Party City breaks; GenOn up on NRG merger; LodgeNet falls; Windstream reveals guidance

By Sara Rosenberg

New York, July 23 - Party City Holdings Inc.'s credit facility freed up for trading during Monday's session, and GenOn Energy Inc.'s term loan was stronger with news that it is merging with NRG Energy Inc., while NRG's term loan was unchanged to a touch weaker.

Also on the trading front, LodgeNet Interactive Corp.'s term loan continued its freefall that began last week after poor earnings were announced.

Over in the primary, Windstream Corp. began circulating price talk on its upcoming term loans, and Pilot Travel Centers LLC revealed plans to bring new bank debt to market later this week.

Party City tops OID

Party City's credit facility hit the secondary market on Monday, with the $1.125 billion term loan (B1/B) quoted at 99 7/8 bid, par 3/8 offered on the open and then it moved up to par 1/8 bid, par 5/8 offered, according to a trader.

Pricing on the term loan is Libor plus 450 basis points with a 1.25% Libor floor, and it was sold at an original issue discount of 99. There is 101 soft call protection for one year.

During syndication, the term loan was upsized from $1.05 billion and pricing was reverse flexed from talk of Libor plus 500 bps to 525 bps.

The company's $1.525 billion credit facility also includes a $400 million ABL revolver.

Party City being acquired

Proceeds from Party City's credit facility, $700 million of notes and equity will fund its purchase by Thomas H. Lee Partners LP from Advent International Corp., Berkshire Partners LLC and Weston Presidio in a deal valued at $2.69 billion.

As a result of the term loan upsizing, the equity portion of the transaction was reduced.

Deutsche Bank Securities Inc., Bank of America Merrill Lynch, Goldman Sachs & Co., Morgan Stanley Senior Funding Inc. and Barclays Capital Inc. are the lead banks on the credit facility deal.

Party City is a Rockaway, N.J.-based designer, manufacturer and distributor of party goods, including paper and plastic tableware, metallic balloons, accessories, novelties, gifts and stationery.

GenOn rises

GenOn's term loan was better in trading after it was announced that the company will be merging with NRG, according to traders.

The term loan was quoted by one trader at par ¼ bid, 101 offered, up from par bid, par ¾ offered, by a second trader at par ½ bid, 101½ offered, up from 99½ bid, par ½ offered, and by a third trader at par 3/8 bid, 101 offered, up from par ¼ bid, par ¾ offered.

The second trader explained that although people are expecting to be paid down at par because the merger won't close until 2013, the paper is worth more than paper at this time because of the yield.

The paydown is expected since the company revealed in a presentation on Monday that the GenOn's credit facility, under which there is about $788 million outstanding, is expected to be eliminated with the merger.

GenOn revises guidance

With the merger news, GenOn updated its estimated results, with full-year 2012 adjusted EBITDA guidance now set at $467 million, up from $446 million previously.

Also, 2013 adjusted EBITDA guidance was raised to $687 million from $669 million.

And, a 2014 adjusted EBITDA estimate of $730 million was provided.

The company will announce its second quarter 2012 earnings results on Aug. 9.

NRG flat to down

Meanwhile, NRG's term loan was unchanged to slightly lower with the debt quoted by one trader at 99½ bid, par offered, versus 99½ bid, par ½ offered on Friday, by a second trader at 99½ bid, par ¼ offered, down from par bid, par ½ offered, and by a third trader at par bid, par ½ offered, unchanged on the day.

NRG released preliminary results for its second quarter with the merger announcement, disclosing expected adjusted EBITDA of around $530 million.

In addition, the company reaffirmed its 2012 adjusted EBITDA guidance at around $1.8 billion to $2 billion and its 2012 free cash flow before growth investments at $800 million to $1 billion.

NRG/GenOn merger details

Under the agreement, Princeton, N.J.-based NRG and Houston-based GenOn are combining in a stock-for-stock tax-free transaction to create a competitive power generation company with a combined enterprise value of $18 billion that will retain the NRG name. GenOn shareholders will receive 0.1216 of a share of NRG common per share.

Following completion of the transaction, NRG shareholders will own 71% of the combined company and GenOn shareholders will own 29%.

Closing is expected in the first quarter of 2013, subject to customary conditions and regulatory as well as shareholder approvals.

The combined company will have financial and commercial headquarters in Princeton, N.J., and operational headquarters in Houston.

NRG/GenOn financials

Preliminary forward pro forma financial guidance for the combined NRG/GenOn company is adjusted EBITDA for 2013 in a range of roughly $2.5 billion to $2.7 billion and for 2014 in a range of about $2.6 billion to $2.8 billion.

Free cash flow before investments for the combined company for 2013 is estimated at $825 million to around $1 billion and for 2014 at around $845 million to $1 billion.

Pro forma corporate debt to EBITDA for 2013 will be 4.4. times, versus 4.8 times on an NRG stand-alone basis, and for 2014 will be 4.1 times, compared to 4.6 times on a stand-alone basis.

No bondholder approval is needed for the transaction, but GenOn's holdco debt is puttable. In case, the holders exercise their put rights, the company has obtained a $1.6 billion bridge loan to fund the redemption.

LodgeNet lower again

In more trading happenings, LodgeNet's term loan declined some more, with levels quoted at 65 bid, 67 offered, compared to 67½ bid, 69½ offered on Friday, according to a trader.

The debt has been sliding since last week when quarterly results were disclosed and the company withdrew its financial guidance for 2012 due to market uncertainties and challenges with room churn and Guest Entertainment revenue.

Prior to the earnings news, the loan was quoted at 75 bid, 78 offered in the secondary market.

As was previously reported, LodgeNet reported a net loss of $103.1 million for the second quarter, or $4.08 per share, compared to a net loss of $4.4 million, or $0.17 per share last year, and revenue was $92.8 million, versus $106.6 million.

LodgeNet is a Sioux Falls, S.D.-based provider of interactive media and connectivity services to hospitality and health care businesses.

Windstream floats talk

Switching to the new deal side, Windstream went out with some pricing guidance on its $900 million in new term loan debt in preparation for its upcoming conference call that is set for 2:30 p.m. ET on Wednesday, according to sources.

The $300 million five-year term loan A-4 is being talked at Libor plus 225 bps, subject to a grid, with no Libor floor, and the $600 million seven-year term loan B-3 is being talked at Libor plus 325 bps to 350 bps with a 1% floor and an original issue discount that is still to be determined, the source remarked.

J.P. Morgan Securities LLC, Bank of America Merrill Lynch, Barclays Capital Inc., Citigroup Global Markets Inc., CoBank, Goldman Sachs & Co., Morgan Stanley Senior Funding Inc., RBC Capital Markets LLC, RBS Securities Inc., SunTrust Robinson Humphrey Inc., Union Bank of California and Wells Fargo Securities LLC are leading the deal.

Windstream bid softens

With the additional debt news, Windstream's term loan B-2 was bid lower with levels seen at 99½ bid, par ¼ offered, versus 99¾ bid, par ¼ offered on Friday, a trader said.

Proceeds from the new debt will be used to repay existing revolver debt and for working capital needs.

In connection the new loans, the company is asking for consents from lenders to amend its existing credit facility to allow for the debt and revise certain other definitions and provisions.

The transaction is expected to be completed in August, a news release added.

Windstream is a Little Rock, Ark.-based provider of advanced communications and technology services, including managed services and cloud computing.

Pilot readies loans

Pilot travel Centers also joined the calendar, scheduling a conference call for Wednesday to launch $1.1 billion of new bank debt (Ba2), according to a market source.

The debt consists of a $100 million add-on revolver, a $300 million add-on term loan A and a $700 million term loan B, the source said.

Bank of America Merrill Lynch, Wells Fargo Securities LLC and SunTrust Robinson Humphrey Inc. are leading the deal that is expected to be used to fund a distribution to shareholders and for acquisitions and general corporate purposes.

Pilot is a Knoxville, Tenn.-based operator of travel centers.

Biomet sets deadline

In other news, Biomet Inc. held its amendment and extension call on Monday, and U.S. investors are being asked to get their commitments/consents in by Wednesday, while European lenders have until Thursday, according to a market source.

Under the proposal, the company is looking to extend its U.S. and euro term loan borrowings to July 2017 from March 25, 2015.

As of Feb. 29, there was about $2.24 billion outstanding under the U.S. term loan and about €838 million outstanding under the euro term loan.

Lenders are being offered a 10 bps consent fee and a 15 bps extension fee, the source added.

Biomet pricing

As reported earlier, price talk on Biomet's extended U.S. debt is Libor plus 375 bps to 400 bps, and the extended euro debt is expected to be priced 25 bps wider than the U.S. piece.

By comparison, non-extended U.S. and euro term loan pricing is Libor/Euribor plus 300 bps.

Bank of America Merrill Lynch, Citigroup Global Markets Inc., Barclays Capital Inc., Goldman Sachs & Co., J.P. Morgan Securities LLC and Wells Fargo Securities LLC are leading the deal.

Biomet is a Warsaw, Ind.-based designer, manufacturer and marketer of products used primarily by musculoskeletal medical specialists in both surgical and non-surgical therapy.

LifePoint allocates

LifePoint Hospitals allocated its $800 million credit facility on Monday and the deal is expected to close on Tuesday, a market source told Prospect News.

The facility consists of a $350 million revolver and a $450 million term loan A, both priced at Libor plus 175 bps.

Citigroup Global Markets Inc., Barclays Capital Inc. and Bank of America Merrill Lynch are the lead banks on the deal that will be used to refinance existing debt.

LifePoint Hospitals is a Brentwood, Tenn.-based hospital company.

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