GXS, Allegheny launch, price talk emerges; Knology ups spread; New World Restaurant pulls refi

By Sara Rosenberg

New York, May 24 - Price talk on both GXS Corp. and Allegheny Energy Inc. surfaced Tuesday as the deals both launched via bank meetings during the session. And, Knology Inc. increased price talk on its first-lien term loan by 100 basis points after ratings on the deal emerged.

Meanwhile, New World Restaurant Group Inc. decided to postpone its new credit facility being that what was originally planned as an opportunistic refinancing seemed to be costing the company a little bit too much.

GXS released price talk on its proposed $450 million credit facility at Tuesday's launch, with the $50 million revolver (B+) and the $300 million first-lien term loan (B+) both talked at Libor plus 325 basis points and the $100 million second-lien term loan (CCC+) talked at Libor plus 650 basis points, according to a market source.

The second-lien term loan contains call protection of 102 in year one and 101 in year two, the source added.

Citigroup is the sole lead bank on the deal.

Proceeds from the term loans will be used, along with available cash, to finance the previously announced acquisition of G International Inc. and to repay some of GXS' and G International's outstanding debt - including GXS' $105 million senior secured floating-rate notes and a portion of GXS' outstanding senior subordinated reset notes.

The revolver is expected to be undrawn at closing.

GXS is a Gaithersburg, Md., provider of B2B e-commerce solutions that simplify and enhance business process integration and collaboration.

Allegheny price talk

Allegheny Energy also came out with opening price talk at its Tuesday launch, with both the $400 million five-year revolver and $300 million five-year term loan talked at Libor plus 200 basis points, according to a market source.

Commitments will be pro rata for the revolver and term loan.

Citigroup and Scotia are the lead banks on the $700 million senior unsecured credit facility, with Citigroup the left lead.

Proceeds from the credit facility will be used to refinance an existing credit facility and to redeem some existing bonds.

Existing senior unsecured ratings for Allegheny are B1/B.

Allegheny is a Greensburg, Pa., diversified utility holding company.

Knology ups pricing

Knology flexed pricing higher on its $165 million five-year first-lien term loan B to Libor plus 450 basis points from Libor plus 350 basis points on the heels of Moody's Investors Service announcing a B3 rating for the tranche on Monday, according to a market source.

Pricing on the $115 million six-year second-lien term loan (Caa2) remained at Libor plus 850 basis points cash interest plus 100 basis points PIK interest, the source added.

The proposed $305 million senior secured credit facility also contains a $25 million revolver with a 75 basis point commitment fee.

Credit Suisse First Boston is the sole lead bank on the deal that will be used to refinance the company's existing credit facility, repay existing senior notes and for general corporate purposes.

Knology is a West Point, Ga., provider of interactive communications and entertainment services.

New World Restaurant postpones

In other primary news, New World Restaurant Group opted to shelve its $185 million credit facility for now as the refinancing was not as attractive as the company had originally hoped.

"They decided the new deal was too expensive relative to the existing debt," a market source explained.

"Due to the current instability of the high-yield market, management of the company, under advisement from Bear Stearns, has decided that completing a refinancing at this time would not result in the favorable interest savings that were initially contemplated and has suspended further refinancing activity until market conditions improve," an 8-K filed by the company with the Securities and Exchange Commission elaborated.

New World Restaurant's credit facility had been launched in April with a structure of a $15 million five-year revolver (B3/CCC+) talked at Libor plus 425 basis points, a $125 million six-year first-lien term loan B (B3/CCC+) talked at Libor plus 425 basis points and a $45 million seven-year second-lien term loan (Caa1/CCC-) talked at Libor plus 675 basis points with call protection of 102 in year one and 101 in year two.

However, during the syndication process, contemplated spreads on the tranches headed higher, with price talk on the first-lien term loan revised to Libor plus 500 basis points and price talk on the second-lien term loan revised to Libor plus 750 basis points.

Furthermore, following these pricing flexes, there were even some more variations to the deal being proposed to investors, but none of those modifications really "took off," the market source added.

Proceeds from the credit facility, which was being led by Bear Stearns, were going to be used to refinance of the company's $160 million notes and AmSouth revolver.

On the heels of the company's decision to withdraw its refinancing plan, Standard & Poor's announced that the company's rating (CCC+/stable/--) will not be impacted by the decision.

S&P said the refinancing would have lowered the annual interest costs, extended debt maturities, and freed up some cash flow to modestly increase capital expenditures to improve operations. But, positive operating trends over the past two quarters are an offsetting consideration and should provide New World with the ability to manage its liquidity in the near term.

New World Restaurant is a Golden, Colo.-based company that operates in the quick casual restaurant industry.

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