance of $9.5 million of 11% subordinated notes due November 2006.

"We are extremely pleased to close this new facility on more favorable terms to the company," said Maynard Jenkins, chairman and chief executive officer of the parent company CSK Auto Corp., in a news release "Completing this new financing facility is another step in the company's strategic plan to pay down debt and reduce our overall cost of capital. Over the last 18 months, we have reduced debt by over $150 million and we expect to generate free-cash-flow in excess of $65 million for fiscal 2003."

CSK Auto is a Phoenix retailer of automotive parts and accessories.

Laidlaw International Inc. closed on a new $825 million senior secured credit facility (Ba3/BB), consisting of a $200 million five-year revolver with an interest rate of Libor plus 300 basis points and a commitment fee of 50 basis points, and a $625 million six-year term loan B with an interest rate of Libor plus 500 basis points. Credit Suisse First Boston and Citibank were the lead banks on the deal.

The Burlington, Ont. transportation company's new facility was obtained in conjunction with the company's exit from Chapter 11, which was announced on Monday.

"This is a very memorable day for the company," said Kevin Benson, president and chief executive officer, in a news release. "It marks the end of a challenging period for all involved in the reorganization process. It also ends the questions and uncertainty concerning the future, which have surrounded the company for the past three years. The company emerges with a strong balance sheet and confident that, with the resources now available to it, it has the ability to realize on its full potential."

Gerdau Ameristeel Corp. closed on a new $350 million senior secured revolving credit facility (BB). A CIBC/CIT joint venture entity and Bank of America led the deal.

An initial draw-down under the facility is expected to take place on June 27 and will be used by the Toronto-based steel producer to repay debt under the existing credit facility, according to a news release.

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