Sedgwick breaks atop 101; Central Garden breaks atop par; Century Theatres cuts term loan spread

By Sara Rosenberg

New York, Feb. 24 - Sedgwick CMS Holdings Inc. allocated its credit facility on Friday, with the term loan freeing for trading in the lower 101 type of context. Also breaking for trading Friday was Central Garden & Pet Co., whose term loan B was seen quoted in the upper-par region.

Meanwhile, on the primary front, Century Theatres Inc. reverse flexed pricing on its term loan due to strong demand.

Sedgwick's credit facility hit the secondary on Friday, with its $300 million term loan quoted at 101¼ bid, 101½ offered, according to one trader, and slightly wider at 101 bid, 101½ offered, according to a second trader.

The term loan is priced with an interest rate of Libor plus 200 basis points. During syndication, pricing on the tranche was reverse flexed from Libor plus 225 basis points.

Sedgwick's $340 million credit facility (B1/B+/B) also contains a $40 million revolver.

Bank of America and Wachovia acted as the lead banks on the deal, with Bank of America the left lead.

Proceeds from the previously funded credit facility were used to back the $635 million acquisition of Sedgwick by Fidelity National Financial Inc., Thomas H. Lee and Evercore, which closed at the end of January.

Sedgwick is a provider of outsourced insurance claims management services to large corporate and public sector entities.

Central Garden breaks

Central Garden & Pet also allocated its credit facility on Friday to see its $300 million seven-year term loan B tranche quoted at par 5/8 bid, par 7/8 offered during its first day of trading, according to a market source.

The term loan is priced with an interest rate of Libor plus 150 basis points. During syndication, pricing on this tranche was reverse flexed from original price talk at launch of Libor plus 175 basis points.

Central Garden & Pet's $650 million credit facility (Ba2/BB) also contains a $350 million five-year revolver with an initial interest rate of Libor plus 150 basis points.

JPMorgan, CIBC and Bank of America are the lead banks on the deal, with JPMorgan the left lead.

Proceeds from the facility will be used to help fund the acquisition of Farnam Cos. Inc. for $287 million and refinance existing debt.

Central Garden & Pet is a Walnut Creek, Calif., marketer and producer of products for pets, lawns and gardens. Farnam is a manufacturer of health care products primarily for horses, household pets and livestock.

Movie Gallery reacts to adviser news

Movie Gallery Inc.'s term loan was seen quoted higher by some traders and unchanged by others, but those seeing it at better levels attributed the new rise to talk that the company hired some sort of financial adviser.

The term loan closed the day quoted at 93¾ bid, 94½ offered, one trader said, up on the bid side and tighter when compared to previous levels of 93 bid, 94½ offered. However, according to a second trader, the term loan closed out the day unchanged at 93 bid, 94½ offered.

"There was some article saying that the company hired an investment bank boutique firm to explore options, including the sale of the company," the first trader said, explaining that this news item was the impetus behind Friday's strengthening.

"But, the news is [useless] since this company will never be sold," the trader added.

Movie Gallery is a Dothan, Ala.-based operator of video retail stores.

Dana revolver holds firm

Dana Corp.'s revolving credit facility has held pretty steady amid rumors of a potential bankruptcy filing, ratings downgrades and reports that the company hired a financial adviser as investors are waiting to see how the story plays out, according to traders.

One trader had the revolver quoted with a 98 bid, saying that this level was unchanged on the day. A second trader had the revolver quoted at 99 bid, par offered, and he too claimed that his levels were unchanged on the day.

"If they file [for bankruptcy] then you will see it go down," the first trader said about the revolver. "People think they may file as soon as this weekend."

"People are waiting to see how things shake out," the second trader added in explanation of why loan levels haven't yet changed even though the company's bonds and stock have been plummeting.

On Friday, Moody's Investors Service lowered Dana's senior unsecured rating to Caa1 from B1 and corporate family rating to B3 from B1.

The downgrades reflect the prospects for continued weakness in the company's operating performance and credit metrics resulting from the ongoing erosion in the automotive supply sector, increasing uncertainty surrounding its liquidity and near-term financial profile based on the need to renegotiate the $400 million revolver and $275 million accounts receivable facility, and challenges being faced in finalizing its fourth-quarter and year-end 2005 financial statements, Moody's said.

Moody's also noted published reports, as of yet unconfirmed by Dana, that the company has retained the services of a restructuring adviser.

In addition, on Friday, Standard & Poor's downgraded Dana's corporate credit rating to CCC+ from B+ and senior unsecured debt to CCC- from B-.

S&P cited the reports that the company hired a restructuring firm as the reason for the downgrades.

"Standard & Poor's will evaluate the implications of this reported move, as well as the company's progress in completing a crucial new bank deal," said credit analyst Daniel R. DiSenso in the ratings announcement. "If it appears that there has been an adverse shift in management's financial strategies, specifically that they entail a financial restructuring, the ratings could be lowered further despite the company's seemingly adequate near-term liquidity."

Dana is a Toledo, Ohio-based engineer, manufacturer, supplier and distributor of systems and components for vehicle manufacturers.

Century Theatres lower pricing

Switching to the primary, Century Theatres reduced pricing on its $360 million term loan to Libor plus 187.5 basis points from original price talk at launch of Libor plus 200 basis points due to strong investor interest, according to a market source.

The term loan tranche contains a step down in pricing to Libor plus 175 basis points, based on the company meeting a specified leverage test. This step down was part of the deal from the very start and was left unchanged when the reverse flex was announced.

Century Theatres $435 million credit facility (Ba3/B+) also contains a $75 million revolver that is priced with an initial interest rate of Libor plus 200 basis points.

Morgan Stanley and Bank of America are the joint lead arrangers on the deal, with Morgan Stanley acting as bookrunner.

Proceeds from the credit facility will be used to refinance existing debt and fund a sizable dividend payment to the owners.

Century Theatres is a San Rafael, Calif., regional theatrical exhibition company.

HealthSouth ups talk

HealthSouth Corp. increased price talk on its $2.05 billion term loan B to the Libor plus 300 to 325 basis points range from original price talk at launch of Libor plus 250 basis points, according to a market source.

"It's a function of it being an unrated deal," the source said. "It's hard for CLO's to get involved in unrated deals. People view it as high risk. There are step downs built in there that allow [pricing] to go down once the deal gets rated."

HealthSouth's $2.55 billion senior secured credit facility also contains a $500 million revolver.

J.P. Morgan Securities Inc., Citigroup Global Markets Inc. and Merrill Lynch & Co. are joint lead arrangers and joint bookrunners on the senior secured credit facility, with J.P. Morgan on the left.

The company is getting the new senior secured credit facility as part of a recapitalization plan under which its will repay substantially all of its existing debt.

To that end, HealthSouth is also in-market with a $1.3 billion senior unsecured interim term loan that is priced with an initial interest rate of Libor plus 450 basis points. After six months, the interest rate will increase by 100 basis points, and then will increase by 50 basis points every three months thereafter.

This interim loan will be reduced in size after the company completes its proposed $300 million convertible perpetual preferred stock offering.

If the recapitalization transactions are not completed, HealthSouth will use the net proceeds from the convertible preferred stock issuance to repay a portion of its outstanding senior unsecured debt.

HealthSouth has already received the required consent from lenders under its $200 million senior unsecured term loan and $355 million senior subordinated credit agreement to go ahead with its recapitalization plan.

Merrill Lynch & Co., Citigroup Global Markets Inc. and J.P. Morgan Securities Inc. are joint bookrunners on the unsecured interim loan, with Merrill Lynch on the left.

Deutsche Bank Securities Inc., Goldman, Sachs & Co. and Wachovia Capital Markets LLC are co-managers on both the senior secured credit facility and the senior unsecured interim loan.

HealthSouth is a Birmingham, Ala., provider of outpatient surgery, diagnostic imaging and rehabilitative health care services.

Gentiva adds step downs

Gentiva Health Services Inc. added two step downs in pricing to its $370 million seven-year term loan but left initial pricing unchanged at Libor plus 225 basis points, according to a market source.

Under the new grid, pricing on the term loan can drop to Libor plus 200 basis points if total leverage is less than 3.5x, with a further reduction to Libor plus 175 basis points if total leverage falls below 3x, the source said.

Gentiva's $445 million senior credit facility (Ba3/B+) also contains a $75 million revolver with an initial interest rate of Libor plus 225 basis points.

Lehman is the lead bank on the deal.

Proceeds from the term loan, along with about $55 million in common stock and about $58 million in cash on hand, will be used to finance the acquisition of The Healthfield Group Inc. for $454 million, refinance over $183 million in existing Healthfield debt and fund transaction costs.

Gentiva is a Melville, N.Y.-based provider of comprehensive home health services. Healthfield is an Atlanta-based provider of home health care and hospice.

Calpine DIP closes

Calpine Corp. closed on its new $2 billion debtor-in-possession credit facility due Dec. 20, 2007 consisting of a $1 billion revolver with an interest rate of Libor plus 225 basis points, a $400 million first-lien term loan with an interest rate of Libor plus 225 basis points and a $600 million second-lien term loan with an interest rate of Libor plus 400 basis points.

The revolver carries a 75 basis point commitment fee that drops to 50 basis points if usage is greater than 65%.

During syndication, the first-lien term loan was upsized from $350 million and the second-lien term loan was downsized from $650 million. Furthermore, pricing on the second-lien term loan was reverse flexed from original price talk at launch of Libor plus 450 basis points.

Deutsche Bank and Credit Suisse acted as joint lead arrangers and joint bookrunners on the deal.

Calpine is a San Jose, Calif., power company.

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