Movie Gallery, Acoustical break; Butler Animal, Hughes Network set price talk; Chiquita put on hold

By Sara Rosenberg

New York, April 26 - Movie Gallery Inc. and Acoustical Material Services Inc. allocated their credit facilities on Tuesday, with Movie Gallery's institutional paper wrapping around 101 and Acoustical's institutional paper trading in the upper par context.

In the primary, Butler Animal Health Supply LLC and Hughes Network Systems LLC set price talk on their proposed credit facilities as both deals launched Tuesday, and Chiquita International Inc. had to put its in-market $650 million credit facility on hold for now as the company wrangles with legal matters.

Movie Gallery's $700 million six-year term loan B freed up for trading, with the paper quoted at par 7/8 bid for $2 million and 101 1/8 offered for $2 million, according to a fund manager.

As for allocations on the term loan, the fund manager said he got 67% of the order amount he put in for.

The tranche, which was upsized from $550 million after the company's bond offering was downsized by $150 million to $325 million, is priced with an interest rate of Libor plus 300 basis points.

Movie Gallery's $870 million senior secured credit facility (B1/B+) also contains a $95 million five-year term loan A with an interest rate of Libor plus 275 basis points and a $75 million five-year revolver with an interest rate of Libor plus 275 basis points.

Wachovia Capital Markets LLC is the sole lead arranger, sole bookrunner and administrative agent on the credit facility, and Merrill Lynch is involved in the loan as well.

Proceeds from the term loans and the $325 million seven-year fixed-rate senior notes offering will be used to pay the approximately $850 million purchase price for Hollywood Entertainment Corp., plus the assumption of about $350 million of debt. Movie Gallery will be acquiring all of the outstanding shares of Hollywood for $13.25 per share in cash.

The bonds priced on Monday at 98.806 with an 11% coupon to yield 11¼%. Price talk was in the 10¾% area.

Revolver borrowings will be available for working capital and general corporate purposes.

The revolver contains an accordion feature allowing for the expansion of the tranche by $25 million under certain circumstances.

Movie Gallery is a Dothan, Ala.-based owner and operator of video specialty stores. Hollywood is a Wilsonville, Ore.-based (and will remain based there following completion of the acquisition) video chain.

Acoustical breaks in high pars

Acoustical Material Services' broke for trading as well with the $125 million seven-year term loan quoted at par ½ bid, 101 offered pretty steadily throughout the day, according to a trader.

As for allocations, one source said he got about half of what he put in for on the term loan.

The tranche is priced with an interest rate of Libor plus 275 basis points.

Acoustical's $160 million credit facility also contains a $35 million five-year revolver with an interest rate of Libor plus 275 basis points.

Proceeds were used for a dividend recapitalization when the deal closed earlier this month.

UBS acted as the sole lead bank on the deal.

Acoustical Material Services is a Montebello, Calif., wholesale building materials company.

Butler price talk

Butler Animal Health Supply revealed price talk of Libor plus 300 basis points on both its $30 million revolver (B2/B) and $140 million first-lien term loan (B2/B) and price talk of Libor plus 625 basis points on its $30 million second-lien term loan (Caa1/CCC+) as the deal launched via a bank meeting Tuesday, according to a market source.

Both term loans are being offered to investors at par and the upfront fee on the revolver is 75 basis points for a $10 million commitment, the source added.

Commitments are due May 10.

Bear Stearns is sole lead arranger and administrative agent on the $200 million credit facility, and Wells Fargo is syndication agent.

Proceeds will be used to help fund the merger of The Butler Co. and Burns Veterinary Supply Inc. As part of the transaction, Heritage Partners Inc., the current owners of Butler, has agreed to sell the company to Oak Hill Capital Partners II LP. Burns Veterinary Supply is currently a wholly owned subsidiary of the Darby Group Companies Inc. The new combined entity, Butler Animal Health Supply, will then be equally owned by Oak Hill and Darby.

The transaction is subject to normal regulatory approvals and is expected to close sometime this summer.

Butler Animal, a distributor of veterinary supplies, will be based in Dublin, Ohio.

Hughes price talk

Hughes Network Systems' also revealed price talk as its $375 million credit facility launched Tuesday as well, with the $50 million six-year revolver and $275 million seven-year first-lien term loan talked at Libor plus 300 basis points and the $50 million eight-year second-lien term loan talked at Libor plus 650 basis points, according to a market source.

The first-lien term loan contains 101 soft call protection for one year. The second-lien term loan contains call protection of 103 in year one, 102 in year two and 101 in year three.

Both term loans are being offered to investors at par.

The $325 million of term loan debt replaces the company's recently pulled $325 million offering of eight-year senior notes. The notes, which were tabled because of the back up in the bond market, had been talked late in the April 11 week at 9¾% to 10%.

"The second-lien players have seen it from the bond deal. For them it was just about pricing," the source said. The "bank meeting saw good attendance. The general feeling is OK. It's a good business. [They] have decent market share."

Proceeds from the term loans are being used to help fund the transfer of Hughes Network Systems' assets to Hughes Network Systems LLC, a newly formed company that is 50% owned by SkyTerra Communications Inc. and 50% owned by The DirecTV Group.

The completion of this joint ownership transaction was actually announced on Monday, meaning that the new credit facility was funded already but is just now being syndicated.

The revolver is expected to be undrawn at closing.

When the joint venture was first announced late last year, it was thought that Hughes would get a $375 million credit facility consisting of a $300 million term loan and a $75 million revolver, but financing plans shifted toward the high-yield market early this month, at which time it was thought that the only bank debt that Hughes would get was a $50 million revolver.

Although news of the $50 million revolver has been out in the marketplace for a little while now, the tranche will be presented to lenders on Tuesday along with the new term loan tranches, the source explained.

JPMorgan and Bear Stearns are the lead banks on the credit facility, with JPMorgan the left lead.

Hughes Network Systems is a Germantown, Md.-based provider of broadband satellite networks and services.

Chiquita on hold

Chiquita's $650 million credit facility that was supposed to help fund the acquisition of the Fresh Express unit of Performance Food Group is "on hold" for now, according to a market source, because of legal matters that are under review by the company and its financial institutions.

After the close Monday, Chiquita announced that the expected closing date of the acquisition may be delayed from around the end of April to hopefully sometime in the second quarter.

The reason for the delay is an investigation into the conduct of some Chiquita employees that recently came to management's attention.

And, because of these problems, the company and financial institutions are evaluating whether the acquisition financing will be impacted in any way.

Currently, Chiquita's credit facility consists of a $125 million five-year term loan A (B1/B+) talked at Libor plus 175 basis points, a $375 million seven-year term loan B (B1/BB-) talked at Libor plus 225 basis points and a $150 million five-year revolver (B1/B+) talked at Libor plus 175 basis points with a 50 basis point commitment fee.

Wachovia and Morgan Stanley are joint lead arrangers and joint bookrunners on the deal, with Wachovia the left lead and Goldman Sachs the documentation agent.

Chiquita is a Cincinnati marketer, producer and distributor of bananas and other fresh produce.

Werner Ladder oversubscribed

Werner Ladder Co.'s $100 million 41/2-year second-lien term loan was oversubscribed by late day Tuesday - just one day after launch - at price talk of Libor plus 1,000 basis points, divided into 850 basis points cash, 150 basis points PIK, according to a market source.

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

Proceeds will be used for a recapitalization. The company will be using $27 million to repay revolver borrowings, $69 million to repay first-lien term loan B borrowings and $4 million to cover fees and expenses.

Werner Ladder is a Greenville, Pa., manufacturer and distributor of fiberglass, aluminum and wood climbing products.

Datatel cuts pricing

Datatel Inc. reduced pricing on its $90 million six-year first-lien term loan (Ba3/B+) to Libor plus 225 basis points from Libor plus 275 basis points and reduced pricing on its $30 million 61/2-year second-lien term loan (B2/B-) to Libor plus 525 basis points from Libor plus 575 basis points, according to a market source.

The flexes were a result of both tranches being massively oversubscribed, the source added. In fact, Datatel's credit facility was oversubscribed only a few days after the April 7 bank meeting with over 15 accounts in the book.

Both term loan tranches are being offered to investors at par.

Datatel's $155 million credit facility also contains a $35 million five-year revolver (Ba3/B+) that is being offered with an upfront fee of 50 basis points for any size commitments and contains a commitment fee of 50 basis points.

Allocations are expected to go out on Wednesday of this week.

Leverage will be in the mid-3x through the first lien and mid-4x through the second lien.

Credit Suisse First Boston is the sole lead arranger on the deal, and Wells Fargo Foothill signed on as syndication agent prior to the bank meeting. Since the launch, Wachovia and BMO Harris have signed on as agents as well.

Proceeds from the credit facility will be used to help fund a management buyout of the company backed by Thoma Cressey Equity Partners and Trident Capital.

Datatel is a Fairfax, Va., provider of fully integrated enterprise information management solutions for higher education institutions.

Young ups term size, cuts spread

Young Broadcasting Inc. increased the size of its term loan due 2012 to $300 million from $275 million and at the same time decreased pricing on the tranche to Libor plus 225 basis points from Libor plus 250 basis points, according to market sources.

"Big book," one source said. "It's one of the premier names in the market. Everybody knows and understands the company. And, people like the management team."

The now $320 million amended and restated senior credit facility (B1/B) also contains a $20 million revolver due 2010.

Wachovia Securities, Lehman Brothers, Merrill Lynch and BNP Paribas are the lead banks on the deal.

Proceeds will be used to finance a cash tender offer and consent solicitation for all of the company's $246.89 million 8½% senior notes due 2008.

Shaw closes

The Shaw Group Inc. closed on its new $450 million five-year revolving credit facility, according to a company news release. BNP Paribas and Harris Nesbitt were co-lead arrangers on the deal, and BNP Paribas was sole book runner.

Of the total amount, all $450 million is available for performance letters of credit and up to $200 million is available for working capital revolving credit loans.

"With this new $450 million credit agreement in place, and the expected repurchase of our senior notes facilitated by our recent equity offering, we will have significantly strengthened our balance sheet and increased our financial flexibility," said J. M. Bernhard Jr., chairman and chief executive officer, in the release.

"We are now very favorably positioned to pursue and attract significant business opportunities in the industrial markets we serve, especially the increasing opportunities we see in the energy and chemicals markets. Shaw is uniquely qualified to serve these industries and to benefit from the market opportunities."

Shaw is a Baton Rouge, La., provider of comprehensive services to the environmental and infrastructure, power, process industries.

Resorts International closes

Resorts International Holdings LLC (Colony Capital) completed its acquisition of four casinos - two properties from Harrah's Entertainment Inc. and two properties from Caesars Entertainment Inc. - for about $1.24 billion, according to a company news release.

To help fund the acquisition, Resorts International got a new $1.06 billion credit facility consisting of a $635 million first-lien term loan (B2/B+) with an interest rate of Libor plus 250 basis points, a $350 million second-lien term loan (B3/B-) with an interest rate of Libor plus 575 basis points and a $75 million revolver (B2/B+).

Resorts' first-lien term loan was originally launched with a size of $585 million and was talked at Libor plus 325 basis points, but the tranche was increased by $50 million and pricing reverse flexed on strong investor interest.

The second-lien term loan was originally launched with a size of $400 million and was talked at Libor plus 700 basis points, but the tranche was decreased by $50 million and pricing was reverse flexed as well.

Deutsche Bank and Goldman Sachs were joint bookrunners on the deal, with Deutsche the left lead.

Colony is a Los Angeles-based real estate investment fund.

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