Tata, GSI, Elder Health, Station set talk; Source, Biomet, AmerCable tweak deals; CanWest, Harlan break

By Sara Rosenberg

New York, July 11 - Tata Steel, the GSI Group, Inc. Elder Health Inc. and Station Casinos Inc. released price talk on their credit facilities as all of these deals were launched with bank meetings during Wednesday's session.

In other primary news, Source Interlink Cos. Inc. increased pricing on its term loan B, Biomet Inc. revised guidance higher on its term loan B as well, and AmerCable Inc. downsized its first-lien term loan B, added a second-lien term loan and removed the super-priority from its revolver.

Moving to the secondary market, CanWest MediaWorks and Harlan Sprague Dawley, Inc. both saw their credit facilities free up for trading, with both companies' institutional term loans quoted atop par, and LCDX actually ended the day higher.

Tata Steel came out with price talk on its term loan B in connection with the deal being presented to U.S. investors with a bank meeting in New York on Wednesday afternoon, according to a market source.

The £1.5 billion seven-year term loan B is being talked at Libor/Euribor plus 225 basis points, the source said.

The term loan B will be launched to European and Asian investors as well, with bank meetings in London and Singapore.

A breakdown of the sizes of the term loan B sub-tranches is currently unavailable because it will depend on how much commitments are raised in each location, the source explained.

The term loan B carries a full covenant package that includes cash coverage, interest coverage, leverage and capital expenditures requirements.

Citigroup, ABN Amro and Standard Chartered Bank are the lead banks on the deal, with Citi the left lead in the United States.

This term loan B is part of a £3.59 billion credit facility (BB) that also includes a £1.59 billion five-year term loan A and a £500 million revolver, with both of these tranches talked at Libor/Euribor plus 175 bps, the source said.

The term loan A and revolver are basically filled out as they were syndicated primarily to relationship banks.

Proceeds will be used to help refinance a £3.62 billion acquisition bridge facility and revolving credit facility that was used to fund the acquisition of Corus Group plc.

Tata Steel is a Mumbai, India, integrated steel company.

GSI Group guidance

GSI Group announced opening price talk of Libor plus 250 bps on its $355 million first-lien credit facility in conjunction with its bank meeting on Wednesday at the Four Seasons in New York, according to a market source.

Tranching on the deal is comprised of a $50 million six-year revolver and a $305 million first-lien term loan.

UBS is the lead bank on the deal.

The capital structure will also include a $120 million second-lien term loan that is being provided by the Woodbridge Co.

Proceeds will be used to help fund Centerbridge Capital Partners, LP's acquisition of a majority stake in the company from Charlesbank Capital Partners and to refinance existing debt, including the company's 12% senior notes.

Leverage will be approximately 4.0 times through the first-lien debt and 5.7 times total.

GSI is an Assumption, Ill., provider of agricultural equipment and services.

Elder Health price talk

Also coming out with guidance was Elder Health as it held a bank meeting in the morning to launch its $135 million credit facility (B2/B), according to a market source.

Both the $10 million revolver and the $125 million term loan B are being talked at Libor plus 275 bps to 300 bps, the source said.

Covenants include a minimum risk-based capital ratio, a minimum interest coverage ratio and a maximum leverage ratio.

Bear Stearns is the lead bank on the deal.

Proceeds from the credit facility, along with $42.5 million in sponsor equity, will be used to fund the acquisition of Senior Partners Medicare line of business in Philadelphia and surrounding counties from Health Partners of Philadelphia Inc.

At close, net debt will be 1.7 times and interest coverage will be north of 5.0 times.

Elder Health is a Baltimore-based company that is focused on simplifying access to health care and improving service, outcomes and health care quality for seniors.

Station sets spread talk

Station Casinos launched its $500 million six-year senior secured revolver (Ba2/BB) on Wednesday with price talk of Libor plus 225 bps, according to a market source.

Deutsche Bank and JPMorgan are joint lead arrangers and joint bookrunners on the deal, with Deutsche the administrative agent and JPMorgan the syndication agent.

Proceeds will be used to help fund the buyout of the company by Fertitta Colony Partners LLC for $90 per share in cash.

The total value of the transaction is about $8.8 billion, including the assumption or repayment of about $3.4 billion of debt.

Fertitta is a new company formed by Frank J. Fertitta III, chairman and chief executive officer of Station, Lorenzo J. Fertitta, vice chairman and president of Station, and Colony Capital Acquisitions, LLC.

For other buyout financing, the company has received commitments for a $2.725 billion first-lien mortgage loan from German American Capital Corp., Deutsche and JPMorgan, and an equity commitment.

Station Casinos is a Las Vegas-based gaming and entertainment company.

Source Interlink ups spread

In more primary happenings, Source Interlink flexed pricing higher on its $880 million seven-year term loan B (B1/B+) to Libor plus 300 bps from original talk at launch of Libor plus 250 bps, according to a market source.

This is the second change made to the term loan B since the deal hit the market. The first time around, a senior secured leverage ratio was added to the tranche.

Under the covenant, the leverage ratio is 6.5 times for the fiscal quarter ending October 2008, 6.0 times for the fiscal quarters ending January 2008 and April 2009, 5.75 times for the fiscal quarters ending July 2009 and October 2009, 5.5 times for the fiscal quarters ending January 2009 and April 2010, 5.25 times for the fiscal quarters ending July 2010 and October 2010, 5.00 times for the fiscal quarters ending January 2010 and April 2011, 4.75 times for the fiscal quarters ending July 2011 and October 2011, and 4.5 times for each fiscal quarter after that.

Source Interlink's $1.18 billion credit facility also includes a $300 million six-year ABL revolver (Ba3/BB-) that is priced at Libor plus 150 bps.

Citigroup and JPMorgan are the lead banks on the deal.

Proceeds from the credit facility, along with $465 million of subordinated notes, will be used to fund the acquisition of Primedia Inc.'s Enthusiast Media division, which is comprised of over 70 magazine titles and 90 web sites, for $1.178 billion in an all-cash transaction.

Pro forma adjusted EBITDA is $203 million.

Source Interlink is a Bonita Springs, Fla., provider of merchandising and fulfillment services for home entertainment products.

Biomet increases price talk

Biomet lifted price talk on its $3.6 billion 71/2-year term loan B (B3/B+) to Libor/Euribor plus 275 bps to 300 bps from original talk at launch of Libor plus 225 bps to 250 bps, according to a buyside source.

Of the total term loan B amount, $1 billion will be a euro sub-tranche.

The euro tranche is already oversubscribed at the wide end of talk and the U.S. portion is still in process, the buyside source remarked.

The syndicate was looking to get recommitments in on Wednesday.

Proceeds will be used to help fund the buyout of the company by the Blackstone Group, Goldman Sachs Capital Partners, Kohlberg Kravis Roberts & Co. and TPG.

In June, the consortium raised their buyout price for Biomet to $46.00 per share from $44.00 per share, or roughly $11.4 billion compared with $10.9 billion, and commenced a tender offer to buy the company's common stock shares.

The increase in the purchase price is being funded by an increase in the amount of equity being used for the transaction.

"It was done at [Libor plus] 225, but that was the old deal," the source said regarding the term loan B. "Then the [buyout] deal changed - buyer had to pay more for the stock. Given the weak earnings, I suppose the lenders wanted more in order to recommit."

On Monday, Biomet announced fourth-quarter numbers that included operating income of $54.473 million, compared with $150.605 million for the fourth quarter of fiscal year 2006, and adjusted operating income, excluding special charges and stock compensation expense, of $142.101 million, compared with $166.5 million last year.

In addition, net income was $41.49 million, or $0.17 per share, compared with $100.367 million, or $0.41 per share, for last year's fiscal fourth quarter, and adjusted net income, excluding special charges and stock compensation expense, was $95.805 million, or $0.39 per share, compared with $113.002 million, or $0.46 per share, last year.

For the 12 months ended May 31, operating income was $489.602 million, compared with $608.386 million for fiscal year 2006 and adjusted operating income, excluding special charges and stock compensation expense, was $622.095 million, or 29.5% of sales, compared with $627.227 million, or 31% of sales, for fiscal year 2006.

Net income for the fiscal year was $335.892 million, or $1.37 per share, compared with $405.908 million, or $1.63 per share, for fiscal year 2006, and adjusted net income, excluding special charges and stock compensation expense, was $419.904 million, or $1.71 per share, compared with $420.644 million, or $1.69 per share, last year.

Biomet's $4.35 billion senior secured credit facility also includes a $400 million six-year cash-based revolver and a $350 million six-year asset-based revolver (Ba2/BB-).

Bank of America and Goldman Sachs are joint lead arrangers on the deal; Bank of America, Goldman, Bear Stearns, Lehman and Merrill Lynch are joint bookrunners; and Wachovia is co-manager. Bank of America is administrative agent, Goldman is syndication agent, and Bear Stearns, Lehman and Merrill Lynch are co-documentation agents.

Biomet is a Warsaw, Ind., designer and manufacturer of musculoskeletal medical products.

AmerCable reworks deal

AmerCable made some changes to its credit facility, downsizing the first-lien term loan B while adding call protection to the tranche, adding a new second-lien term loan and eliminating the super-priority status from the $15 million revolver, according to a market source.

The first-lien term loan B (B2/B-) is now sized at $100 million, down from $135 million, and while pricing was left unchanged at Libor plus 350 bps, the paper is now non-callable for one year, then at 102 in year two and 101 in year three, the source said.

On the flip side, a new $35 million second-lien term loan was added to the capital structure with price talk of Libor plus 625 bps and call protection of non-callable for one year, then at 102 in year two and 101 in year three, the source added.

Deutsche Bank is the sole lead arranger and bookrunner on the $150 million deal.

Proceeds will be used to help fund the acquisition of the company by Quintana Energy Partners LP and to repay existing senior bank debt.

AmerCable is an El Dorado, Ariz., manufacturer of flexible electrical power and control cables for harsh operating environments.

Tower Automotive downsizes, adds covenants

Tower Automotive Inc. downsized its credit facility to $910 million from $935 million and added maintenance covenants to its first- and second-lien term loans, according to a market source.

The downsizing came from a reduction to the synthetic letter-of-credit facility to $60 million from $85 million, the source said.

The covenant added to the deal is a net senior leverage ratio that is 4.25 times through the first-lien debt and 4.75 times through the second-lien debt, the source added.

Tower Automotive's credit facility also includes a $200 million five-year asset-based revolver, a $525 million first-lien term loan and a $125 million second-lien term loan.

The second-lien term loan is talked at Libor plus 625 bps to 650 bps.

JPMorgan and Goldman Sachs are the lead banks on the deal.

Proceeds will be used to help fund the acquisition of Tower by Cerberus Capital Management LP for about $1 billion.

On Wednesday, the U.S. Bankruptcy Court for the Southern District of New York approved the sale of to Cerberus Capital Management, clearing the way for the deal to close by the end of this month.

Tower Automotive is a Novi, Mich.-based auto parts maker.

CanWest frees to trade

Switching to secondary happenings, CanWest MediaWorks' credit facility broke for trading, with the C$500 million U.S. dollar equivalent term loan B quoted at par bid, par ¼ offered, according to a trader.

The term loan B is priced at Libor plus 200 bps.

During syndication, the term loan B was upsized from C$450 million and pricing firmed up at the wide end of original talk of Libor plus 175 bps to 200 bps.

CanWest's C$1.015 billion credit facility (Ba1/BB-) also includes a C$250 million revolver that is priced at Libor plus 200 bps, with a 52.5 bps unused fee, and a C$265 million term loan A that is priced at Libor plus 200 bps.

During syndication, the term loan A was upsized from C$250 million.

The term loan upsizings were done as a result of the company's decision to downsize its bond deal to $400 million from $650 million.

With the changes, senior leverage was increased by 0.2 of a turn to 3.2 times and total leverage was reduced by 0.5 a turn to 5.0 times.

Scotia Capital is the sole lead bank on the revolver and the term loan A, which were sold in Canada, and Scotia and Citigroup are joint leads on the term loan B, with Scotia the left lead.

Proceeds are being used to help fund a privatization agreement between CanWest MediaWorks Income Fund and CanWest MediaWorks LP, under which the fund's outstanding units were redeemed for C$9.00 in cash each.

Other financing came from a C$75 million senior subordinated unsecured credit facility.

CanWest MediaWorks is a Don Mills, Ont.-based media company.

Harlan breaks

Also freeing up for trading was Harlan Sprague Dawley, with its $330 million seven-year first-lien term loan quoted at par bid, par ½ offered, according to a trader.

The term loan is priced at Libor plus 250 bps.

During syndication, pricing on the term loan was flexed up from Libor plus 225 bps.

Harlan's $360 million senior secured credit facility (B2/BB-) also includes a $15 million six-year U.S. revolver and a $15 million six-year euro-denominated revolver, with both of these tranches priced at Libor plus 250 bps as well.

During syndication, pricing on the revolver flexed up from Libor plus 225 bps and the super-priority status was removed.

UBS Investment Bank is the lead bank on the deal.

Proceeds will be used to finance Harlan's acquisition of E.M. Developments Ltd., SafePharm Laboratories Ltd., ILS Ltd. and SafePharm USA, Inc. and to refinance existing debt.

Harlan is an Indianapolis-based provider of preclinical research tools and services for the pharmaceutical, biotechnology, agrochemical, industrial chemical and food industries.

LCDX gains ground

LCDX reversed its course as levels actually moved higher in reaction to the stock market being up and, possibly, also because of the potential that the SLM Corp. (otherwise known as Sallie Mae) deal may not happen, according to a trader.

"There are problems with Sallie Mae. If that doesn't happen there's a lot less paper," the trader said.

On Wednesday, news emerged that J.C. Flowers & Co., Bank of America and JPMorgan Chase have informed Sallie Mae that current legislative proposals to cut government subsidies to student lenders could result in a failure of the conditions to the closing of the merger to be satisfied.

Sallie Mae, a Reston, Va., saving- and paying-for-college company, said that it strongly disagrees with this assertion, it intends to proceed toward the closing of the merger transaction as rapidly as possible and it will take all steps to protect shareholders' interests.

The Sallie Mae buyout, if successful, would be financed with a $12.5 billion seven-year senior secured term loan and $4 billion of senior secured second-lien notes, led by Bank of America and JPMorgan.

LCDX went out at 96.55 bid, 96.70 offered, up from 96.30 bid, 96.40 offered, the trader said.

And the cash market, although starting the session down by about an eighth to a quarter of a point, went out unchanged on the day because of an afternoon rally, the trader remarked.

NYSE ended the day up 61.11 points, or 0.61%, Nasdaq ended the day up 12.63 points, or 0.48%, the Dow Jones Industrial Average ended the day up 76.17 points, or 0.56%, and the S&P 500 ended the day up 8.64 points, or 0.57%.

Movie Gallery softens

Movie Gallery Inc.'s first-lien term loan B was lower on Wednesday in very light trading, according to a trader.

The first-lien term loan B ended the day at 89½ bid, 91 offered, down about half a point, the trader said.

Meanwhile, the second-lien term loan went out at 70 bid, 72 offered, unchanged on the day, the trader added.

Last week, the Dothan, Ala.-based video rental company said that it is considering a number of strategic alternatives, including asset divestitures, recapitalizations, alliances with strategic partners and a sale to or merger with a third party.

In addition, the company revealed that it was not able to meet the financial covenants contained in its senior facility for the fiscal quarter ended July 1 due to significantly softer-than-expected second-quarter results.

The company is currently talking to its lenders about a way to remedy the defaults, including possibly seeking a waiver, amendment, forbearance or similar agreement.

Hercules closes

Hercules Offshore Inc. completed its acquisition of Todco, according to a news release.

To help fund the transaction, Hercules got a new $1.05 billion credit facility (Ba3/BB) consisting of a $150 million five-year revolver and a $900 million six-year term loan B priced at Libor plus 175 bps.

During syndication, pricing on the B loan was reverse flexed from original talk at launch of Libor plus 200 bps on strong investor interest.

And, prior to launch, the term loan B was expected to carry a size of $1.1 billion, but it was reduced because the company is generating a lot of cash.

UBS acted as the lead bank on the deal. Other banks involved include Amegy Bank, Comerica Bank, Credit Suisse, Deutsche Bank, Jefferies Finance LLC and JPMorgan.

Financial covenants include maximum leverage and fixed-charge coverage.

In addition to financing the acquisition, proceeds from the facility were used to repay in full and terminate Hercules' existing senior secured term loan facility and to refinance Todco's revolver.

Hercules Offshore is a Houston-based operator of jack-up drilling rigs and liftboats. Todco is a Houston-based provider of contract oil and gas drilling services.

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