Vanguard details emerge; Cedar Fair seeks OK for buyout, add-on; Hexion up with bond upsizing

By Sara Rosenberg

New York, Jan. 15 - Vanguard Health Systems Inc. came out with details, such as tranching and price talk, on its proposed credit facility, as the transaction was launched to investors during Friday's market hours.

In other news, Cedar Fair LP launched its amended senior secured credit facility to existing lenders early on in the session that would permit the acquisition of the company by Apollo Global Management, provide for an incremental loan and extend some maturities.

Over in trading, Hexion Specialty Chemicals Inc.'s strip of C-1 and C-2 bank debt moved higher following news that the company's bond offering was increased since that means a bigger paydown for term loan lenders.

Vanguard structure, talk

Vanguard Health held a conference call on Friday to kick off syndication on its proposed $1.025 billion credit facility, and in connection with launch, structure and price talk on the deal surfaced, according to a market source.

The facility consists of a $260 million revolver and a $765 million term loan, with both tranches talked at Libor plus 350 basis points with a 1½% Libor floor, the source said.

The term loan is being offered to investors at an original issue discount of 98½ to 99, the source added.

Bank of America and Barclays are the lead banks on the deal that will be used to refinance existing debt.

Only existing lenders are being approached for this new deal.

Vanguard is a Nashville, Tenn.-based owner and operator of acute care hospitals and complementary facilities and services.

Cedar Fair seeks amendment

Cedar Fair also held a conference call on Friday for existing lenders, at which time the company launched an amended $1.25 billion senior secured credit facility (Ba3/BB) that would allow for the change of control that would result from the buyout by Apollo Global Management, according to market sources.

The company is being purchased for $11.50 in cash per limited partnership unit. The transaction is valued at about $2.4 billion, including the refinancing of outstanding debt.

Lenders are being offered a 12.5 bps fee for the change of control amendment, sources said.

Bank of America, JPMorgan, Barclays Capital, UBS and KeyBanc Capital Market are the lead banks on the amended deal.

Cedar Fair to get additional debt

Cedar Fair's amended facility consists of a $1 billion term loan, of which $100 million is incremental debt and $900 million is existing, and a $250 million existing revolver, sources said.

Currently, a portion of the existing $900 million of term loan debt matures in 2012 and a portion of it matures in 2014.

The term loan borrowings that mature in 2012 would be extended to 2014 so that the entire facility would expire at the same time, and the revolver would also be extended to 2014 from 2012, sources continued.

Pricing on the amended term loan and the extended revolver would be Libor plus 400 bps with no Libor floor - in line with pricing on the existing term loan that matures in 2014. The existing 2012 term loan debt is currently priced at Libor plus 200 bps.

Cedar Fair getting notes, equity

Funding for the buyout of Cedar Fair is expected to come from the sale of $700 million of high-yield bonds and up to $765 million in equity, as well as from the incremental term loan.

The bonds are backed by a commitment for a $700 million senior unsecured bridge loan.

Closing on the transaction is expected by the beginning of the second quarter of 2010, subject to approval of holders of two-thirds of Cedar Fair's outstanding units, the receipt of regulatory approvals and other conditions. The transaction does not include a financing condition.

Cedar Fair levels pretty flat

Following the lender call on Friday, Cedar Fair's term loan levels in the secondary market were basically unchanged to slightly wider or stronger, depending on which trader was asked.

The term loan due in 2012 was quoted by one trader at 99 bid, 99¾ offered, compared to Thursday's levels of 99¼ bid, 99 7/8 offered, and by a second trader at 99¼ bid, 99¾ offered, versus 99 1/8 bid, 99 5/8 offered.

And, the term loan due in 2014 was quoted by the first trader at 99¾ bid, par ¼ offered, compared to 99½ bid, par ¼ offered, and by the second trader at 99 3/8 bid, 99 7/8 offered, in line with previous levels.

Cedar Fair is a Sandusky, Ohio-based amusement-resort operator.

Airvana reveals pricing

Airvana Inc. disclosed on Friday that its $170 million seven-year non-amortizing senior secured loan will carry initial pricing of 14.75%, with a step down to 14% if the loan is reduced to $85 million, according to an SC 13E3 filed with the Securities and Exchange Commission.

There is call protection for mandatory prepayments of 108.5 in year one, 107.5 in year two, 106.5 in year three, 104.5 in year four, 102.5 in year five and par thereafter. And, for optional prepayments, the loan is non-callable for three years, then at 107 in year four, 104 in year five, 101 in year six and par thereafter.

GSO Capital Partners is the lead lender on the deal and Wilmington Trust Co. is the agent.

Financial covenants include a total leverage ratio.

Airvana being acquired

Proceeds from Airvana's loan will be used to help fund its buyout by 72 Mobile Holdings LLC, an entity formed by S.A.C. Private Capital Group LLC, GSO Capital Partners, Sankaty Advisors LLC and ZelnickMedia.

Under the terms of the agreement, 72 Mobile will purchase each share of Airvana common stock for $7.65 cash, in a transaction valued at around $530 million.

Other financing for the transaction will come from $103.1 million in equity.

Completion of the buyout is expected to occur by the end of the first quarter, subject to approval of Airvana shareholders, regulatory approvals and other closing conditions. There is no financing condition.

Airvana is a Chelmsford, Mass.-based provider of mobile broadband network infrastructure products.

Hexion better on bond news

Switching back to trading happenings, Hexion's strip of C-1 and C-2 bank debt gained some ground after the company increased its senior secured notes offering to $1 billion from $700 million, according to a trader.

The strip was quoted at 96 bid, 97 offered, up from 94 bid, 95 offered prior to the upsizing, the trader said, adding that the strengthening actually took place on Thursday night shortly after the news came out.

Proceeds from the $1 billion of 8.875% senior secured notes, which priced at 99.296, will be used to repay $800 million of term loans and for general corporate purposes.

By comparison, when the bond deal was expected to be sized at $700 million, lenders were told that $500 million of the company's term loans would be repaid.

Proceeds from the notes will be placed into escrow until the company obtains approval of its credit facility amendment, which, among other things, allows for the notes.

Hexion amendment details

As was previously reported, Hexion is out to lenders with an amendment that, in addition to allowing the note sale, would extend term loan debt to May 5, 2015 in return for higher pricing and extend revolver maturities to May 5, 2013.

As of Jan. 12, the company had about $200 million in orders towards the extended revolver, up from $175 million prior to the launch of the amendment.

Pricing on the extended revolver is Libor plus 450 bps and committing revolver lenders are being offered a 200 bps upfront fee as well as a 200 bps ticking fee.

The extended revolver would take effect upon the May 31, 2011 expiration of the existing revolver.

The amendment would also revise some covenants contained in the credit agreement, reset the accordion feature to $200 million, permit the issuance additional senior notes or loans as long as an agreed amount of proceeds are used to prepay term loans and/or revolver loans at par, and allow the sale of additional debt, including junior or unsecured debt, in an amount not to exceed the accordion feature.

Hexion is a Columbus, Ohio-based thermoset resins company.

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