Mitchell, US Airways flex; Advanced Medical Optics, Ply Gem set talk; American Cellular, GNC break

By Sara Rosenberg

New York, March 14 - Mitchell International Inc. made some changes to its credit facility, including lowering pricing on all tranches under the deal, and US Airways Group Inc. increased pricing on its term loan.

Also in the primary, Advanced Medical Optics Inc. came out with official price talk on its credit facility as the deal was launched with a bank meeting on Wednesday and Ply Gem Industries Inc. released guidance on its deal in preparation for its Thursday launch.

In the secondary market, American Cellular Corp.'s credit facility allocated and freed up for trading, with the term loan B quoted in the upper pars, and GNC Parent Corp.'s facility freed up as well, with its term loan B ending the day in the low pars.

Mitchell International announced modifications to its credit facility on Wednesday that included reducing spreads on the revolver, first-lien term loan B and the second-lien term loan, according to a market source.

The $20 million revolver and the $190 million first-lien term loan B are now priced at Libor plus 200 basis points, down from original talk of Libor plus 225 bps, and the $120 million second-lien term loan is now priced at Libor plus 525 bps, down from original talk at launch of Libor plus 550 bps to 600 bps, the source said.

The first-lien term loan B only has a leverage covenant and the second-lien term loan has no covenants at all, the source added.

The second-lien term loan carries call protection of 102 in year one and 101 in year two.

Goldman Sachs is the lead bank on the $330 million credit facility.

Proceeds from the debt will be used to fund the leveraged buyout of the company by an investment group led by Aurora Capital Group from Hellman & Friedman LLC.

Other buyout financing is coming from a $20 million holdco PIK mezzanine loan that will be held entirely by General Electric Pension Trust, a member of the investment group.

Leverage through the first lien is just over 4.0 times, leverage through the second lien is 7.0 times and leverage through the holdco mezzanine is 7.5 times.

Mitchell is a San Diego-based provider of information, workflow and performance management solutions to the automotive insurance claims and collision repair industries.

US Airways ups spread

Also tweaking its deal Wednesday, US Airways raised pricing on its $1.6 billion term loan to Libor plus 225 bps from Libor plus 200 bps as a result of weaker-than-anticipated B2/B ratings surfacing earlier this week, according to a fund manager.

Citigroup and Morgan Stanley are the joint lead arrangers on the deal, with Citi the administrative agent, Morgan Stanley the syndication agent and GE Commercial Finance the documentation agent.

Proceeds will be used to refinance $1.25 billion of the company's existing senior secured credit facility, to refinance $325 million of unsecured debt and to raise incremental liquidity.

US Airways is a Tempe, Ariz.-based airline.

Advanced Medical price talk

Advanced Medical Optics announced official price talk on its proposed $700 million senior secured credit facility as the deal was launched with a bank meeting in New York during market hours, according to an informed source.

The $400 million seven-year term loan was launched with price talk of Libor plus 200 basis points and its $300 million six-year revolver was launched with price talk of Libor plus 175 bps.

UBS Investment Bank, Bank of America and Goldman Sachs are the lead banks on the deal, with UBS the left lead.

Proceeds will be used to help fund the acquisition of IntraLase Corp. for about $808 million in cash.

When the acquisition was announced, the company revealed in filings with the Securities and Exchange Commission that it had actually received a commitment for a $900 million credit facility consisting of a $300 million revolver and a $600 million term loan.

However, the company had also said that it planned to cut the term loan size by $200 million to $300 million and issue $200 million to $300 million of bonds.

Advanced Medical is a Santa Ana, Calif., developer, manufacturer and marketer of medical devices for the eyes. IntraLase is an Irvine, Calif., designer, developer and manufacturer of ultra-fast laser products for vision correction.

Ply Gem floats guidance

Also on the price talk front, Ply Gem came out with guidance on its proposed $768.5 million amended and restated senior secured credit facility (B1/B+) as the transaction is gearing up to launch with a lender call on Thursday, according to a market source.

The $80 million revolver due Feb. 12, 2009 is being talked at Libor plus 300 bps, while the $663.7 million U.S. first-lien term loan due Aug. 15, 2011 and the $24.8 million Canadian first-lien term loan due Aug. 15, 2011 are being talked at Libor plus 250 bps, the source said.

UBS is the lead bank on the deal.

Negative covenants will be those that are usual and customary for covenant-light facilities of this type, including an incurrence-based debt covenant set at a 2.0 times consolidated interest coverage ratio.

The first-lien term loans will have no financial maintenance covenants.

The revolver will have a first-lien leverage covenant tested quarterly set at 4.25 times. However, this leverage covenant is only tested when there are amounts outstanding under the revolver in excess of $8 million.

Proceeds will be used to replace the existing $70 million revolver due Feb. 12, 2009, the existing $558.72 first-lien term loans due Aug. 15, 2011 and repay the existing $105 million second-lien term loan.

The revolver has a $25 million accordion feature, and the term loan has a $250 million accordion feature that is subject to compliance with a 4.25 times first-lien leverage ratio.

Mandatory prepayments include 100% of asset sale and insurance proceeds with customary reinvestment provisions, 100% of debt issuance proceeds and 50% of excess cash flow commencing with the 2008 fiscal year, stepping down to 25% when senior leverage is less than 1.5 times.

Commitments from lenders are due on March 23, with closing targeted for March 28.

Ply Gem is a Kearney, Mo., manufacturer and marketer of products for use in the residential new construction, do-it-yourself and professional renovation markets.

American Cellular frees to trade

Moving to the secondary, American Cellular's credit facility broke for trading, with the $900 million funded term loan B quoted at par ½ bid, par ¾ offered on the open and then moving up to par 5/8 bid, par 7/8 offered, where it closed out the day, according to a trader.

The $75 million delayed-draw term loan was seen quoted at par 1/8 bid early on in the session, another market source added.

The term loan B and the delayed-draw term loan are both priced at Libor plus 200 bps with a step down to Libor plus 175 bps effective when both Moody's Investors Service and Standard & Poor's upgrade the corporate ratings. Both loans carry 101 soft call protection for one year.

During syndication, the term loan B was upsized from $700 million after the company decided to cancel its $425 million senior notes offering and only tender for 75% of its $900 million 10% senior notes due 2011 as opposed to 100% of the notes. Furthermore, pricing on the term loan B and the delayed-draw was reverse flexed from original talk of Libor plus 225 bps with the addition of the ratings-based step down, as opposed to a leverage-based step down; the soft call protection was added to the tranches; and the incurrence-based secured leverage test under the loans was changed to 5.5 times from 4.5 times.

American Cellular's $1.05 billion senior secured credit facility (B1/B-/B+) also includes a $75 million revolver that is priced at Libor plus 225 bps, in line with original talk.

The only change made to the revolver during syndication was to the maintenance secured leverage covenant, which was increased to 5.5 times from 4.5 times.

Lehman and Morgan Stanley are the joint lead arrangers on the deal, with Lehman the left lead.

In addition to funding the notes repurchase, proceeds from the facility will be used to refinance the company's existing senior secured credit facility.

American Cellular is a subsidiary of Dobson Communications Corp., an Oklahoma City-based provider of wireless phone services to rural markets.

GNC breaks

GNC's credit facility also hit the secondary market on Wednesday, with its $675 million term loan B quoted at par ½ bid, par ¾ offered on the open, moving as low as par bid, par ¼ offered on selling pressure, and then rebounding slightly to par 1/8 bid, par 3/8 offered, where it ended the session, according to a trader.

The term loan B is priced at Libor plus 225 bps.

During syndication, the term loan B was upsized from $660 million as the company reduced its subordinated notes offering to $110 million from $125 million, and pricing on the paper was flexed down from original talk at launch of Libor plus 250 bps.

GNC's $735 million credit facility (B1/B-) also includes a $60 million revolver that was upsized during syndication from $50 million.

JPMorgan and Goldman Sachs are the lead banks on the deal, with JPMorgan the left lead.

Proceeds from the credit facility will be used to help fund the leveraged buyout of the company by Ares Management LLC and Ontario Teachers' Pension Plan from Apollo Management, LP in a transaction valued at around $1.65 billion, subject to certain adjustments.

GNC is a Pittsburgh-based retailer of nutritional products, vitamin, mineral, herbal and other specialty supplements and sports nutrition, diet and energy products.

Kelson fall continues

In other trading news, Kelson Holdings LLC's second-lien term loan continued to slide on Wednesday in a generally weaker secondary market, according to a trader.

The second-lien loan ended the day at 96 bid, 96¾ offered, down from Tuesday's levels of 97¾ bid, 98½ offered, the trader said.

"It was a tough deal to get done so it's just getting hit harder," the trader said.

The second-lien loan is priced at Libor plus 650 bps pay in kind. Pricing can be changed to Libor plus 575 bps cash pay if the company's cash flow operations improve enough that EBITDA over interest is greater than 1.5 times

Kelson, a company wholly owned by Harbinger Capital Partners, is a holding company established for the management and ownership of certain power plants.

Hanger closes

Hanger Orthopedic Group, Inc. completed the repricing of its term loan B to Libor plus 225 bps from Libor plus 250 bps, with a step down to Libor plus 200 bps if corporate credit ratings are upgraded to B2/B.

Originally, the repricing asked lenders to take the spread down to Libor plus 200 bps, but it was revised during the process.

Citigroup acted as the lead bank on the deal.

Hanger is a Bethesda, Md., provider of orthotic and prosthetic patient-care services.

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