AMR term loan steady in trading with bankruptcy approval chatter; Miller Heiman sets talk

By Sara Rosenberg

New York, Aug. 29 - AMR Corp.'s exit term loan remained strong in the secondary market on Thursday as buzz made its way around that the bankruptcy judge is considering approving the company's reorganization plan.

Moving to the primary market, Miller Heiman surfaced with plans for a new credit facility and began circulating price talk on the term loan B tranche contained in the transaction, and Activision Blizzard Inc. came out with timing on the launch of its credit facility.

AMR stays strong

AMR's exit term loan held steady on Thursday with chatter that the judge may approve the company's bankruptcy plan.

The term loan was quoted by one trader at 98¾ bid, 99¼ offered and by a second trader at 98¾ bid, 99¾ offered, with both traders saying levels were unchanged on the day.

Sources said that at a hearing, the judge in the bankruptcy case did not confirm the reorganization plan but implied that arguments for confirmation were persuasive.

Currently, AMR is facing a lawsuit filed by the Department of Justice that seeks a permanent injunction against the proposed merger between it and US Airways Group Inc., which would occur with AMR's emergence from Chapter 11.

However, AMR has told the court that its reorganization plan satisfies all Bankruptcy Code requirements for confirmation, and the fact that the effective date may not occur for several months does not change that fact.

AMR is a Fort Worth-based airline company.

Miller Heiman floats talk

Over in the primary, Miller Heiman set a bank meeting for Wednesday morning to launch a new credit facility and released pricing guidance on the $233 million six-year term loan B that is included in the deal, according to a market source.

The B loan is talked at Libor plus 475 basis points with a 1% Libor floor and an original issue discount of 99 and has 101 soft call protection for six months, the source said.

In addition to the term B, the company's $273 million credit facility provides for a $40 million five-year revolver.

Miller Heiman PIK debt

Along with the new credit facility, Miller Heiman will be getting $65 million of subordinated PIK notes, the source continued.

Proceeds from the new debt will be used to fund the acquisition of IPI.

GE Capital Markets and BMO Capital Markets are the joint leads on the credit facility.

Miller Heiman is a Denver-based provider of corporate sales training.

Activision timing emerges

Activision Blizzard scheduled a bank meeting for Wednesday to launch its previously announced $2.5 billion senior secured credit facility, according to a market source.

The credit facility consists of a $250 million five-year revolver and a $2.25 billion seven-year covenant-light term loan B.

Filings with the Securities and Exchange Commission outlined revolver pricing at Libor plus 250 bps with a 37.5 bps unused fee and term B pricing at Libor plus 275 bps with a 0.75% Libor floor. The B loan is expected to have 101 soft call protection for six months.

Bank of America Merrill Lynch and J.P. Morgan Securities LLC are leading the deal that will be used to fund Activision's acquisition from Vivendi of around 429 million company shares and certain tax attributes in exchange for roughly $5.83 billion in cash, or $13.60 per share.

Simultaneously, ASAC II LP, an investment vehicle led by Activision chief executive officer Bobby Kotick and co-chairman Brian Kelly, will purchase about 172 million company shares from Vivendi for around $2.34 billion in cash, or $13.60 per share, and following completion, Activision will be an independent company with the majority of its shares owned by the public.

Activision plans notes

With the new credit facility, Activision intends to issue $1 billion of high-yield first-lien secured notes and $1.5 billion of high-yield unsecured notes, and the remaining funds for its stock buyback will come from around $1.2 billion of cash on hand.

The notes are backed by a commitment for a $1 billion senior secured bridge loan priced at Libor plus 412.5 bps with a 0.75% Libor floor and a $1.5 billion senior unsecured bridge loan priced at Libor plus 550 bps with a 0.75% Libor floor for an eight-year tranche and Libor plus 612.5 bps with a 0.75% Libor floor for a 10-year tranche.

All of the bridge loans have a spread increase of 25 bps per annum if the borrower has not received ratings of at least Ba2/BB, and every three months, pricing on the bridge loans will step up by 50 bps until it hits a cap.

Closing is expected by the end of September, subject to customary conditions.

Activision Blizzard is a Santa Monica Calif.-based interactive entertainment publishing company.

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