Rent-A-Center allocates and breaks for trading; term B par ½ bid, par ¾ offered

By Sara Rosenberg

New York, May 22 - Rent-A-Center Inc.'s new credit facility allocated and broke for trading on Thursday in a relatively quiet pre-holiday secondary bank loan market, with the term loan B immediately moving up from its original issue price of par to par ½ bid, par ¾ offered.

"A little bit of trading happened in it," a trader said regarding Rent-A-Center.

The new $600 million credit facility consists of a $400 million six-year term loan B with an interest rate of Libor plus 225 basis points, flexed down on Wednesday from price talk of Libor plus 250 to 275 basis points, a $120 million five-year revolver with an interest rate of Libor plus 225 basis points and an $80 million five-year letter of credit facility with an interest rate of Libor plus 225 basis points. All of the tranches were oversubscribed.

Interest on the B loan is grid based and would move back up to Libor plus 250 basis points if the company's leverage goes above two times.

Upfront fees on the revolver were 5/8 for a $15 million commitment and 75 basis points for a $20 million commitment.

Banks were asked to commit on a three to one basis with regards to the letter of credit facility and the revolver. For every $3 committed to the letter of credit facility, banks are required to commit $1 to the revolver.

The facility was originally expected to be sized at $650 million, but was reduced by $50 million after the company's bond offering was upsized by $50 million.

Lehman Brothers and JPMorgan are the lead banks on the deal, which will be used to refinance the company's existing senior debt.

Rent-A-Center is a Plano, Tex. operator of company-owned stores in the rent-to-own industry.

Calpine Corp.'s bank debt traded as low as 95¾ on Thursday and then moved back up to trade around 961/4, according to various traders. By the end of the day the paper was quoted at 96 bid, 97 offered, a trader added.

The paper itself has been pretty volatile recently, moving up or down depending on investor opinion regarding whether the company will successfully extend the maturity of its revolver, the trader explained.

Early last week, Calpine announced in a conference call that it is involved in final discussions with its bank group regarding the refinancing of its $400 million and $600 million revolving working capital facilities, with the main focus of the negotiations centering on how long the extension would be.

At the time of the call, the company expressed its intention to refinance the $1 billion revolver prior to the May 24 maturity date and admitted to being optimistic about completing this task.

The crux of the negotiations has been whether the lenders will extend the revolver for one year or two years, company officials explained at the time of the call, adding that they were hoping for the two-year extension.

In follow-up news, Gaylord Entertainment Co. closed on its new $225 million credit facility. Deutsche Bank, Bank of America and CIBC were the lead banks on the deal.

The three-year facility consists of a $25 million senior revolver with an interest rate of Libor plus 350 basis points, a $150 million senior term loan with an interest rate of Libor plus 350 basis points and a $50 million subordinated term loan with an interest rate of Libor plus 800 basis points.

Proceeds will be used to pay off the company's existing $60 million term loan and to complete construction of the 1,511-room Gaylord Opryland Texas Resort & Convention Center, which is on schedule to open in April 2004.

"We are delighted to have closed this facility which will enable us to complete our world-class hotel in Texas. Opening our hotel near Dallas is another important step in our strategy to broaden Gaylord Hotels' network of unique destination resort and convention centers," said David Kloeppel, executive vice president and chief financial officer, in a news release.

Gaylord Entertainment is a Nashville, Tenn. diversified hospitality company.

Red Robin Gourmet Burgers Inc. closed on its amended $85 million revolving credit agreement, which is due May 19, 2006. The previous agreement was sized at $40 million and was set to expire in 2005.

Proceeds will be used to fund the construction and acquisition of new restaurants, to refinance existing indebtedness and for general corporate purposes, including working capital.

"We expect that available borrowings under our amended revolving credit facility, together with cash on hand and cash provided by operating activities, will provide sufficient funds to finance our expansion plans though at least the next 36 months," said Jim McCloskey, chief financial officer, in a filing with the Securities and Exchange Commission.

Wachovia was the lead bank on the Greenwood Village, Colo. casual dining restaurant chain's new loan.

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