PacifiCare breaks; Charter A loan up; American Airlines, LNR, Reliant launches well attended

By Sara Rosenberg

New York, Dec. 1 - PacifiCare Health Systems Inc.'s $825 million credit facility (Ba2/BBB-) broke for trading on Wednesday, with the term loan B quoted in the lower par context. And, Charter Communications Inc.'s term loan A felt stronger as the company unexpectedly issued new bonds to repay debt.

On the primary side of things, American Airlines Inc., LNR Property Corp. and Reliant Energy Inc. were all said to have gotten early orders from investors, and price talk on Reliant's $2.8 billion deal surfaced with the bank meeting.

Pacificare's $425 million six-year term loan B was quoted anywhere from par bid, par ¼ offered to par ¼ bid, par ½ offered during the session, according to traders. The tranche is priced with an interest rate of Libor plus 150 basis points.

The facility also contains a $200 million five-year term loan A and a $200 million five-year undrawn revolver, both priced at Libor plus 150 basis points as well.

JPMorgan is the lead arranger on the deal.

Proceeds from the term loans will be used to fund the acquisition of American Medical Security Group (AMS), a Green Bay, Wis., provider of individual and small group insurance products to members in 33 states and the District of Columbia, refinance the roughly $150 million term loan PacifiCare has outstanding and refinance roughly $30 million of outstanding AMS debt.

PacifiCare Health Systems, based in Cypress, Calif., is a consumer health organization.

Charter up

Charter's term loan A was stronger by about a quarter to a half a point on the day at 99 bid, 99¼ offered, according to a trader, while the term loan B basically stayed unchanged at 99¾ bid, par 1/8 offered.

The impetus behind the term A movement seemed to have been Charter's announcement that it would repay debt with some of the proceeds from its fly-by upsized $550 million senior floating-rate notes offering.

But, there was some confusion among sources as to what debt would be repaid with the bond proceeds. "I don't know why [the A] moved up considering they're paying down revolver," one trader said. However, a second trader remarked that he heard proceeds would be used to "pay down bank debt on a pro rata basis across the Charter complex," which would explain why the A headed higher and the B stayed right around a par pay down level.

Charter is a St. Louis-based cable company.

American Airlines well attended

American Airlines' Wednesday morning bank meeting went well as there was very good physical attendance as well as a number of people listening in via telephone - a situation that was only improved by the company's good job of presenting the deal to these potential lenders, according to a market source.

Furthermore, early commitments have already started to come in on the deal, even though the commitment deadline isn't until Dec. 15, the source said.

The $850 million credit facility (B+) consists of a $600 million revolver talked at Libor plus 525 basis points and a $250 million term loan B talked at Libor plus 600 basis points.

The term loan is being offered at par and a fee of 50 basis points is being given to lenders for a $50 million revolver commitment.

Citigroup Global Markets Inc. and JPMorgan Chase are joint lead arrangers on the deal, with Citigroup the left lead.

Proceeds will be used to refinance the Fort Worth, Texas-based airline's existing $834 million facility. The deal is hoped to close before Christmas.

Unlike Northwest Airlines Inc., there will be no special collateral call for this airline deal because collateral for the loan is a more straightforward.

Recently, Northwest Airlines closed on a new $975 million credit facility (B1/B+) consisting of a $575 million term loan A with an interest rate of Libor plus 525 basis points and a $400 million term loan B with an interest rate of Libor plus 675 basis points.

Syndication of the Northwest deal went very well as was evident in the fact that the tranches were reverse flexed prior to close - the term A by 25 basis points and the term B by 75 basis points - but, momentum for the book building process really began after the company held its collateral call since investors needed clarity on the security package before they could get comfortable with the deal.

"Collateral being used here is routes and aircraft, but people are really lending against the aircraft so no explanatory call [was] needed," the source said. "Northwest is really lending against the routes."

"It was nice to see that they actually have the collateral value in dollar amounts right here in the bank book as opposed to Northwest where all they told you was how they evaluated the collateral value," a buyside source said.

"I'm not surprised they have early commitments either. Hedge funds are probably jumping all over this," the buyside source added.

LNR also gets orders

LNR's $1.7 billion credit facility also saw a "good launch" on Wednesday, according to a market source as "tons of size early orders" were already placed by late afternoon.

The facility consists of a $150 million revolver talked at Libor plus 300 basis points, a $150 million term loan A talked at Libor plus 300 basis points and a $1.4 billion term loan B talked at Libor plus 300 to 325 basis points.

Deutsche Bank and Goldman Sachs are joint lead banks on the deal.

Proceeds will be used to help fund the acquisition of LNR by Riley Property Holdings LLC, a newly formed company majority owned by affiliates of Cerberus Capital Management LP and its real estate affiliate Blackacre Institutional Capital Management LLC, in a transaction valued at about $3.8 billion.

LNR is a Miami Beach, Fla.-based real estate investment, finance and management company.

Reliant sets price talk

Reliant set price talk on its $2.8 billion credit facility (B1) as the deal launched via a "very well" attended bank meeting that sparked "early orders" as well, a market source said.

The $1.7 billion revolver is talked at Libor plus 300 basis points and the $1.1 billion term loan B is talked at Libor plus 275 basis points, the source added.

Reliant has already received commitments for the revolver in excess of $1.7 billion, a company news release previously disclosed.

Deutsche Bank, Bank of America, Barclays, Goldman Sachs and Merrill Lynch are the lead banks on the deal, with Deutsche the left lead.

Proceeds from the credit facility, along with proceeds from senior secured notes and fixed-rate tax-exempt bonds, will be used to refinance existing debt facilities, including a $2.1 billion revolver and a $1.7 billion term loan at the parent company, $300 million of Orion Power Midwest bank debt and $400 million of floating-rate tax-exempt bonds. All in all, Reliant expects to get $4 billion in new debt through these various transactions.

Closing on the refinancing is expected to occur before year-end.

Reliant is a Houston provider of electricity and energy services to retail and wholesale customers.

Delta closes

Delta Air Lines Inc. closed on its upsized $630 million three-year senior secured credit facility on Wednesday, according to a market source. General Electric Capital Corp. was the sole lead arranger on the deal.

The facility consists of a $300 million revolver with an interest rate of Libor plus 400 basis points and a $330 million term loan - increased from $200 million during syndication - with an interest rate of Libor plus 600 basis points.

The revolver is secured by some accounts receivable, and the term loan is secured by the remaining unencumbered assets.

Syndication of the deal, which went very well as the tranches were oversubscribed, was done by approaching a select group of lenders. On the term loan the syndicate basically went out to hedge funds and some people who knew the credit, while on the revolver they just went out to a couple of banks.

The Atlanta air transportation company got the new deal in connection with its out-of-court restructuring plan.

Natural Products Group closes

Harvest Partners Inc.'s newly formed company, Natural Products Group LLC, completed its acquisition of Levlad Inc. and its subsidiary Arbonne International Inc., according to a company news release.

To help fund the acquisition, Natural Resource Partners got a new $110 million credit facility consisting of a $15 million revolver and a $95 million term loan. CIBC World Markets was the lead bank on the deal.

Subordinated debt financing provided by TCW/Crescent Mezzanine was also used for acquisition financing.

Chatsworth, Calif.-based Levlad manufactures and markets branded natural and organic personal care products. Irvine, Calif.-based Arbonne sells its own branded line of herbal and botanical personal care products through a direct-sales network of independent consultants.

TravelCenters of America closes

TravelCenters of America Inc. completed its acquisition of 11 Rip Griffin interstate travel centers from Truck Service Center Inc., according to a company news release.

To fund the acquisition, TravelCenters obtained a new $575 million senior secured credit facility (Ba3/BB) consisting of a $475 million seven-year term loan C and a $100 million five-year revolver.

Proceeds from the facility were also used to refinance debt.

JPMorgan and Lehman acted as joint lead arrangers on the deal, with left lead JPMorgan also acting as sole bookrunner.

TravelCenters is a Westlake, Ohio-based network of full-service travel centers.

VCA Antech closes

VCA Antech Inc. closed on its new $223.9 million term loan F with an interest rate of Libor plus 175 basis points that was used essentially to reprice the previous term loan E, which carried an interest rate of Libor plus 225 basis points, according to a company news release.

Goldman Sachs and Wells Fargo were the lead banks on the transaction.

VCA Antech is a Los Angeles provider of pet health care services.

Regency Gas closes

Regency Gas Services LLC closed on its $290 million credit facility consisting of a $40 million revolver with an interest rate of Libor plus 275 basis points (B1/B+), a $200 million first-lien term loan with an interest rate of Libor plus 275 basis points (B1/B+), and a $50 million second-lien term loan with an interest rate of Libor plus 600 basis points (B3/B-).

Originally, the first-lien term loan was sized at $160 million and the second-lien term loan was sized at $80 million, but funds were shifted during syndication, at which time pricing on the second lien was also lowered from Libor plus 725 basis points.

Through these modifications, the company ended up increasing its total credit facility size to $290 million from $280 million. As a result of this, the equity contribution for the Hicks, Muse, Tate & Furst Inc. leveraged buyout of Regency was reduced by $10 million.

UBS is the sole lead bank on the Dallas-based midstream gas gathering, processing, and transmission company's deal.

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