Hercules Offshore upsizes, cuts spread; Paetec sets price talk; Carter's, TravelCenters break

By Sara Rosenberg

New York, June 27 - Hercules Offshore LLC increased the size of its term loan while at the same time reducing pricing and adding soft call protection to the deal. And, Paetec Communications Inc. launched its credit facility with price talk on the deal set at the lower end of previously heard spreads.

Meanwhile in the secondary, The William Carter Co.'s credit facility freed up for trading with the institutional paper trading in the lower-101 context by late day after first opening up just south of 101, and TravelCenters of America also began trading with its term loan seen quoted in the low-101 region.

Hercules Offshore upsized its five-year term loan B (B2/B-) to $140 million from $130 million and reverse flexed pricing on the tranche to Libor plus 325 basis points from original price talk of Libor plus 350 basis points, according to a market source.

Furthermore, the syndicate added 101 soft call protection for one year to the credit agreement, the source added.

Citigroup and Credit Suisse First Boston are joint lead arrangers on the deal, with Citigroup the left lead.

Proceeds from the term loan will be used to refinance existing debt.

Hercules Offshore is a Houston-based jack-up drilling and liftboat contractor.

Paetec price talk

Paetec launched its $200 million credit facility (B2/B) Monday with opening price talk of Libor plus 350 basis points on both the $160 million six-year term loan and a $40 million five-year revolver, according to a market source.

Previously, market sources had put price talk on the two tranches in the Libor plus 350 to 400 basis point range.

Deutsche Bank and CIT Group are the joint lead arrangers on the deal.

The company is getting the new deal in connection with its initial public offering of common stock.

Proceeds from the term loan will be used along with IPO proceeds to replace the existing senior secured credit facility and pay cash dividends to the holders of series A convertible preferred stock.

The revolver will be available for working capital and general corporate purposes.

Paetec is a Fairport, N.Y., competitive local exchange carrier.

Carter's breaks

William Carter's $625 million credit facility (B1/BB) allocated and freed up for trading on Monday, with the $500 million seven-year term loan B first quoted on the break at par 5/8 bid, 101 offered "for $2 million on each side" and then moving up to 101¼ bid, 101½ offered "for $2½ million on each side" by afternoon, according to a fund manager.

The term loan is priced with an interest rate of Libor plus 175 basis points - the low end of original price talk of Libor plus 175 to 200 basis points - and contains a step down to Libor plus 150 basis points if leverage is below 2x and current ratings are maintained or if the deal get a ratings upgrade from Moody's Investors Services and leverage is below 21/2x.

The step down was added early last week when pricing on the term loan firmed up.

As for allocations on the institutional tranche, "They were pretty small," the fund manager said. "I can't talk for everyone but we got about a third of what we were expecting."

Carter's credit facility also contains a $125 million six-year revolver with an interest rate of Libor plus 175 basis points, which was also the low end of original price talk of Libor plus 175 to 200 basis points, and a commitment fee of 50 basis points.

Banc of America Securities LLC and Credit Suisse First Boston are joint lead arrangers and joint bookrunners on the deal, with Bank of America also acting as administrative agent and CSFB acting as syndication agent.

Proceeds from the credit facility will be used to fund the acquisition of OshKosh B'Gosh Inc. and refinance existing Carter's debt. OshKosh has no debt outstanding.

Currently, Carter's has about $50 million outstanding under its existing senior credit facility that will be refinanced through this new deal.

Under the acquisition agreement, Carter's will pay $26.00 per share in cash for each share of OshKosh common stock outstanding for total consideration of about $312 million.

The acquisition, which is subject to regulatory review and other terms and conditions, is expected to close in the third quarter.

At closing leverage will be a little over 3x trailing 12 months EBITDA, interest coverage will be over 4x and debt to capitalization ratio will be around 55%.

Carter's is an Atlanta-based marketer of children's apparel for ages newborn to six years old. OshKosh is an Oshkosh, Wis.-based marketer of children's apparel and accessories.

TravelCenters opens for trading

TravelCenters' $805 million senior secured credit facility (B1/BB) freed up for trading on Monday, with its $680 million term loan seen quoted at 101 bid, 101¼ offered steadily throughout the session in relatively quiet trading on the name, according to a trader.

The term loan is priced with an interest rate of Libor plus 175 basis points. Pricing was reverse flexed from original price talk of Libor plus 200 basis points just last week.

The facility also contains a $125 million revolver.

J.P. Morgan Securities Inc. and Lehman Brothers Inc. are joint bookrunners and co-lead arrangers on the deal.

Proceeds will be used to refinance outstanding borrowings under the company's existing senior secured credit facility and fund a tender offer for its 12¾% senior subordinated notes due 2009.

TravelCenters of America is a Westlake, Ohio, network of full-service travel centers and heavy truck repair facilities.

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