American Airlines, Dollarama cut B loan pricing; Texas Genco breaks with B loan in the 101s

By Sara Rosenberg

New York, Dec. 8 - American Airlines Inc. and Dollarama reverse flexed spreads on their term loan Bs on Wednesday, and American Airlines even moved up the commitment deadline on its institutional tranche by a few days.

In the secondary, Texas Genco Holdings Inc.'s credit facility broke for trading, with the institutional term loan trading actively in the plus 101 area.

American Airlines cut pricing on its $250 million term loan B to Libor plus 525 basis points from Libor plus 600 basis points and has requested that lenders place all commitments and recommitments by Friday, according to market sources. Originally, the book on the term loan B wasn't set to close until Dec. 15.

The $850 million credit facility (B+) also contains a $600 million revolver with an interest rate of Libor plus 525 basis points.

The term loan is being offered at par and a fee of 50 basis points is being given to lenders for a $50 million revolver commitment.

Citigroup Global Markets Inc. and JPMorgan Chase are joint lead arrangers on the deal, with Citigroup the left lead.

Proceeds will be used to refinance the Fort Worth, Texas-based airline's existing $834 million facility. The deal is hoped to close before Christmas.

Unlike Northwest Airlines Inc., there was no special collateral call for this airline deal because collateral for the loan is a more straightforward. The collateral being used in this case is routes and aircraft, but people are really lending against the aircraft, whereas for Northwest the collateral was really routes. And, with this American deal the collateral value in dollar amounts was listed in the bank book that went out to potential lenders, whereas in the Northwest deal dollar amounts were not spelled out.

Northwest Airlines closed on its $975 million credit facility (B1/B+) - consisting of a $575 million term loan A with an interest rate of Libor plus 525 basis points and a $400 million term loan B with an interest rate of Libor plus 675 basis points - toward the end of November.

Dollarama cuts pricing

Dollarama reduced pricing on its U.S. dollar equivalent C$240 million term loan B to Libor plus 225 basis points from Libor plus 250 basis points on Wednesday morning, according to market sources.

Citigroup and RBC are the lead banks on the deal, with Citigroup the left lead.

The credit facility also contains a C$75 million revolver and C$120 million term loan A.

Proceeds will be used to help fund Bain Capital's acquisition of Dollarama, a Montreal-based franchise retail chain of dollar stores.

Texas Genco plus 101

Texas Genco $2.45 billion credit facility (Ba2/BB) hit the secondary on Wednesday with busy trading activity in its $1.625 billion seven-year term loan B throughout the session, according to a trader.

The tranche, which includes a $475 million delayed-draw piece, opened for trading at 101 bid, 101 3/8 offered, inched up to trade in the 101½ context and then settled down t 101¼ bid, 101¾ offered by day's end, the trader said.

Pricing on the B loan is set at Libor plus 200 basis points with a stepdown to Libor plus 175 basis points, effective upon the company reaching Ba1 ratings. This B loan was reverse flexed from Libor plus 250 basis points On Tuesday after price talk of 6 7/8% to 7 1/8% surfaced on the company's $1.125 billion 10-year bond deal, which priced on Wednesday at the low end of talk.

The term loan B was also upsized earlier in the syndication process by $250 million in response to an equivalent reduction in the bond deal.

The facility also contains a $325 million five-year revolver, a $200 million five-year letter-of-credit facility, and a $300 million five-year special letter-of-credit facility with an interest rate of Libor plus 225 basis points.

Goldman Sachs, Deutsche Bank, Morgan Stanley and Citigroup are lead banks on the deal (excluding the special letter-of-credit facility), with Goldman listed on the left.

Deutsche led the syndication of the $300 million special letter-of-credit facility and marketed the tranche to special investors, such as hedge funds and insurance companies.

CIT and GE Capital signed on to the revolver as co-documentation agents, ABN Amro and Royal Bank of Canada signed on as senior managing agents and NatCity signed on to the lower tier.

Proceeds from the facility, combined with proceeds from the bond deal, will be used to help fund GC Power Acquisition LLC's acquisition of Texas Genco from CenterPoint Energy Inc. for about $3.65 billion in cash.

GC Power Acquisition LLC is a newly formed entity owned in equal parts by affiliates of The Blackstone Group, Hellman & Friedman LLC, Kohlberg Kravis Roberts & Co. LP and Texas Pacific Group.

Texas Genco is a Houston wholesale electric power generating company.

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