J. Crew pulls deal; Ameristar breaks; Novelis creeps higher; Blockbuster seesaws; Acco off on numbers

By Sara Rosenberg

New York, Nov. 9 - J. Crew Group Inc. decided to pull its term loan deal from market in order to time it better with its proposed initial public offering of common stock.

In secondary doings, Ameristar Casinos Inc. broke for trading, with the institutional portion of the deal trading in the upper-par to 101 region.

Also, Novelis Inc.'s bank debt spent the day firming up as investors have had time to digest the recent restatement news. Blockbuster Inc. felt some pressure on its term loan early in the day but managed to recoup some losses by afternoon. And Acco Brands Corp. fell off a touch on earnings results.

J. Crew opted to take its $295 million seven-year term loan (Ba3/B+) out of the market on Wednesday afternoon as the company decided that it would rather bring the deal back concurrently with its proposed IPO as opposed to keeping a delayed-draw structure, according to a market source.

The loan was originally launched to be a funded piece of paper; however, it had recently been converted into a delayed-draw structure when the company decided to push off its IPO until next year to avoid the upcoming holiday season.

Being that the term loan is contingent on the IPO being completed, the initial desire after the IPO postponement had been to keep the already marketed deal intact by simply switching it to a short-term delayed-draw piece of paper - a sentiment that has obviously now changed.

The most recent term loan structure called for a delayed draw through March 21, 2006, with the ability to extend until May 21, 2006 with 50% lender approval.

Lenders would have gotten a 50 basis point undrawn fee through the end of January 2006, which would then have increased to 75 basis points from February 2006 through March 21, 2006 and to 100 basis points if the delayed draw was extended until May 21, 2006.

Interest on the term loan would have been set at Libor plus 225 basis points - as was planned when the deal was supposed to be funded and when it turned to delayed draw - and the tranche would have had a seven-year final maturity.

Goldman Sachs and Bear Stearns were the lead banks on the deal, with Goldman the left lead.

New York-based apparel and accessories retailer J. Crew planned to use the term loan, along with proceeds from the IPO, to redeem all $92.8 million 14½% cumulative preferred stock, all $32.5 million 14½% cumulative redeemable preferred stock, all $21.7 million 13 1/8% senior discount debentures due 2008 and all or a portion of the 9¾% senior subordinated notes due 2014.

Ameristar breaks

Ameristar Casinos' new credit facility hit the secondary market on Wednesday, with the $400 million term loan B quoted at par ¼ bid, par ¾ offered on the break, moving up to par ½ bid, 101 offered during the session and then moving up even more to par ¾ bid, 101 1/8 offered by close, according to traders.

The term loan B is priced with an interest rate of Libor plus 150 basis points.

Ameristar's $1.2 billion credit facility (Ba3/BB+) also contains an $800 million revolver with an interest rate of Libor plus 100 basis points.

Deutsche Bank and Wells Fargo are the lead arrangers on the deal, with Deutsche the left lead and administrative agent and Wells Fargo also acting as the syndication agent.

Proceeds will be used by the Las Vegas-based casino company to refinance existing bank debt.

Novelis trades up

Novelis' bank debt headed up to the par ¾ bid, 101¼ offered region on Wednesday as the market seems to have decided the necessary restatement of some financials will not have that much of an affect on numbers, according to a trader.

On Monday the company's stock had been halted and an announcement was made that 2005 first- and second-quarter numbers would have to be restated.

Immediately following the news, the company's bank debt had traded down to par 3/8 bid, par 7/8 offered and then had recovered slightly moving to par ½ bid, 101 offered.

Novelis is restating first- and second-quarter numbers relating to reserves and contingencies in South America.

On a preliminary basis, the first-quarter earnings are expected to be restated principally to reflect additional income taxes of about $4 million in Canada.

Second-quarter restated earnings are expected principally to reflect the reversal of an approximately $5 million pre-tax contingency related to Brazilian litigation matters.

In addition, because of the need to restate previous financials, the company has decided to delay the release of third-quarter 2005 results.

Novelis is an Atlanta-based aluminum rolled products and aluminum can recycling company.

Blockbuster feels some pressure

Blockbuster's term loan B was off about a quarter of a point early in light trading Wednesday, but by afternoon, activity picked up and so did levels as the paper closed the session only a touch weaker at 97¾ bid, 98¼ offered, according to a trader.

"That sector has been kind of all over the map," the trader added.

On Tuesday, the term loan B traded up to 98¼ bid, 98½ offered as the company announced plans to issue a minimum of $100 million in a cumulative convertible perpetual preferred stock offering - a condition to the effectiveness of the company's Nov. 4 loan amendment.

Under the amendment, Blockbuster got more leeway under financial covenants through 2007 and in return, pricing on the company's bank debt was increased by 50 basis points.

The interest rate on the term loan B was raised to Libor plus 400 basis points and the interest rate on the term loan A was raised to Libor plus 375 basis points, the buyside source said.

Blockbuster is a Dallas-based provider of in-home movie and game entertainment.

Acco dips on numbers

Acco's bank debt ended the day a touch weaker at par ¾ bid, 101¼ offered, but at one point was off by as much as a quarter of a point from previous levels, after the release of third-quarter financials, according to a trader.

For the quarter, net income decreased to $3.6 million, or $0.08 per share, compared to $38.5 million, or $1.10 per share, in the prior-year quarter. Net sales were up 39% at $421.7 million for the third quarter, compared to $303.8 million in the prior year.

For the first nine months of 2005, Acco reported net sales of $973.7 million, compared to $843.4 million in the prior-year nine months, an increase of 15%. Net income was $30.2 million, compared to $40.6 million in the prior-year nine months.

Acco is an Illinois-based supplier of branded office products.

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