Hawker tweaks deal; Spansion pulled; Visteon down on more debt; Freeport up on technicals

By Sara Rosenberg

New York, March 19 - Hawker Beechcraft Corp. made a second round of changes to its credit facility, this time reducing the size of the synthetic letter-of-credit facility, lowering pricing on the synthetic letter-of-credit facility and the term loan and adding a step down to those two tranches

Also in the primary, Spansion Inc. pulled its term loan B repricing proposal from the market.

In secondary happenings, Visteon Corp.'s term loan came under some pressure as the company is looking for additional debt, Freeport-McMoRan Copper & Gold Inc.'s term loan B was a touch stronger on market technicals, Community Health Systems Inc.'s term loan headed lower on paydown expectations and Graham Packaging Holdings Co.'s term loan B dipped on refinancing/repricing news.

Hawker Beechcraft's revised seven-year covenant-light pre-funded synthetic letter-of-credit facility is now sized at $110 million, down from $250 million, pricing was reverse flexed to Libor plus 200 basis points from original talk of Libor plus 225 bps to 250 bps and a step down to Libor plus 175 bps was added effective when corporate family ratings are upgraded to B1/B+, according to a fund manager.

Pricing on the company's $1.3 billion covenant-light seven-year term loan was also reverse flexed to Libor plus 200 bps from original talk of Libor plus 225 bps to 250 bps and the same step down to Libor plus 175 bps effective when corporate family ratings are upgraded to B1/B+ was added to this tranche as well, the fund manager said.

Earlier on in the syndication process, the term loan had been upsized from $1.2 billion after the company downsized its high-yield bond offering by the equivalent amount.

The company's now $1.81 billion (down from a most recent size of $1.95 billion and an original size of $1.85 billion) credit facility (Ba3/BB-) also includes a $400 million six-year revolver with a 50 bps commitment fee.

Recommitments from lenders were due on Monday.

Credit Suisse, Goldman Sachs and Lehman are the lead banks on the deal, with Credit Suisse the left lead.

Proceeds from the credit facility, along with the $1.1 billion of bonds and sponsor equity, will be used to fund the acquisition of Raytheon Aircraft Services, Ltd., the aviation division of Raytheon Co., by Onex Corp. and GS Capital Partners.

Hawker Beechcraft is a Wichita, Kan., manufacturer of business jet, turboprop, piston-driven and military training aircraft.

Spansion pulls repricing

Spansion pulled its repricing proposal from market, under which the company was asking lenders to lower the spread on its term loan B to Libor plus 275 bps from Libor plus 300 bps, according to a market source.

Bank of America was acting as the lead bank on the deal.

Spansion is a Sunnyvale, Calif., flash memory devices company.

Visteon softens on added debt

Moving to the secondary market, Visteon's term loan was lower on Monday as news of plans for an additional $500 million term loan made its way around the market, according to a trader.

The term loan ended the session at par ½ bid, 101 offered, down from previous levels of 101 bid, 101½ offered, the trader said.

The company announced late-day Friday that it is looking to get a new $500 million term loan that will mature in December 2013.

On Monday, news emerged that the loan will be launched with a bank meeting during Tuesday's market hours and that price talk is set at Libor plus 300 bps, in line with pricing on the company's existing $1 billion secured term loan that expires in June 2013.

JPMorgan and Citigroup are the joint lead arrangers on the deal, with JPMorgan administrative agent.

The Van Buren Township, Mich., automotive parts supplier previously said it would consider further enhancing its liquidity if market conditions were favorable.

Freeport-McMoRan up as buyers emerge

Freeport-McMoRan's term loan B inched higher during trading hours as better buying was noticeable for the paper, according to a trader.

The term loan B closed the day at par 1/8 bid, par 3/8 offered, up from Friday's closing levels of par bid, par ¼ offered, the trader said.

Freeport-McMoRan announced Monday that it plans to repay some of its new term loan B and term loan A debt using proceeds from an offering of 10 million shares of mandatory convertible preferred stock and 35 million shares of common stock.

When asked whether the paydown could have anything to do with the paper's movement in trading, the trader responded, "It was more of a technical move than relating to the news that came out today. It was lower on Friday because of technical pressure. Now buyers are coming in."

Also on Monday, Freeport-McMoRan said it closed on the new $11.5 billion senior secured credit facility that was used to fund the acquisition of Phelps Dodge Corp. for roughly $26 billion in cash and stock.

The facility consists of a $7.5 billion seven-year term loan B (Ba2/BB+/BB) priced at Libor plus 175 bps, a $2.5 billion five-year term loan A (Ba2/BB+/BB) priced at Libor plus 150 bps, a $500 million five-year revolver (Baa3/BB+/BBB-) available to Freeport and PT Freeport Indonesia priced at Libor plus 150 bps with a 37.5 bps commitment fee and a $1 billion five-year revolver (Ba2/BB+/BB) priced at Libor plus 150 bps with a 37.5 bps commitment fee.

JPMorgan and Merrill Lynch acted as the lead banks on the deal, which was also used to refinance Freeport's existing credit facility.

Freeport-McMoRan is a Phoenix-based copper, gold and molybdenum mining, exploration and production company.

Community Health dips on paydown anticipations

Community Health Systems' term loan moved into the lower par context as investors expect that the company's existing debt will be taken out in connection with the acquisition of Triad Hospitals Inc., according to a trader.

The term loan ended the session at par ¼ bid, par ½ offered, down from prior levels of par ¾ bid, 101¼ offered, the trader said.

Community Health is buying Triad for $54 per share in cash, or approximately $6.8 billion, including $1.7 billion of existing debt.

To help back the transaction, Community Health has received a commitment for an up to $6.95 billion senior secured credit facility and $3.365 billion of senior notes, which will be led by Credit Suisse and Wachovia.

The financing commitment includes $1.25 billion of undrawn available capital.

The acquisition is expected to close in the third quarter, subject to certain closing conditions including approval by Triad's stockholders, antitrust clearance and other regulatory approvals. There is no financing condition.

Community Health is a Nashville, Tenn., operator of general acute care hospitals in non-urban communities. Triad is a Plano, Texas, owner and manager of hospitals and ambulatory surgery centers.

Graham Packaging down on refi/repricing

Graham Packaging's term loan B was also trading lower on Monday as the company launched a new $1.875 billion term loan B that will essentially reprice/refinance the existing first-lien term loan B and repay second-lien term loan debt, according to a trader.

The existing term loan B ended the day at par 1/8 bid, par 3/8 offered, down from 101 1/8 bid, 101 3/8 offered, the trader said.

Graham Packaging's newly launched term loan B is being talked at Libor plus 200 bps and is being led by Deutsche Bank and Citigroup.

Graham Packaging is a York, Pa.-based producer of custom high-value-added blow-molded plastic containers.

Tenneco closes

Tenneco Inc. closed on its new $830 million senior credit facility (Ba2/BB/BB+) consisting of a $550 million five-year revolver, a $150 million five-year term loan A and a $130 million seven-year synthetic letter-of-credit facility, according to a company news release.

Pricing on all three tranches is set at Libor plus 150 bps.

During syndication, the synthetic letter-of-credit facility was downsized from $177.5 million and pricing was reverse flexed from original talk of Libor plus 175 bps, the revolver was upsized from $375 million, the term loan A was upsized from $100 million and a $177.5 million seven-year term loan B that was being talked at Libor plus 175 bps was dropped from the capital structure.

JPMorgan and Deutsche Bank acted as the lead banks on the deal, with JPMorgan the left lead.

Proceeds were used to refinance the company's existing $831 million senior credit facility, which consists of $356 million in term loans, a $155 million synthetic letter-of-credit facility and a $320 million revolver due December 2008.

"In addition to expanding our revolver, this new facility will reduce our annual interest expense by more than $4 million annually. Additionally, we secured more favorable covenant terms, including the elimination of our fixed charge covenant, which will provide Tenneco the flexibility needed to help it achieve its long-term plans more quickly," said Gregg Sherrill, chairman and chief executive officer, in the release.

Tenneco is a Lake Forest, Ill., designer, manufacturer and marketer of emission control and ride control products and systems for the automotive original equipment market and aftermarket.

Gray Television closes

Gray Television, Inc. closed on its new $1.025 billion senior credit facility (Ba3/B) consisting of a $100 million seven-year revolver and a $925 million institutional term loan due Dec. 31, 2014, with both tranches priced at Libor plus 150 bps, according to a company news release.

Wachovia, Bank of America and Goldman Sachs acted as joint bookrunners on the deal, with Wachovia sole lead arranger. Wachovia is the administrative agent, Bank of America is syndication agent, and Goldman, Deutsche Bank and Bank of Scotland are co-documentation agents.

The company drew $610 million under the term loan and $8 million under the revolver to refinance its existing credit facility. The company can draw up to $275 million under the term loan to redeem its 9¼% senior subordinated notes due 2011 and can draw up to $40 million under the term loan to redeem its series C preferred stock.

Gray is an Atlanta-based television broadcasting company.

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