Huntsman lower on news of cancelled bond deal; Calpine strengthens on loan extension

By Sara Rosenberg

New York, May 27 - Huntsman Corp.'s bank debt headed south by a few points in secondary trading as investors were disappointed by the company's decision to pull its proposed bond offering. Meanwhile Calpine Corp. headed higher as the company gained some additional time to work out the extension of its credit facilities.

Huntsman's bank debt dropped a couple of points on the heels of the company's decision to pull its $250 million offering of senior notes due 2010, according to traders. One trader had the paper quoted at 90 bid, 92 offered, while a second trader had the paper quoted at 89 bid, 94 offered.

On Friday the loan was quoted at 95 bid, 96 offered as the possibility of the bond deal being pulled was rumored around the marketplace, but it traded as high as 97¼ prior to that as investors were hopeful about being paid down with proceeds from the bond offering.

The Salt Lake City-based company manufactures products for the chemicals, plastics, detergent, personal care, rubber and packaging industries.

Calpine's bank debt was quoted higher on Tuesday in reaction to Friday's announcement that the company received an extension on the maturity date of its credit facilities. The loan was quoted at 96 1/8 bid, 97 1/8 offered.

More specifically, the bank groups on the company's two working capital facilities totaling $950 million agreed to extend the maturity date to June 16, 2003.

The San Jose, Calif. power company said the extension will give it enough time to finalize terms on a new two-year $1 billion working capital facility.

"It's been as low as 951/2, 96 when they were talking about extending," a trader said in regards to Calpine's bank debt. "Now that they got it, the paper moved up.

For example, last Thursday, the bank debt traded as low as 95¾ and then moved back up to trade around 961/4. By the end of the day the paper was quoted at 96 bid, 97 offered. The paper had been pretty volatile, moving up or down depending on investor opinion regarding whether the company will successfully extend the maturity of its revolver, according to market sources.

Previously, Calpine announced in a conference call that it is involved in final discussions with its bank group regarding the refinancing of its $400 million and $600 million revolving working capital facilities, with the main focus of the negotiations revolving around how long the extension would be.

At the time of the call, the company expressed its intention to refinance the $1 billion revolver prior to the May 24 maturity date and admitted to being optimistic about completing this task. However, it is apparent that the company needed a bit more time and managed to gain it through this latest extension.

The main crux of the negotiations has been whether the lenders will extend the revolver for one year or two years, company officials explained at the time of the call, adding that they were hoping for the two-year extension.

Affinity Group Inc.'s $175 million credit facility (Ba2/BB-) allocated and broke for trading on Tuesday, with the term loan B quoted above par, according to a trader.

Timing on allocations had been somewhat fluid as the deal was previously thought to potentially hit the secondary as early as May 9.

When asked what was behind the delay, a syndicate source previously told Prospect News that since there are two agents and people in general have been out of the office, making going over allocations more time-consuming, the process has taken slightly longer than expected.

The oversubscribed loan consists of a $35 million five-year revolver with an interest rate of Libor plus 350 basis points and a $140 million six-year term loan B with an interest rate of Libor plus 400 basis points.

Oversubscription on the deal was reached during the week of May 5 when a few big tickets came in, a source close to the deal previously said.

FleetBoston and CIBC are the lead banks on the Englewood, Colo. direct marketing company's deal that will be used to repay existing bank debt, repurchase a portion of the notes at Affinity Group Holding, Inc. and fund a shareholder distribution.

Charter Communications Inc.'s term loan B was slightly higher on Tuesday at 91¼ bid, 91¾ offered, according to a trader who attributed the strengthening in the St. Louis cable company's paper to market technicals from buying interest.

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