LifePoint, Northwest, Custom Building and Cogentrix all break in plus par region

By Sara Rosenberg

New York, April 14 - A number of deals allocated and freed up for trading during Thursday's session including LifePoint Hospitals Inc., Northwest Airlines Corp., Custom Building Products Inc. and Cogentrix Energy Inc. - but unlike the trend that was seen a few weeks, not a single name broke above 101.

LifePoint's $1.25 billion seven-year term loan B, which was originally offered to investors at par, was seen quoted at par ¼ bid, par ½ offered by one trader and par ¼ bid, par 5/8 offered by a second trader throughout its first day of trading, according to a market source.

The tranche, which was upsized from $1.1 billion after the company decided not to approach the high-yield market with a $200 million floating-rate senior subordinated notes issue, is priced with an interest rate of Libor plus 162.5 basis points. Pricing came down from original price talk of Libor plus 175 basis points at the time of the upsizing.

The term loan B was only increased by $150 million as opposed to $200 million - the size of the previously planned bond offering - because the company generated free cash flow and no longer needs as much debt financing.

There is a roughly $200 million carve-out for delayed draw under the term loan B.

LifePoint's $1.55 billion credit facility (Ba3/BB) also contains a $300 million five-year revolver with an interest rate of Libor plus 175 basis points.

Citigroup is the sole lead bank on the deal that will be used to finance the acquisition of Province Healthcare Co., refinance Province's existing debt, refinance LifePoint's credit facility and provide for the ongoing working capital and general corporate needs of LifePoint Hospitals.

Under the acquisition agreement, LifePoint will buy Province for about $1.7 billion in cash, stock and the assumption of debt. The businesses of LifePoint and Province will be combined under a newly formed company.

LifePoint is a Brentwood, Tenn., operator of hospitals. Province is a Brentwood, Tenn., owner, leaser and manager of hospitals.

Northwest par plus

Northwest Airlines' term loan C broke on Thursday at par ¼ bid for $2 million, 101¼ offered for $2 million and remained quoted in that context throughout the session, according to one market source, while a second source had the paper quoted at tighter and slightly lower levels of par 1/8 bid, par 5/8 offered.

As for allocations, the market source said that he got 80% of his order - a pretty good percentage in this market.

The $147.75 million term loan C due Nov. 23, 2010 is priced with an interest rate of Libor plus 625 basis points and contains call protection of 103 through Nov. 23, 2005, 102 through Nov. 23, 2006, 101 through Nov. 23, 2007 and par thereafter.

Originally, the term loan C was launched with pricing of Libor plus 525 basis points but was flexed higher by 100 basis points because investors felt it was underpriced compared to the company's existing term loan B bank debt.

Proceeds from the term loan C will be used to refinance the $147.75 million amortization payment due Nov. 23 on the existing term loan A and term loan B. The company does have the cash to make the amortization payment but wants to conserve it because of uncertainties related to fuel prices and lower revenue from lower ticket prices.

Amortization is 1% per year beginning on Nov. 23, 2006, with a bullet payment at maturity.

JPMorgan and Citigroup are the lead banks on the Eagan, Minn.-based airline company's deal.

Custom Building around mid-par

Custom Building Products' first-lien term loan opened for trading on Thursday at par 3/8 bid for $2 million and par ¾ offered for $2 million, with levels staying in that context throughout the day, according to a fund manager.

The $305 million first-lien term loan is priced with an interest rate of Libor plus 225 basis points and a step down to Libor plus 200 basis points if leverage is 31/2x.

Originally, the first-lien term loan was launched with a size of $280 million but it was increased by $25 million after the company decided to decrease its second-lien term loan by $25 million to $105 million.

Furthermore, pricing on the first-lien term loan came down from original talk of Libor plus 250 basis points during syndication.

The $105 million second-lien term loan is priced with an interest rate of Libor plus 500 basis points.

The fund manager said his allocations on the deal amounted to 48% of his order on the first-lien term loan and 60% of his order on the second-lien term loan.

Custom Building Products' $440 million credit facility also contains a $30 million revolver.

Bank of America is the lead bank on the deal that will be used to help fund the Kelso & Co.'s leveraged buyout of the company.

Custom Building Products is a Seal Beach, Calif., provider of installation solutions for tile and stone.

Cogentrix low-pars

Cogentrix Energy's recently upsized $700 million term loan freed up for trading with levels seen at par bid, par ½ offered, according to a trader.

The tranche, which was increased from $650 million, is priced with an interest rate of Libor plus 175 basis points and contains the ability to step down after one year to Libor plus 150 basis points if leverage is less than 4x.

Cogentrix Energy's $750 million credit facility (Ba2/BB+) also contains a $50 million revolver.

Goldman Sachs is the lead bank on the deal that will be used to refinance the company's existing bank debt and fund a portion of the recently completed acquisition of equity interests in 11 power plants, a natural gas pipeline and related assets from National Energy & Gas Transmission Inc. for about $550 million.

Cogentrix is a Charlotte, N.C., independent power producer.

Bear wins Trimaran portfolio

Bear Stearns was said to be the winner of a $350 million portfolio auctioned off by Trimaran on Thursday that contained some par as well as some distressed names, according to sources.

The portfolio was traded around par 1/2, sources said.

"It probably had like three distressed names - Nellson Nutraceutical was one of them," one source added.

Conversent closes

Conversent Communications Inc. closed on its new $225 million credit facility (B3/B) consisting of a $200 million term loan and a $25 million revolver. Bank of America acted as the administrative agent and lead arranger on the deal, and CIT Group Inc. was documentation agent.

Proceeds were used to refinance existing debt and to fund a redemption of some ownership interests in Conversent Holdings Inc. and FiberNet.

Conversent Communications is the new company being formed for the merger of Conversent Holdings, a facilities-based communications provider, and FiberNet, a local exchange carrier.

American Wholesale Insurance closes

American Wholesale Insurance Group Inc. closed on its new $150 million credit facility consisting of a $110 million six-year first-lien term loan B (B) with an interest rate of Libor plus 350 basis points and a $40 million 61/2-year second-lien term loan (CCC+) with an interest rate of Libor plus 850 basis points.

Originally, the first-lien term loan B was sized at $100 million but the tranche was upsized by $10 million as the second-lien term loan was downsized by $10 million to $40 million.

Also, price talk on the second-lien term loan was originally set at Libor plus 700 basis points but was increased to Libor plus 850 basis points during syndication.

Credit Suisse First Boston acted as the sole lead arranger on the deal that was used to help fund the now completed acquisition of Stewart Smith Group from Willis Group Holdings.

American Wholesale Insurance is a Charlotte, N.C.-based wholesale insurance organization. Stewart Smith is a New York-based wholesale insurance broker.

ATP closes

ATP Oil & Gas Corp. closed on its amended $350 million senior secured five-year term loan B that is priced with an interest rate of Libor plus 550 basis points.

Through the amendment, the company gained $121 million in additional liquidity, decreased the overall interest rate of the facility from Libor plus 684.7 basis points, repaid and eliminated the second-lien tranche that carried an interest rate of Libor plus 1,000 basis points, extended the maturity by one year to April 2010 and amended covenants to provide greater flexibility.

Credit Suisse First Boston was sole lead arranger on the Houston natural gas and oil company's deal.

"ATP's performance over the past year has allowed us to expand our facility while also significantly improving its terms. We are exceptionally pleased with the reception of the investment community with our transaction as participation was more than two-times over subscribed," said T. Paul Bulmahn, chairman and president, in a company news release.

"The added liquidity will enable us to continue our expanded development and acquisition program in the Gulf of Mexico as well as provide the financial strength to accelerate our activities in the North Sea, particularly at The Tors and at Cheviot. Lowering our cost of capital and eliminating our second-lien tranche should provide added equity returns to our shareholders."

Reader's Digest closes

The Reader's Digest Association Inc. closed on its new $400 million five-year revolving credit facility with an initial interest rate of Libor plus 125 basis points. J.P. Morgan Securities Inc. and RBS Securities Corp. were the lead banks on the deal.

Proceeds were used to retire all of the company's outstanding term loans, which were priced at Libor plus 200 basis points, and repay revolver borrowings, which were priced at Libor plus 300 basis points.

Pricing on the new revolver is based on the company's leverage ratio. Pricing on the previous credit facilities was based on ratings.

Furthermore, unlike the prior credit facility, the new revolver does not contain covenants that limit the company's ability to increase dividends, buy back shares or make acquisitions.

"This is an important milestone on our path to a strong financial future," said Thomas O. Ryder, chairman and chief executive officer, in a company news release. "Our new financing lowers interest rates while at the same time giving us greater flexibility.

"We appreciate our lenders' acknowledgement of our improved creditworthiness and their confidence in providing many of the terms that would be appropriate for companies with investment-grade credit ratings."

Reader's Digest is a Pleasantville, N.Y., publishing and direct marketing company.

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