Huntsman up with settlement; BRSP breaks; Ashland rises; Cumulus gains; QVC tweaks loan

By Sara Rosenberg

New York, June 23 - Huntsman Corp.'s term loan strengthened as the company announced that it settled with the banks on the issue of previously terminated merger agreements, and as part of the settlement, a new term loan and an unsecured note were provided to the company.

Also in the secondary, BRSP LLC's term loan freed up for trading, Ashland Inc.'s term loan B gained some ground following news that the company will be selling its marine services business and using proceeds to reduce debt, and Cumulus Media Inc.'s term loan was better on the back of an amendment launch.

Moving to the primary market, QVC Inc. came out with some changes to its in-market term loan B, including raising pricing and narrowing down the original issue discount at the wide end of talk.

Huntsman better by a few points

Huntsman's term loan moved higher after the company revealed that it settled its lawsuit against Credit Suisse and Deutsche Bank for fraud and tortious interference in connection with the terminated merger agreements with Basell and Hexion Specialty Chemicals Inc., according to a trader.

The term loan was quoted at 90½ bid, 91½ offered, up from 88¼ bid, 89¼ offered, the trader said.

As part of the settlement with the banks, Huntsman received on Tuesday a $500 million seven-year senior secured term loan priced at Libor plus 225 basis points and a $600 million seven-year senior unsecured note priced at 5.5%.

The company had to amend its existing credit facility with Deutsche Bank to create the new term loan tranche, and covenants and restrictions under the existing senior secured credit facility apply to the new loan.

Also, the banks provided the company with $620 million in cash and a $12 million reimbursement of litigation costs.

Huntsman paying down debt

Huntsman said that it will use proceeds from the settlement to repay some of its outstanding debt, including its $295 million of 11 5/8% senior secured notes due 2010, and to further enhance its liquidity.

In addition, the company plans to substantially reduce the size of its current revolving credit facility due 2010.

"This settlement with the banks marks a very successful conclusion to this litigation for the company and all of its stakeholders," said Peter Huntsman, president and chief executive officer, in a news release.

"The cash and financing will enhance our already enviable cash position to more than about $1.7 billion and provide us much greater flexibility as we manage our business. The financing offers us a much lower average cost of borrowing and extends the maturities of our borrowings such that the earliest meaningful maturity is July 2012," Huntsman added.

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

BRSP frees to trade

BRSP's $290 million five-year senior secured term loan (B1/BB-) hit the secondary market late in the day, with levels quoted above the original issue discount price at which the paper was sold during syndication, according to a market source.

The term loan was seen at 94½ bid on the break and then it moved up to end the day at 95 bid, 97 offered, the source remarked.

The loan is priced at Libor plus 450 bps with a 3% floor, and it was sold at an original issue discount of 94.

During syndication, the loan was upsized from $275 million, the original issue discount was trimmed from initial guidance in the 92 to 93 area and call protection was changed to 102 in year one, and 101 in years two and three, from 104 in year one, 102 in year two and 101 in year three.

Barclays Capital is the lead bank on the deal that will be used to refinance an existing term loan that was put in place in 2006. The extra $15 million in proceeds raised from the upsizing is going towards the reduction of out of pocket expenses.

BRSP is a special purpose entity covering two gas-fired power plants - Broad River and South Point - that are operated by Calpine Corp.

Ashland up on asset sale

Ashland's term loan B was better on Tuesday on the back of news that the company is selling its marine services business, known as Drew Marine, to J. F. Lehman & Co. in a transaction valued at about $120 million, according to a trader.

Proceeds from the sale will be used to pay down debt.

The transaction is expected to close within 60 days, conditioned upon a number of standard closing conditions.

After the news hit, Ashland's term loan B moved up to close out the day at par¾ bid, 101¼ offered, the trader said. By comparison, at Monday's close, the debt was quoted at par½ bid, 101 offered.

Ashland is a Covington, Ky.-based provider of specialty chemical products, services and solutions.

Cumulus moves higher

Cumulus Media's term loan was stronger during the trading session in follow through from news earlier this week that the company is looking to amend its credit facility, according to a trader.

The term loan was quoted at 64½ bid, 66½ offered, up from Monday's close of 64 bid, no offers and Monday morning levels of 62 bid, 66 offered, the trader said.

On Monday, the company launched an amendment to lenders that would give covenant relief and on Tuesday afternoon a second lender call was held.

In return for the covenant changes, the company would increase pricing on the term loan to Libor plus 400 bps from Libor plus 175 bps and repay some of the debt.

Cumulus Media is an Atlanta-based radio broadcasting company.

LCDX strengthens

The LCDX 12 index was a little bit better on Tuesday despite stocks being mixed on the day, according to traders.

The index was quoted by one trader at 84.30 bid, 84.60 offered, up from 83.80 bid, 84.10 offered, and by a second trader at 84.10 bid, 84.40 offered.

Meanwhile, Nasdaq closed down 1.27 points, or 0.07%, Dow Jones Industrial Average closed down 16.1 points, or 0.19%, S&P 500 closed up 2.06 points, or 0.23%, and NYSE closed up 34.42 points, or 0.60%.

QVC ups pricing

Over on the new deal front, QVC made some modifications to its $500 million term loan B (Ba2/BBB) in order to improve momentum in syndication, such as increasing pricing and moving original issue discount talk to the high end of initial guidance, according to sources.

The term loan B is now talked at Libor plus 400 bps, up from original talk at launch of Libor plus 350 bps, sources said.

And, the original issue discount is now talked at 98 as opposed to being guided in the 98 to 98½ range, sources continued.

The 2% Libor floor on the deal was left unchanged.

One other revision that was made to the term loan B was that Most-Favored-Nation language was added to the tranche, sources remarked.

Commitments are due from lenders on Friday at 3 p.m. ET.

Previously it was heard that the deal had been coming along a little slowly with less than $100 million in the book as of Friday afternoon (the deal launched two days earlier on June 17), but sources pointed out that the lack of momentum could have been a result of a lot of people being out at the U.S. Open.

QVC led by two

QVC's new term loan B is being led by Bank of America and JPMorgan and proceeds from the deal will be used for general corporate purposes.

The company already has a good amount of bank debt outstanding and recently the maturities on some of that debt were extended.

Under an amendment, the company's existing credit facility will mature in six tranches between June 2010 and March 2014 with 11% of the outstanding principal due in 2010, 16% due in 2011, 9% due in 2012, 9% due in 2013 and 55% due in 2014.

Lenders consenting to the amendment, which represent $4.998 billion in commitments, received modified terms, including pricing that varies from Libor plus 350 bps to 550 bps, depending on the tranche maturity.

Loans held by non-consenting lenders, which represent $252 million in commitments, will remain under the pricing terms of the previous credit facility, with such debt maturing in 2011. Non-consenting lenders continue to receive a maximum interest margin of Libor plus 100 bps.

QVC is a West Chester, Pa.-based multimedia retailer.

© 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.