NewPage sets price talk; Hawaiian Telecom launches; American Wholesale Insurance allocates

By Sara Rosenberg

New York, April 12 - In the bank loan primary market, NewPage Corp. released price talk on its recently launched $1.325 billion credit facility and Hawaiian Telecom launched its credit facility at anticipated price talk levels of Libor plus 225 basis points.

In other happenings, American Wholesale Insurance Group Inc. allocated its credit facility late Tuesday afternoon, with some investors pleased with the size of their positions.

NewPage Corp. set price talk on its credit facility, with the $350 million asset-based revolver talked at Libor plus 225 basis points, the $750 million term loan B talked at Libor plus 250 to 300 basis points and the $225 million timber term loan tranche talked at Libor plus 350 to 375 basis points, according to a market source.

On Monday, Moody's Investors Service assigned a B1 rating to the term loan B and a B3 rating to the timber term loan being borrowed by Escanaba Timber Co.

Ratings reflect high financial leverage, low product line diversification and the cyclical nature of the business with relatively volatile pricing and cash flow, Moody's said.

Proceeds from the $1.325 billion credit facility and a $900 million three-part bond offering that kicked off on Monday will be used to help fund Cerberus Capital Management LP's leveraged buyout of MeadWestvaco Corp.'s papers business and associated timberlands.

Under the terms of the agreement, NewPage will acquire the Papers business for $2.3 billion, which consists primarily of mills located in Chillicothe, Ohio; Escanaba, Mich.; Luke, Md.; Rumford, Maine; and Wickliffe, Ky.

The acquisition is subject to customary closing conditions, including regulatory approvals and financing, and is expected to be completed in the second quarter.

Prior to the Thursday bank meeting, the credit facility was expected to be sized at $1.12 billion consisting of a $400 million revolver, a $550 million term loan and a $170 million timber tranche, although that structure was said to be incredibly flexible and likely to change.

Goldman Sachs and UBS are joint lead arrangers on the deal, with Goldman the left lead.

NewPage is a Dayton, Ohio, producer of coated and carbonless papers.

Hawaiian Telecom launches

Hawaiian Telecom presented its proposed $875 million credit facility to potential lenders on Tuesday with price talk set at the previously expected level of Libor plus 225 basis points on the $175 million revolver, $300 million term loan A and $400 million term loan B.

The bank meeting was originally scheduled for last Thursday but was pushed off in order to give the syndicate more time to get documentation together, a market source previously explained.

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

Proceeds will be used to help fund The Carlyle Group's $1.65 billion acquisition of Verizon Hawaii from Verizon Communications Inc.

Under the LBO agreement, which was announced around mid-year 2004, Carlyle will acquire Verizon's Hawaii-based local telephone operations as well as the print directory, long distance and internet service provider operations; Verizon Wireless is not included in the transaction.

The closing of the transaction is contingent on approvals from the Hawaii Public Utilities Commission, the Federal Communications Commission and the U.S. Department of Justice, and on successfully obtaining the proposed financing.

American Wholesale allocations

American Wholesale Insurance Group's syndicate started calling accounts with allocations late in the day Tuesday, with investors pretty happy in terms of the size of the positions they put in for compared to what they actually received.

"We did well - 70% of what we asked for on the first lien and 60% on the second," a fund manager told Prospect News.

No quotes were seen on the paper by evening, although, in general, trading activity in the new bank debt is expected to be somewhat limited "as distribution was relatively limited," a second market source explained.

"[I'm] not sure if it's free to trade yet," the fund manager added. They were calling everyone with allocations but may not have gotten to everyone because it's so late in the day. They might not begin trading it until tomorrow morning."

American Wholesale Insurance Group's $150 million credit facility consists of a $110 million six-year first-lien term loan B with an interest rate of Libor plus 350 basis points and a $40 million 61/2-year second-lien term loan with an interest rate of Libor plus 850 basis points.

Originally, the first-lien term loan B was sized at $100 million but the tranche was upsized by $10 million as the second-lien term loan was downsized by $10 million to $40 million.

Also, price talk on the second-lien term loan was originally set at Libor plus 700 basis points but was increased to Libor plus 850 basis points during syndication.

Credit Suisse First Boston is the sole lead arranger on the deal that will be used to help fund the acquisition of Stewart Smith Group from Willis Group Holdings.

American Wholesale Insurance is a Charlotte, N.C.-based wholesale insurance organization. Stewart Smith is a New York-based wholesale insurance broker.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.