MetroPCS eyes handful of changes; Hughes Network ups second-lien spread; Rexnord breaks in low pars

By Sara Rosenberg

New York, May 13 - MetroPCS Wireless Inc. made a number of changes to its credit facility, including raising pricing and changing some terms, and some more changes are still being contemplated including a potential shift in funds. Also in the primary, Hughes Network Systems LLC flexed up pricing on its second-lien term loan by 75 basis points.

In the secondary, Rexnord Corp.'s add-on/repricing deal freed up for trading on Friday in the lower-par context.

MetroPCS' $700 million first-lien term loan was changed to a six-year maturity as opposed to the originally proposed seven-year tenor and price talk was revised upwards, with speculation being that it's going to Libor plus 425 basis points from Libor plus 375 basis points - although no official word on the flex has been released, according to market sources.

Call protection on the first-lien term loan remains at 102 in year one and 101 in year two.

As for the $250 million seven-year second-lien term loan, call protection has been changed to non-callable for two years then at 102 in year three and 101 in year four, sources said. Originally, the second-lien was launched with call protection of 102 in year one and 101 in year two.

In addition, price talk on the second lien is also said to be heading higher, with rumor being that the deal will come at Libor plus 625 basis points as opposed to the Libor plus 575 basis points pricing that the tranche was launched with - although, once again, no official word on the flex had come out prior to press time.

Another modification to the deal that is being made is that a leverage covenant will be added to the credit agreement, but specifics on the covenant are not yet available, one source said. "Max 5x leverage first lien is what I heard," another source chimed in.

Lastly, being that the second-lien term loan is oversubscribed with the juicier proposed terms, market talk is that sizes are somewhat in flux, with the syndicate discussing whether to enlarge the second lien and reduce the first lien. A decision on the possible shift of funds has not yet been made, sources added.

The $950 million senior secured credit facility is unrated at this time because financial statements are being held up, but as a reference spot, the senior unsecured notes at the holding company level are rated B3 and this credit facility is a secured deal at the operating company level.

Last-12-months pro forma first-lien leverage is 3.1x, secured debt to EBITDA through the second-lien is 4.2x and EBITDA to cash interest expense is a little over 3x.

Bear Stearns is the sole lead arranger and bookrunner on the deal that will be used to fund a tender offer for MetroPCS Inc.'s $150 million 10¾% senior notes due 2011 and refinance $540 million of existing debt, with remaining proceeds going toward cash on the balance sheet for build-out and corporate uses.

MetroPCS Wireless is a Dallas-based provider of wireless communications services.

Hughes second lien flexes up

Hughes Network Systems increased pricing on its $50 million eight-year second-lien term loan (B3/B) to Libor plus 725 basis points from Libor plus 650 basis points but left call protection provisions unchanged at 103 in year one, 102 in year two and 101 in year three, according to a market source.

Earlier this week, the syndicate had already revised price talk on the $275 million seven-year first-lien term loan (B1/B) higher, changing it to Libor plus 325 basis points from original price talk of Libor plus 300 basis points. The tranche contains - and has since launch - 101 soft call protection for one year.

Hughes' $375 million credit facility also contains a $50 million six-year revolver (B1/B).

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

The $325 million of term loan replaces the company's previously 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%.

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 in late April, meaning that the new credit facility was already funded but is now being syndicated.

The revolver is expected to be undrawn at closing.

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

Rexnord breaks

Rexnord's $587 million repriced and resized term loan B broke for trading on Friday with the paper seen quoted at par 1/8 bid, par 3/8 offered, according to a market source.

The tranche is comprised of $312 million of incremental term loan B bank debt due December 2011 (B1/B+) and $275 million of existing term loan B debt. Pricing on the entire tranche is Libor plus 225 basis points with a step down if total leverage is less than or equal to 3.75x.

The existing term loan B debt had been previously priced at Libor plus 300 basis points.

Deutsche Bank and Credit Suisse First Boston are the lead banks on the deal.

Proceeds from the term loan B add-on will be used to fund the acquisition of Falk Corp., an oration industrial company, from Hamilton Sundstrand for $295 million.

Rexnord is a Milwaukee-based manufacturer of mechanical power transmission components.

Collins & Aikman falls

Collins & Aikman Corp.'s bank debt continued its downward spiral - along with everything else in the market - on Friday, falling off about two to three points on the bid side to levels of 89 bid, 91 offered from levels of 91 bid, 95 offered, according to one trader, and levels of 88 bid, 90 offered from levels of 91 bid, 92 offered, according to a second trader.

The bank debt dropped off on Thursday from previous levels of 96 bid, 98 offered after the company revealed that it is facing liquidity challenges, the resignation of its chief executive officer, as well as the need to seek loan waivers. And, downgrades by Standard & Poor's on Thursday and by Moody's Investors Service on Friday didn't help the situation either.

On Thursday, the company said that it would be seeking a waiver under its credit facility of the consolidated leverage ratio covenant because it anticipates being unable to comply with this requirement based on estimated first-quarter 2005 performance.

Collins & Aikman went on to say that it continues to face significant near-term liquidity challenges. Its credit facility is fully drawn so it must rely fully on timely access to its receivables facility, foreign receivables factoring arrangement and fast pay financing programs to fund ongoing operations.

The company said it is looking at ways to improve results and enhance liquidity. It is transitioning the General Motors fast pay program administered by GECC to one administered by GMAC that will provide a commitment to October. Also, it is continuing to work with its largest customers and suppliers to enhance commercial terms to improve operating results, cost recovery and liquidity.

As of May 11, Collins & Aikman had cash and availability under its financing arrangements of $13.4 million.

In addition to these liquidity problems, the company also revealed a shake up in management. David A. Stockman, chief executive officer, chairman of the board and director, resigned. Charles E. Becker, a former director of the company, has agreed to serve as acting chief executive officer. Marshall Cohen, a current director of the company, was named as non-executive interim chairman of the board of directors.

Following these announcements, S&P lowered its corporate credit rating on Collins & Aikman to CCC- from CCC+ and downgraded Collins & Aikman Products Co.'s senior secured debt to CCC- from CCC+.

The downgrade reflects S&P's belief that the company could be forced to seek bankruptcy protection in the near term because of severe liquidity pressures. The outlook is negative.

Then, on Friday, Moody's came out with its own downgrade, cutting Collins & Aikman Products' senior secured credit facility to Caa2 from B3. The outlook remains negative.

Moody's said that the rating downgrade reflects several adverse new company developments, which have led the rating agency to believe that a reorganization is imminent in the absence of a material infusion of additional funds - ideally in the form of equity.

Collins & Aikman is a Troy, Mich., designer, engineer and manufacturer of automotive interior components.

Alliance One closes

Alliance One International Inc. - the company formed by the merger of Dimon Inc. and Standard Commercial Corp. - closed on its new $650 million senior secured credit facility (B1/BB-) consisting of a $150 million term loan A with an interest rate of Libor plus 275 basis points, a $200 million term loan B with an interest rate of Libor plus 325 basis points and a $300 million revolver with an interest rate of Libor plus 275 basis points.

The term loan B was added to the deal during syndication because the company's proposed bond offering was downsized.

And, pricing on the pro rata tranches was flexed up by 25 basis points from Libor plus 250 basis points during syndication as well.

Wachovia was the lead bank on the deal with ING and Deutsche also involved.

Proceeds from the credit facility, along with proceeds from a $415 million two-tranche bond offering, were used to repay outstanding debt under Dimon's and Standard's existing credit facilities and to consummate the tender offers for Dimon's $200 million 9 5/8% senior notes due 2011 and $125 million 7¾% senior notes due 2013 and Standard's $150 million 8% senior notes due 2012. Alliance One also intends to redeem, within 60 days, all of its outstanding 6¼% convertible subordinated debentures due 2007.

Alliance One is a Danville, Va.-based company that is the world's second-largest dealer of leaf tobacco with operations in more than 30 countries.

Gardner Denver closes

Gardner Denver Inc. closed on its $605 million amended and restated credit facility consisting of a $380 million incremental term loan A due 2010 with an interest rate of Libor plus 175 basis points (comprised of $230 million incremental debt and $150 existing term loan A debt rolled over an repriced from Libor plus 200 basis points) and a $225 million revolver due 2009 that was rolled over from the previous facility.

J.P. Morgan Securities Inc. and Bear, Stearns & Co. Inc. acted as joint lead arrangers and joint bookrunners for the new term loan, and J.P. Morgan Securities Inc. served as sole lead arranger and sole bookrunner on the revolver.

Funding of the $380 million term loan facility and of the restated revolver is subject to completion of the acquisition of Thomas Industries Inc., with proceeds from the term loan to be used for acquisition financing.

Gardner Denver is a Quincy, Ill., producer of blowers, compressors, petroleum and water jetting pumps and accessories.

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