Trout Coal trims pricing; Masonite gets more orders; Calpine loan levels powered higher by bonds

By Sara Rosenberg

New York, March 7 - Trout Coal Holdings LLC cut pricing on all three tranches contained in its in-market $420 million credit facility on Monday morning as the books were significantly oversubscribed. And, Masonite continued to get orders in on its term loan without the release of price talk at Monday's meeting.

In the secondary, Calpine Corp.'s second-lien bank debt pushed its way higher during Monday's session on the coattails of the company's bonds trading up.

Trout Coal reverse flexed pricing on its "extremely oversubscribed" credit facility, reducing spreads on its $20 million revolver and $275 million first-lien term loan B to Libor plus 250 basis points from original price talk of Libor plus 300 basis points, and reducing the spread on its $125 million second-lien term loan C to Libor plus 500 basis points from original price talk of Libor plus 600 basis points, according to a market source.

In fact, the deal received so many orders that the syndicate had to shut the books down early, ending the commitment process late last week as opposed to Wednesday of this week as was initially planned, the source said.

Commitments started flooding in for both term loans immediately after the Feb. 23 bank meeting took place, with one source attributing the positive feedback to an overall need for paper and a general liking among market players for the coal sector.

Both term loans are being offered to investors at par. Any size revolver commitment gets an upfront fee of 100 basis points.

The second-lien term loan contains call protection of 102 in year one and 101 in year two.

Recommitments are due from lenders on Tuesday and allocations are expected to go out some time next week.

Lehman and Deutsche Bank are the lead banks on the deal.

Proceeds will be used to refinance existing debt and pay a dividend to sponsor ArcLight Capital Partners.

Trout Coal is a Central Appalachia, W.Va., coal mining company that owns five operating coal mines in Central Appalachia and mine developments in West Virginia and Illinois.

Masonite well attended

Masonite International Corp.'s Monday bank meeting saw strong attendance, as could be expected from the previous amount of verbal interest that has been seen around the marketplace, and commitments for the term loan have continued to stream into the books.

"A lot of people there," a market source said about the bank meeting. The "room was packed and [there were] a lot of people on the telephone.

Prior to the bank meeting there had already been a significant amount of interest, with one source pointing to a couple of factors that should work in the deal's favor, including Masonite being an existing issuer, the business being one that is easy to understand and the amount of equity being contributed by Kohlberg Kravis Roberts & Co. as part of this leveraged buyout financing package.

And, although the deal has now officially launched, price talk has still not come out on Masonite's $1.175 billion term loan B but is expected to be announced within the next couple of days, the source continued.

"There are commitments with no price talk, commitments at certain levels and bigger commitments at higher levels," the source added.

Masonite's $350 million revolver is talked at Libor plus 250 basis points.

So far, the only banks that have committed to the revolver are the five lead banks, but "there are some institutional guys who are willing to make revolver commitments to improve their term loan portions," the source added.

The Bank of Nova Scotia and Deutsche Bank are co-lead arrangers on the credit facility, Deutsche and UBS Securities are co-syndication agents, and SunTrust and Bank of Montreal are agents.

The term loan is being offered to investors at par, and the revolver carries upfront fees of 125 basis points for commitments of $25 million and 100 basis points for commitments of $15 million.

Commitments are due on March 21.

Masonite was previously scheduled to hold the bank meeting during the week of Feb. 14 but a decision was made to cancel the launch because shareholders were expected to turn down KKR's LBO proposal at a Feb. 18 shareholders. The opposition to the acquisition basically said that the original offer undervalued the company.

Later that week though, KKR announced that it increased its bid for Masonite to C$42.25 per share cash from C$40.20 per share cash, and, in light of the change, Masonite rescheduled its shareholders meeting to March 31 from Feb. 18.

The additional funds needed by KKR to complete the pricier-than-originally-anticipated LBO will be coming from equity, which is why the size of the $1.525 billion credit facility (B2/BB-) and the proposed $825 million bond offering were left unchanged from original sizes.

Masonite International is a Mississauga, Ont.-based building products company.

Calpine trades up

In secondary activity on Monday, Calpine Corp.'s second-lien term loan was up about a half a point to a quarter of a point on the day, with trades taking place at 90¼ during the session and levels closing out the day at 90 bid, 90¾ offered, according to a trader.

"The bonds traded up today," the trader said in explanation of the bank debt's gain.

Most recently, Calpine said that its indirect subsidiary, Calpine Steamboat Holdings LLC, closed on a new $503 million non-recourse project finance facility due December 2011 that will initially be structured as a construction loan and will carry an interest rate of Libor plus 175 basis points. The loan will convert into a term loan upon commercial operations of the plants.

Proceeds from the facility, which was announced on Thursday, will be used to fund construction of the 375-megawatt Mankato Energy Center in Blue Earth County, Minn., and the 250-megawatt Freeport Energy Center in Freeport, Texas.

Upon closing, San Jose, Calif.,-based power company, Calpine, received about $97 million for construction costs spent to date on the two projects. The remaining amount available under the project finance facility will be used to fund the completion of the projects.

American Lawyer Media closes

American Lawyer Media Holdings Inc. closed on its new $344.5 million credit facility consisting of a $196 million five-year first-lien term loan (B3/B-) at Libor plus 250 basis points, a $70 million five-year revolver (B3/B-) at Libor plus 250 basis points with a 50 basis point commitment fee and a $78.5 million six-year second-lien term loan (Caa1/CCC) at Libor plus 575 basis points with call protection of 102 in year one and 101 in year two.

During syndication, the first-lien term loan was reverse flexed from initial price talk of Libor plus 275 to 300 basis points, the revolver was reverse flexed from initial price talk of Libor plus 275 basis points and the second-lien term loan was reverse flexed from initial price talk of Libor plus 600 basis points.

Credit Suisse First Boston, UBS and General Electric Capital Corp. were the lead banks on the deal, with CSFB the left lead.

Proceeds from the term loans are being used to finance the tender offer for the company's 9¾% senior notes due 2007, help retire the company's 12¼% senior discount notes due 2008 and refinance about $23.9 million outstanding under the company's existing credit facility.

The revolver was undrawn at closing and is available for general corporate purposes, according to a company news release.

American Lawyer Media is a New York-based integrated media company, focused on the legal and business communities.

NewQuest closes

NewQuest Health Solutions Inc. closed on its new $180 million credit facility (B1/B) consisting of a $15 million five-year revolver at Libor plus 325 basis points and a $165 million six-year term loan B at Libor plus 300 basis points.

During syndication, the term loan was reverse flexed from Libor plus 325 basis points.

UBS was the lead bank on the deal that was used to help fund GTCR Golder Rauner LLC's leveraged buyout of the Nashville, Tenn., managed care organization.

In connection with the recapitalization, GTCR made an investment of $134 million in NewQuest.

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