MetroPCS, Penn National price talk surfaces; Kerr-McGee price talk moves higher again

By Sara Rosenberg

New York, May 3 - MetroPCS Wireless Inc. and Penn National Gaming Inc. unveiled price talk on their deals as both credit facilities launched via very well attended bank meetings Tuesday.

Meanwhile, Kerr-McGee Corp.'s revolving tranche and term loan X tranche are both expected to price 50 basis points wide of original talk, while the term loan B tranche is now expected to clear at the wide end of recently revised price talk.

MetroPCS announced opening price talk of Libor plus 375 basis points on its $700 million seven-year first-lien term loan and opening price talk of Libor plus 575 basis points on its $250 million seven-year second-lien term loan at Tuesday's "packed" bank meeting, according to a market source.

It is a "pretty good story," the source said. The company has decent credit stats, is free cash flow positive and has spectrum value, the source added, explaining that the company has about $2 billion worth of spectrum value and an implied asset value of about $2.6 billion, so asset coverage is attractive.

Both term loans contain hard call protection of 102 in year one and 101 in year two, and both term loans are being offered to investors at par.

Commitments are due from lenders on May 13.

The $950 million senior secured credit facility is unrated at this time because "financial statements are being held up," the source said, 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.

Penn National price talk

Penn National Gaming, during Tuesday's launch, revealed opening price talk of Libor plus 200 basis points on all tranches contained in its $2.725 billion senior secured credit facility (Ba3/BB-) - which includes a $750 million five-year revolver, a $325 million six-year term loan A and a $1.65 billion seven-year term loan B, according to a market source.

The revolver and term loan A tranches contain pricing grids.

As for the bank meeting itself, "it was very well attended. [There were a] lot of people there," the source added.

Deutsche Bank, Goldman Sachs and Lehman Brothers are the lead banks on the deal, with Deutsche the left lead.

Proceeds will be used to help fund the acquisition of Argosy Gaming Co. for a price of $2.7478 billion consisting of a $1.4104 billion equity purchase, $805.3 million Argosy debt to be retired, $319.9 million Penn National debt to be retired and $212.2 million in fees and expenses.

Penn National is a Wyomissing, Pa., owner and operator of gaming properties. Argosy Gaming is an Alton, Ill., owner and operator of casinos.

Kerr-McGee price talk rises

Kerr-McGee's $2 billion senior secured two-year term loan X and $1 billion senior secured five-year revolver are now expected to end up with pricing of Libor plus 225 basis points, up 50 basis points from the opening price talk of Libor plus 175 basis points that the tranches were launched with at the April 19 bank meeting, according to a market source.

Furthermore, it is now anticipated that the $2 billion senior secured six-year term loan B will end up with pricing of Libor plus 250 basis points, the wide end of previously revised Libor plus 225 to 250 basis points price talk, and 50 basis points higher than opening price talk of Libor plus 200 basis points that the tranche was launched with, the source said.

When price talk on the term loan B was first modified at the end of April it caught some investors by surprise, although in the current market in which investors seem to have a bit more leverage it made sense that such a large deal might have to clear some hurdles before fully syndicating, a source previously explained to Prospect News.

Allocations on the $5 billion deal are currently hoped to go out around mid-month, another source added.

Security for the credit facility is basically a perfected first priority interest in all tangible and intangible U.S. assets and all of the capital stock of direct and indirect subsidiaries.

Proceeds will be used to refinance debt, finance a $4 billion modified "Dutch" auction self tender offer for shares of the company's common stock that was announced last Thursday and for general corporate purposes.

As a result of the company's self tender offer and financing needs, all three ratings agencies downgraded Kerr-McGee's secured debt ratings - Moody's Investors Service to Ba3, Standard & Poor's to BB+ and Fitch Ratings to BB.

Under the tender offer, the company will buy back up to $4 billion of its common stock at a price not less than $85 per share or more than $92 per share. The tender offer is expected to begin on or about April 18.

Following the tender, the company expects to reduce debt by $3.5 billion to $4.5 billion over a two-year period with net proceeds from the separation of its chemical business and divestiture of certain oil and gas properties, along with cash flow from operations which has been underpinned by an expanded hedging program for 2005 through 2007.

JPMorgan and Lehman Brothers are the lead banks on the $5 billion senior secured credit facility, with JPMorgan the left lead.

The company has also received a commitment for a $1 billion unsecured interim facility from the same two banks.

Kerr-McGee is an Oklahoma City-based energy and inorganic chemical company.

Calpine up again

Gains continue to mount in Calpine Corp.'s second-lien bank debt as market sentiment seems to shift further and further away from bankruptcy buzz based on pre-released first-quarter numbers as well reports that the company is seeking an investigation into its resent stock performance.

One trader had Calpine quoted at 76 bid, 77 offered and said that the paper was only up about half to three quarters of a point on the day, being that he traded it at 76 on Monday.

Another trader had the paper quoted at 77 bid, 78 offered and put levels up by three points on the day as he saw it close out Monday's session at 74 bid, 75 offered.

"It's running with the equity," the second trader added.

Last week, Calpine's equity, bonds and second-lien loan had a rough time as rumors of a potential Chapter 11 filing engulfed all markets.

On Friday, Calpine pre-announced first-quarter numbers in a move that helped put some of the rumors to rest. These results included expectations of cash and cash equivalents on hand of about $800 million, EBITDA, as adjusted for non-cash and other charges, of about $240 million and a fully diluted loss per share of about $0.38.

Then, on Sunday, The Wall Street Journal reported the San Jose, Calif.-based power company had requested that The New York Stock Exchange investigate the recent trading of its stock and rumors about its finances.

Since the release of preliminary first-quarter numbers, Calpine's second-lien term loan has gained somewhere in the range of 5½ to 6½ points.

Young Broadcasting closes

Young Broadcasting Inc. closed on its $320 million amended and restated senior credit facility (B1/B) consisting of a $300 million term loan due 2012 with an interest rate of Libor plus 225 basis points and a $20 million revolver due 2010.

The term loan was upsized from $275 million and reverse flexed from Libor plus 250 basis points during syndication.

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

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

Young Broadcasting is a New York-based owner and operator of television stations.

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