Yonkers sets price talk; AAT cuts spreads; BI-LO sweetens terms; Jarden, Kyle, UAL break

By Sara Rosenberg

New York, July 15 - Yonkers Raceway came out with price talk on its term loan as the deal launched via a bank meeting Friday morning, AAT Communications Corp. lowered pricing on its first-and second-lien term loans, and, BI-LO LLC made some technical changes to its credit facility, sweetening call protection and increasing the excess cash flow sweep percentage.

In other happenings, Jarden Corp. and Kyle Acquisition Group's new deals freed up for trading, and UAL Corp. allocated its upsized and repriced debtor-in-possession financing facility.

Yonkers Raceway came out with opening price talk of Libor plus 350 to 375 basis points on its $225 million term loan, a portion of which is delayed draw. The deal was launched Friday, according to a market source.

Merrill Lynch is the bookrunner on the deal, with Bear Stearns acting as co-arranger.

Proceeds from the term loan will be used by the Yonkers, N.Y., horse racing track to fund renovations and additions to the facility that will enable it to have a slot racetrack casino.

Late-June 2004, Yonkers had launched a $185 million delayed draw term loan, of which some was expected to be drawn at closing, but the deal was tabled in July 2004 because of legislation issues regarding the allocation of money from slot machines.

Pricing on the original $185 million term loan was Libor plus 375 basis points with a step down to Libor plus 325 basis points upon opening of the renovated facility. There was also a 100 basis points undrawn feee.

AAT reverse flexes

AAT Communications lowered the interest rate on its term loans, cutting the spread on the $200 million seven-year term loan B (B1/BB+) to Libor plus 175 basis points from Libor plus 200 basis points and cutting the spread on the $85 million eight-year second-lien term loan (B2/BB) to Libor plus 275 basis points from Libor plus 325 basis points, according to a market source.

The change in pricing is not a big surprise considering that immediately following the Monday bank meeting the first-lien term loan was significantly oversubscribed and the second-lien term loan was two times oversubscribed.

Pricing on the $50 million 61/2-year revolver (B1/BB+) remained at Libor plus 225 basis points, with a 50 basis point commitment fee. The revolver was essentially already spoken for by existing banks before the deal even launched.

The 101 one-year soft call protection that the second-lien term loan was launched with remained in place, the source added.

Both the first- and second-lien term loans are being offered to investors at par.

From the start, AAT had the option of moving $20 million to its first-lien term loan (making it $220 million) from its second-lien term loan (making it $65 million) with the decision expected to be based on economics and how well each tranche performed in terms of syndication.

However, with the newly revised pricing and the flexibility that the current structure gives the company, AAT decided to leave the tranche sizes as launched, the source said.

Commitments from institutional lenders are now due early next week. Originally the deadline was set for July 22.

"The books would have been shut already but with these changes [they] wanted to give institutional investors a little bit more time," the source said.

Some positives working for the deal are the increasing scarcity of tower paper because other towers are considering securitizations, the relatively sameness in size of the new institutional loan compared to the existing loan making it easy for rollover commitments to, at a minimum, subscribe the deal and the reduction in pro rata paper in the new deal compared to the existing deal sending some banks in the direction of the institutional paper, a source previously explained to Prospect News.

About a year ago, AAT got a new $325 million credit facility (B1/B-) consisting of a $200 million seven-year term loan B with an interest rate of Libor plus 275 basis points, a $50 million seven-year revolver with an interest rate of Libor plus 275 basis points and a 50 basis points commitment fee, and a $75 million seven-year delayed-draw term loan with an interest rate of Libor plus 275 basis points.

The lack of the delayed-draw term loan piece in this newest transaction is what the source was referring to when he stated that the pro rata portion of the credit facility is being downsized when compared to the existing deal.

TD Securities and Credit Suisse First Boston are the lead banks on the deal, with TD left lead and administrative agent.

Proceeds will be used for a dividend recapitalization.

AAT is a St. Louis-based owner and operator of wireless communications towers.

BI-LO tweaks deal

Investors got what they were clamoring for as BI-LO sweetened prepayment premiums under its term loan B agreement to hard call protection of 103 in year one, 102 in year two and 101 in year three from soft call protection of 102 in year one and 101 in year two, according to a buy-side source.

Furthermore, the excess cash flow sweep in the credit agreement was increased to 75% from 50% - another improvement that investors were hoping for and talking about since the syndicate made its first round of changes on the deal, the source added.

About two weeks ago, the syndicate went out to all potential lenders with a number of changes to the deal (although the tweaks were never posted to Intralinks), including the addition of the soft call protection that was just revised.

At that time, the syndicate also upped pricing on both the $345 million six-year term loan B and the $75 million five-year revolver to Libor plus 400 basis points from Libor plus 325 basis points.

Lastly, the syndicate changed the amortization schedule on the term loan B, increasing it to $5 million in 2005, $15 million in 2006, $20 million in 2007 and 2008, $25 million in 2009, $30 million in 2010 and $230 million in 2011. Amortization was originally planned to be 1% of the term loan per year for the first five year and the balance due in equal quarterly installments during the sixth year.

After the first round of changes was announced, investors were still hoping for more, eyeing the call protection and the excess cash flow sweep as the problematic areas but happy with the revised spreads and amortization schedule.

And, with Friday's tweaks it is apparent that the lenders won out.

Bear Stearns is the lead bank on the $420 million credit facility (B1/B) that will be used to refinance some acquisition loans that were put in place by the sponsors.

With this new deal, bank leverage will be less than 2x and total debt will be in the mid-3x area.

BI-LO is a Greenville, S.C., supermarket operator that was bought by Lone Star Funds early this year from Royal Ahold.

Jarden term loan breaks

Jarden's $380 million senior secured term loan B2 (B1/B+) allocated and freed up for trading on Friday, with the paper quoted at par ¼ bid, par ½ offered, according to a market source.

The term loan, which was upsized from $350 million earlier this week, is priced with an interest rate of Libor plus 175 basis points. Originally, the incremental term loan debt was launched with price talk of Libor plus 200 basis points, which is where the existing term loan B is priced, but the spread came down during syndication on strong demand.

Because the spread on the new term loan debt is different than the spread on the existing term loan B, the syndicate essentially structured it as new term loan B2 rather than it just being an add-on to the existing B loan tranche, which means the new debt will be trading at different levels than the existing debt, the source explained.

The term loan B2 was marketed to existing lenders only and allocations were pro rata based on existing positions, the source added.

Citigroup and CIBC are the lead banks on the deal.

Proceeds from the term loan B2 will be used to help fund the acquisition of The Holmes Group Inc. in a transaction valued on a debt-free basis at approximately $625 million, consisting of $420 million in cash and 4.1 million shares of Jarden common stock. Jarden is buying Holmes from principal shareholders Berkshire Partners and Jordan A. Kahn, the founder and chief executive officer of the business.

The transaction is expected to close in the third quarter.

Jarden is a Rye, N.Y., provider of niche branded consumer products. Holmes is a Milford, Mass., manufacturer and distributor of select home environment and small kitchen electrics.

Kyle bid in high-pars

Kyle allocated its $490 million credit facility Friday, with the term loan A seen quoted at par ¾ bid, no offers and the term loan B seen quoted at par 7/8 bid, no offers, according to a market source.

Both the $200 million three-year term loan A and the $165 million five-year term loan B are priced with an interest rate of Libor plus 200 basis points.

Kyle's facility also includes a $125 million three-year revolver with an interest rate of Libor plus 200 basis points as well.

As for allocations, "I'm not sure how overall allocations were [but] I got 93% of my order," the source added.

Wachovia is the sole lead bank on the deal.

The deal is for a home building project in Las Vegas by a group of home builders. Proceeds will be used to finance the purchase of a large parcel of land from the Bureau of Land Management.

UAL allocates add-on

UAL, parent company of United Airlines, allocated its upsized and repriced DIP, although trading levels on the reworked term loan remained at par 7/8 bid, 101 1/8 offered - in line with previous trading levels, according to a market source.

Under the amendment, the DIP term loan was increased by $300 million and pricing on the tranche was lowered to Libor plus 425 basis points from Libor plus 450 basis points.

Furthermore, pricing on the revolver was lowered to Libor plus 425 basis points from Libor plus 450 basis points as well.

In February of this year, the Elk Grove Township, Ill., airline carrier amended its DIP to, among other things, lower the interest rate to Libor plus 450 basis points from Libor plus 500 basis points and remove the 3% Libor floor that was previously in place.

In addition to the add-on and repricing, this newest amendment also involved lenders waiving events of default related to technical matters, including any agreements to acquire aircraft, and extending the maturity of the DIP to Dec. 30, with an option to extend the term until March 31, 2006.

Lenders were also asked to amend the minimum cash covenant, provide for a new capital expenditure basket for some aircraft purchases, including a cash sublimit and financing requirement for the balance of the purchase price, and make changes to the collateral package.

JPMorgan and Citigroup are the lead banks on the DIP.

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