General Growth nets early institutional orders; SpectraSite sees interest

By Sara Rosenberg

New York, Oct. 20 - General Growth Properties Inc.'s bank meeting saw an incredibly large attendance as more then 200 people showed up to participate, reflecting what's already been seen by the syndicate through the senior managing agent process and receipt of early institutional commitments - investors are interested in this deal.

Meanwhile, SpectraSite Communications Inc.'s $900 million senior secured credit facility has also begun to attract attention on the term loan B front from new investors as well as from existing lenders, and with the deal fully underwritten by five banks and the recent addition of a sixth bank to a senior managing agent role, sentiment is pretty positive regarding the syndication process.

General Growth Properties' $2 billion four-year term loan B talked at Libor plus 250 basis points had already received about half a billion in commitments ahead of Wednesday's retail bank meeting, according to a market source who explained that there was no "early round" to launch the deal to a select group of institutional lenders but rather, the orders came in from "guys who took it upon themselves to commit early."

The $250 million three-year revolver and the $3.9 billion three-year term loan A - both talked at Libor plus 225 basis points - have also seen their fair share of orders as "north of $2 billion" in commitments came in during the SMA process, which first began on Oct. 4, the source said. And this number does not take into account "the fact that there are four underwriters who will hold some paper as well," the source continued.

Some factors that may be drawing investors to the deal are that it's a large, liquid, relatively well rated deal with underlying asset value and a management team looking toward an investment-grade future, the source explained.

"Ratings came out at BB+, a bit better then originally expected [which is viewed] very positively. It will be well rated compared to what's being seen in the market today - lots of single B's," the source said.

"It's a stock secured deal but there's a comfort level with the value of underlying assets," the source said.

"And, there's an overall sense that this management team wants to, over time, crawl their way back to investment grade," he concluded.

The term loan B is being offered at par. Upfront fees for the pro rata strip are 50 basis points for $100 million commitment and 25 basis points for anything less than $100 million.

The commitment deadline is Nov. 3.

The $3.6 billion six-month bridge loan is not being syndicated since it that will be taken out by CMBS transactions. In fact, it is expected that only about $1.5 billion of the bridge loan will be left at closing of the credit facility.

Lehman Brothers, Credit Suisse First Boston, Wachovia and Bank of America are joint lead arrangers and joint bookrunners on the deal, with Lehman listed on the left.

Proceeds, along with $500 million of new equity, will be used to help fund the acquisition of The Rouse Co. for $7.2 billion, including the assumption of about $5.4 billion of Rouse debt, and to redo $2 billion of General Growth's unsecured credit.

The transaction is expected to close in the fourth quarter of 2004.

Post closing, General Growth, a Chicago-based shopping mall owner, will have about $23 billion of debt, or about 71% of total pro forma capitalization of $32.5 billion based upon the current stock price. Estimated interest coverage is about 1.6x for the first full year after closing, assuming the transaction closes in the fourth quarter.

SpectraSite sees some rollover

SpectraSite's credit facility consists of a $400 million term loan B talked at Libor plus 175 basis points, a $200 million revolver talked at Libor plus 150 basis points and a $300 million delayed-draw term loan A talked at Libor plus 150 basis points.

"The bank meeting went very well," a market source told Prospect News about Wednesday's launch. "Good turnout. Well attended.

"There's an existing term B investor base," the source continued. "The existing B is $250 million. Expect a number of recommitments and some new money. There are commitments rolling in [already], some new, some existing.

"The deal was fully underwritten by five banks: TD, Citi, Deutsche, Lehman and Royal Bank of Scotland. And, Royal Bank of Canada committed as senior managing agent," the source added, pointing out that the bank investor base is already pretty hefty.

TD Securities and Citigroup are the joint lead arrangers on the deal, with TD listed on the left. TD is the administrative agent, Citigroup is the syndication agent, and Deutsche Bank, Lehman and Royal Bank of Scotland are co-documentation agents.

The term loan B is being offered at par. There will be upfront fees on the revolver and the term loan A, but specifics on the fees are still being determined.

The commitment deadline is Nov. 5 with closing targeted for a week to 10 days after.

Security for the Cary, N.C.-based wireless tower operator's facility is a pledge of substantially all assets.

Proceeds will be used to refinance the company's existing credit facility and for general corporate purposes, including acquisitions and financing distributions to its shareholders. The existing facility currently has outstanding borrowings of about $439 million.

On Wednesday, Moody's Investors Service assigned its Ba3 rating to the credit facility with a positive outlook and upgraded the senior implied rating of SpectraSite Inc. to Ba3 from B1.

The upgrade reflects the strong and consistent cash flow growth, both historical and projected, of the company as well as the expiration last August of a significant tower purchase commitment that went substantially unused, Moody's explained.

"SpectraSite is likely to seek to return value to its shareholders, and the new credit facility provides ample flexibility to do so. The ratings could be improved should SpectraSite devote a large portion of its free cash flow to permanent debt repayment," Moody's said about the positive outlook.

Berkline/BenchCraft ups pricing, cuts size

Berkline/BenchCraft Holdings LLC made a number of changes to its proposed credit facility including reducing the size of the second-lien term loan (B2/B-) to $50 million from $70 million and increasing pricing on the tranche to Libor plus 800 basis points from price talk of Libor plus 650 to 700 basis points, according to a fund manager.

As a result of the second-lien downsizing, the dividend being paid with a portion of the proceeds from the facility is also being reduced by $20 million.

Call protection on the second-lien remained unchanged at 103 in year one, 102 in year two and 101 in year three.

Meanwhile, the $110 million first-lien term loan (B1/B+) is priced at Libor plus 300 basis points, coming in at the high end of the Libor plus 275 to 300 basis points price talk that the deal was launched with.

Furthermore, the scheduled amortization on the first-lien was increased to 5% a year in the first six years from 1% a year, the fund manager added.

The excess cash flow sweep remained at 75%.

These modifications were not completely unexpected as some investors were already talking last week about expectations that the first lien would come in at 300 over and the second lien would flex up.

Berkline/BenchCraft's now $195 million facility also contains a $35 million revolver (B1/B+).

Allocations are expected to go out next week.

Goldman Sachs is the lead bank on the refinancing and dividend deal for the Morristown, Tenn., manufacturer of residential stationary and motion upholstery furniture.

Texas Genco launch pushed out

Texas Genco Holdings Inc.'s bank meeting to launch its proposed $2.2 billion credit facility to retail investors has been postponed to sometime during the week of Nov. 1 from the previously expected Oct. 25 date, according to a market source. The deal already launched to senior managing agents on Oct. 12.

Goldman Sachs, Deutsche Bank, Morgan Stanley and Citigroup are lead banks on the deal, with Goldman listed on the left.

The facility consists of a $325 million five-year revolver, a $200 million five-year letter-of-credit facility, a $900 million seven-year term loan B, a $475 million seven-year delayed-draw term loan B and a $300 million five-year "special" letter-of-credit facility.

Price talk on the tranches is expected to come out when ratings come out.

Proceeds, combined with proceeds from a proposed bond deal, will be used to help fund GC Power Acquisition LLC's acquisition of Texas Genco from CenterPoint Energy Inc. for about $3.65 billion in cash.

GC Power Acquisition LLC is a newly formed entity owned in equal parts by affiliates of The Blackstone Group, Hellman & Friedman LLC, Kohlberg Kravis Roberts & Co. LP, and Texas Pacific Group.

The transaction, subject to customary regulatory approvals, will be accomplished in two steps. The first step, expected to be completed in the fourth quarter of 2004, involves Texas Genco's purchase of the 19% of its shares owned by the public for $47 per share, followed by GC Power Acquisition's purchase of a Texas Genco unit that will be formed to own its coal, lignite and gas-fired generation plants.

The second step, which is expected to take place in the first quarter of 2005 following receipt of approval by the Nuclear Regulatory Commission, GC Power Acquisition will complete the acquisition of Texas Genco, the principal remaining asset of which will then be Texas Genco's interest in the South Texas Project nuclear facility.

Texas Genco is a Houston wholesale electric power generating company.

Cooper-Standard moved to November

Cooper-Standard Automotive's proposed credit facility is now estimated to launch during the week of Nov. 1, not in October as was previously expected, according to a market source. Deutsche Bank and Lehman Brothers are joint lead arrangers and joint bookrunners on the deal, with Deutsche listed on the left. Goldman Sachs and UBS are co-documentation agents.

Currently, the contemplated structure of the facility is a $500 million term loan B talked in the Libor plus 275 basis points context and a $125 million revolver.

Proceeds will be used to help fund the acquisition of Cooper-Standard by an entity formed by The Cypress Group and Goldman Sachs Capital Partners from Cooper Tire & Rubber Co. for about $1.165 billion in cash.

As part of the LBO financing package, Cooper-Standard also plans on approaching the high-yield market with a bond offering that is estimated to be sized at $400 million via joint book running managers Deutsche Bank, Lehman Brothers, Goldman Sachs and UBS, the source added.

The transaction, which is subject to financing and regulatory approvals, is expected to close in the fourth quarter.

Cooper-Standard Automotive is a Novi, Mich.-based manufacturer of fluid handling systems, body sealing systems, and active and passive vibration control systems, primarily for automotive original equipment manufacturers.

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