Owens-Illinois, J. Ray McDermott set talk; J. Crew cuts spread; Helix breaks; Cablevision up with numbers

By Sara Rosenberg

New York, May 9 - Owens-Illinois Inc. and J. Ray McDermott SA came out with price talk on their credit facilities as both deals were launched to investors with bank meetings on Tuesday.

Also in the primary, J. Crew Operating Corp. lowered pricing on its term loan and tweaked the grid that, under very specific conditions, allows the spread to step down.

In secondary news, Helix Energy Solutions Inc.'s credit facility freed for trading with the term loan B quoted atop par, and Cablevision Systems Corp.'s term loan B strengthened as the company put out fairly positive financial results.

Owens-Illinois released opening price talk on its proposed $1.5 billion credit facility (B1/BB-) as syndication on the deal official kicked off on Tuesday, according to a market source.

All tranches contained in the facility were launched with talk set at Libor pus 175 basis points, the source said.

Tranching on the facility is comprised of an $850 million multi-currency revolver, a $225 million equivalent Australian term loan A, a $300 million dollar- and euro-denominated term loan B and a $125 million equivalent Canadian term loan C.

Deutsche Bank and Bank of America are the lead banks on the deal that will be used to refinance existing debt, with Deutsche the left lead.

Owens-Illinois is a Toledo, Ohio, manufacturer of packaging products.

J. Ray talk surfaces

Also emerging Tuesday was price talk on J. Ray McDermott's proposed $500 million senior secured credit facility (B1/B+) as it too was presented to lenders via a bank meeting during market hours, according to a source.

Both the $400 million five-year revolver and the $100 million six-year synthetic letter-of-credit facility were launched to investors with opening price talk of Libor plus 250 basis points, the source said.

The revolver carries a 50 basis point commitment fee.

Credit Suisse is the lead arranger on the deal that is being obtained in connection with a tender offer, expiring June 1, for the company's 11% senior secured notes due 2013.

Funded debt at close will be zero.

J. Ray McDermott is a Houston-based provider of engineering, procurement, construction, and installation services for offshore oil and gas field developments.

J. Crew trims pricing

J. Crew reverse flexed pricing on its $285 million senior secured term loan (B2/B) as the deal is oversubscribed multiple times and modified the step down provision under the agreement, according to a market source.

The term loan is now priced with an interest rate of Libor plus 225 basis points, down from original talk at launch of Libor plus 250 basis points, the source said.

Furthermore, under the revised agreement, pricing can step down to either Libor plus 200 basis points if ratings on the loan improve to B1/B+ or Libor plus 175 basis points if ratings on the loan improve to three-B's or better. The company only qualifies for the step down if leverage falls below 31/4x. Also, once the leverage test is met and the deal gets re-rated, pricing can only drop to the appropriate spread that one time.

So, for example, if the term loan receives ratings of B1/B+, pricing will drop to Libor plus 200 basis points and at that time, the pricing grid will be removed from the credit agreement, eradicating the ability to further drop to Libor plus 175 basis points if ratings improve a second time.

Originally, the pricing grid was three-tiered, allowing the spread to drop to Libor plus 225 basis points on B1/B+ ratings, Libor plus 200 basis points on three-B's and Libor plus 175 basis points on four-B's. All other terms and conditions of the pricing grid, such as the leverage test and the step down being a one shot deal, were the same.

Lender commitments are due at the end of business Wednesday, which was the original commitment deadline as well.

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

Proceeds from the new loan will be used to repay or redeem the company's 9¾% senior subordinated notes due 2014.

The term loan is no longer conditioned on the completion of an initial public offering of common stock, as was the case last year when the company had syndicated, but was unable to complete, a $295 million term loan. That original term loan deal had been pulled from market because of the postponement of the company's IPO.

J. Crew is a New York-based apparel and accessories retailer.

Helix frees to trade

Meanwhile, in trading, Helix Energy Solutions' credit facility hit the secondary, with the $840 million seven-year term loan B quoted at par ½ bid, par ¾ offered consistently throughout the day, according to traders.

The term loan B is priced with an interest rate of Libor plus 200 basis points and contains a step down to Libor plus 175 basis points under certain conditions. Pricing came in at the tight end of original guidance of Libor plus 200 to 225 basis points.

Helix Energy's $1.09 billion senior secured credit facility (B2/BB) also contains a $250 million revolver.

Bank of America is the lead bank on the deal that will be used to help fund Helix's acquisition of Remington Oil and Gas Corp. in a transaction valued at about $1.4 billion. Remington stockholders will receive in the merger $27.00 in cash and 0.436 shares of Helix common stock for each Remington share they own.

Pro forma, as of Sept. 30, 2005 for all the debt, interest coverage would be around 7.1x. Projected pro forma debt service coverage will be around 9.6x. And, projected debt to EBITDA at close will be around 2.00 to 1.00.

Helix is a Houston-based energy service company. Remington is a Dallas-based explorer, developer and producer of oil and gas reserves.

Cablevision rises on earnings

Cablevision's term loan B saw slight gains as the company announced first quarter financial that showed a narrower loss on a year-over-year basis and good subscriber growth, according to a trader.

The term loan B closed out the session quoted at par 3/8 bid, par 5/8 offered, up about an eighth of a point on the day, the trader said.

For the quarter, Cablevision reported a net loss of $58.9 million, or $0.21 per share, compared with a net loss of $118.9 million, or $0.41 per share, in the same period last year.

Revenues for the first quarter increased by 16.2% to $1.409 billion from revenues of $1.213 billion in the first quarter of 2005.

As for subscribers, Cablevision added 38,722 basic video customers during the quarter, up 1.3% from December 2005 and up 2.7% from March 2005. Digital video customers rose by 164,659 or 8.4% from December 2005 and 31.1% from March 2005. High-speed data customers rose by 112,289 or 6.6% from December 2005 and 25.4% from March 2005. And, Optimum Voice phone customers rose by 133,967 or 18.3% from December 2005 and 137.4% from March 2005.

"Cablevision enjoyed an excellent first quarter, driven largely by the continued industry-leading success of our consumer video, voice and data services. In addition to double-digit increases in consolidated revenue and adjusted operating cash flow, Cablevision experienced its highest quarterly gain in basic video subscribers since 2000, while achieving record quarterly gains in both high-speed data and voice customers," said James L. Dolan, president and chief executive officer, in the release.

"These results, along with the addition of nearly 165,000 digital video customers, ensured Cablevision's industry-leading penetration rates for all of its consumer services for yet another quarter."

Cablevision is a Bethpage, N.Y., media, entertainment and telecommunications company.

Standard Pacific closes

Standard Pacific Corp. closed on its $350 million of new term loan debt (NA/NA/BB) and the amendment of its existing revolving credit facility, according to a company news release.

The new term debt consists of a $250 million seven-year term loan B with an interest rate of Libor plus 150 basis points and a $100 million five-year term loan A with an interest rate of Libor plus 112.5 basis points.

During syndication, the term loan B was upsized from $200 million.

In addition, the company amended its revolver to increase the accordion feature by $400 million, allowing the maximum capacity of the facility to be increased from $1.1 to $1.5 billion if and when the accordion is exercised.

Bank of America and JPMorgan acted as joint lead arrangers on the new term loans. Bank of America and JPMorgan acted as joint bookrunners on the term loan A, while Bank of America acted as sole bookrunner on the term loan B. The revolver amendment was solely led by Bank of America as well.

Proceeds from the term loans were used to repay outstanding debt under the company's revolver and for other general corporate purposes. As of March 17, there was $686.6 million drawn under the revolver, not including $81.8 million of issued but undrawn letters of credit.

Standard Pacific is an Irvine, Calif., builder and seller of single-family attached and detached homes.

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