Knowledge Learning lowers pricing on term loan and revolver; Calpine and Huntsman trade higher

By Sara Rosenberg

New York, Dec. 3 - Knowledge Learning Corp. reverse flexed both its institutional and pro rata tranches on Wednesday as market conditions and oversubscription allowed the syndicate to reduce rates by 25 to 50 basis points depending on the piece.

Meanwhile, in the secondary, Calpine Corp.'s bank debt continued to head higher with most people pointing to market technicals as the impetus behind the strengthening. And, Huntsman LLC was up on an expected debt repayment with proceeds from a drive-by bond offering.

Pricing on Knowledge Learning's $235 million term loan B was reduced to Libor plus 400 basis points from Libor plus 450 basis points, and pricing on the $25 million revolver was reduced to Libor plus 375 basis points from Libor plus 400 basis points, according to a market source.

The $260 million credit facility that launched Nov. 12 is expected to close late next week.

BNP Paribas is the lead bank on the refinancing deal.

Knowledge Learning is a San Rafael, Calif., provider of childcare services.

Calpine's second lien bank loan was quoted higher on Wednesday with many unable to pinpoint any particular reason for the strengthening except to say that the bonds have been doing better and market technicals are working in the paper's favor.

One trader placed the second lien paper higher by about a point on the day with levels in the area of 96½ bid, 97½ offered.

"It's riding up because the bonds have been going up," the trader said. "And, because of the general market. There's not much stuff to buy out there."

However, a second trader said that the bank debt was up about ¾ of a point on Wednesday and 7/8 of a point on Tuesday. This trader placed Wednesday's closing levels higher at 97 bid, 97½ offered.

"There's no reason," the trader said regarding the upward momentum. "The bonds are rallying. We asked our bond guys and they didn't know why. There was some speculation of a refi, but we don't think that's accurate."

The San Jose, Calif., power company most recently announced that it signed a one-year agreement to supply varying amounts of electricity, up to a maximum of 155 megawatts, to Utility Choice Electric, beginning Dec. 1.

"We welcome Utility Choice Electric as a new Calpine customer and look forward to expanding our relationship as their business grows," said David Itz, director of marketing and sales for Calpine, in a company news release. "Power sales agreements like these leverage the breadth and flexibility of Calpine's portfolio in Texas, and allow Calpine to offer customized energy solutions for retail electricity providers and their customers."

Huntsman LLC's bank debt was quoted by one trader at 92¼ bid, 93¼ offered, while a second trader simply placed the paper in the 93 context. According to the second trader, the paper began the day at 91½ bid, 92½ offered.

On Wednesday, the company flew into the capital markets pricing a $75.4 million tack-on 11.625% senior secured notes offering via Credit Suisse First Boston and Deutsche Bank Securities.

According to both traders, proceeds from the bond sale will be used to pay down some of the company's outstanding bank debt.

Huntsman is a Salt Lake City petrochemical firm.

In follow-up news, Oriental Trading Co. Inc.'s newly launched add-on deal is moving along nicely with the first lien piece heavily oversubscribed and the second lien piece anticipated to syndicate easily just based on spread alone, according to a market source.

On Tuesday, the company launched a $25 million first lien add-on to its term loan. The company's existing $250 million term loan B had been priced at Libor plus 275 basis points, but through this amendment the entire enlarged institutional tranche will now be priced at Libor plus 300 basis points. BNP Paribas is the lead bank on this portion of the deal.

Also on Tuesday, the company launched a $75 million second lien add-on with an interest rate of Libor plus 650 basis points. Credit Suisse First Boston is the lead bank on this tranche.

"I'm sure it's doing well in this kind of environment with that kind of spread," the source said regarding the second lien paper.

Proceeds from the two add-ons are being used as part of the company's dividend recapitalization.

Oriental Trading is an Omaha, Neb., direct marketer of novelties, toys, party supplies, crafts, gift items, home décor products and garden accents.

Georgia Gulf Corp. closed on its new $200 million seven-year term loan (Ba3/BBB-) with an interest rate of Libor plus 250 basis points, which was obtained through the amendment of the company's existing credit agreement. JPMorgan was the lead bank on the deal.

The amendment also provides for an increase in the available borrowings under the revolving credit facility to $120 million from $100, according to a company news release.

Proceeds from the new term loan, combined with borrowings under the revolver, proceeds from the sale of $100 million 7 1/8% senior notes and a $25 million increase in the company's receivables securitization program were used to repay the approximately $134 million existing term loan under the senior credit facility, which had a scheduled maturity of 2007, pay the tender and consent payments of about $140 million relating to the company's 10 3/8% notes and related expenses, and will provide the funds to redeem the remaining outstanding 10 3/8% notes. The remaining notes have been called for redemption on Dec. 21.

Georgia Gulf is an Atlanta manufacturer and marketer of chlorovinyls and aromatics.

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