FairPoint, Capmark move on bankruptcy news; SemGroup fills after changes; Terra-Gen upsizes

By Sara Rosenberg

New York, Oct. 26 - FairPoint Communications Inc.'s term loan debt headed higher on Monday after the company revealed that it filed for Chapter 11 and Capmark Financial Group Inc.'s bank debt bounced around as it, too, made a bankruptcy announcement.

In other news, SemGroup LP's credit facility has received strong interest since changes were announced to the deal, Terra-Gen Power LLC increased the size of its term loan and Rural/Metro Corp.'s refinancing credit facility is already coming along nicely after just having launched into syndication last week.

FairPoint rises with filing

FairPoint's term loans gained some ground in trading as the company announced that it has reached a financial restructuring plan with lenders holding more than 50% of the outstanding debt under its secured credit facility and has filed for bankruptcy, according to traders.

The term loan B was quoted by one trader at 83½ bid, 85½ offered, up from 80½ bid, 82½ offered on Friday, and by a second trader at 82¼ bid, 83¼ offered, up from 81 bid, 83 offered.

And, the term loan A was quoted by the first trader at 83½ bid, 85½ offered, up from 82½ bid, 83½ offered.

Under the plan, about $1.1 billion of debt under the credit facility would be converted into equity, transferring 98%, and in certain circumstances, 100% of the equity ownership of the company to the secured lenders.

Other terms of the plan are still being negotiated, but the company's about $570 million of senior notes due 2018 as well as other unsecured creditors will be converted into equity ownership of the company equal to about 2% and will be issued warrants to purchase up to 5% of the ownership interest.

FairPoint getting term loan

FairPoint's restructuring plan also provides for a new $1 billion five-year secured term loan that is priced at Libor plus 450 bps with a 2% Libor floor.

Amortization is $10 million in each of the first two years and $50 million in the third year following emergence from Chapter 11, with increasing annual amortization amounts thereafter through maturity.

In addition, the company has received commitments for a $75 million debtor-in-possession revolving credit facility to ensure sufficient liquidity during the Chapter 11 process.

Upon emergence from bankruptcy, the DIP revolver will convert into a $75 million five-year revolver.

The restructuring plan is expected to reduce the company's debt to about $1 billion from its current level of nearly $2.7 billion, which includes accrued interest and amounts owed under its interest rate swap agreements.

FairPoint is a Charlotte, N.C.-based provider of communications services.

Capmark reacts to bankruptcy

Another company to announce a Chapter 11 filing on Monday was Capmark, and in response to the news, the company's roll-up loan was stronger and its unsecured term loan was quoted all over the place.

The roll-up loan was quoted by one trader at 70 bid, 71 offered, up from 68½ bid, 69½ offered. And, this trader was quoting the unsecured term loan at 26 bid, 27 offered, up from 25½ bid, 26½ offered.

However, a different trader was quoting the unsecured term loan lower on the day at 25 5/8 bid, 26 5/8 offered, versus 25¾ bid, 26¾ offered on Friday.

Capmark to reduce debt

Capmark said that it intends to use the reorganization process to implement a restructuring that reduces its corporate debt and maximizes value for its stakeholders.

"We view this reorganization process as an unfortunate but necessary response to recent unprecedented conditions in financial and commercial real estate markets, which presented a significant challenge for Capmark and similarly situated finance companies. By constraining the availability of capital, these difficult market conditions had a negative effect on all our core businesses," said Jay Levine, president and chief executive officer, in a news release.

As of Oct. 23, Capmark and its filing subsidiaries had in excess of $500 million of cash and cash equivalents available to fund its operations. As a result, the company believes that it has sufficient current liquidity to continue to satisfy customary obligations associated with ongoing operations of its business.

Capmark is a Horsham, Pa.-based commercial real estate finance company.

SemGroup fills up

Switching to the primary market, SemGroup's exit financing credit facility is oversubscribed after changes were announced on Friday that included a change to tranche sizes as well as to pricing, according to a market source.

Under the revisions, the pre-funded letter-of-credit facility is now sized at $150 million, up from $100 million, and the revolver is now sized at $350 million, down from $400 million, the source said.

Pricing on the pre-funded tranche was raised to Libor plus 700 basis points, as compared to original talk of Libor plus 600 bps, the source continued, while pricing on the revolver was left unchanged at Libor plus 600 bps.

The upfront fee on the pre-funded facility was increased to 5%, whereas originally, lenders were offered 2% to 3% upfront based on ticket size, but the upfront fee on the revolver was left unchanged at 2% to 3%.

And, the maturity of the pre-funded letter-of-credit facility was revised to three years from four years, the source added.

The revolver and pre-funded facility still include a 1.5% Libor floor.

SemGroup lead banks

BNP Paribas, Bank of America and Calyon are the lead banks on the SemGroup deal that will be used for working capital once the company exits Chapter 11 - which is expected to occur in November.

Under the reorganization plan, the company will emerge from bankruptcy as a publicly traded company with its creditors owning substantially all of the equity in the reorganized company.

The plan also calls for the creation and funding of a litigation trust for the purpose of continuing to pursue claims against the estate.

SemGroup is a Tulsa, Okla.-based privately held limited partnership that provides midstream services to North America's energy industry.

Terra-Gen ups loan size

Terra-Gen Power upsized its 21/2-year term loan to $215 million from $200 million, according to a market source.

As a result of the upsizing, there will be a lower equity contribution by the sponsor, the source said.

Pricing on the term loan will remain in line with initial talk at Libor plus 500 bps with a 3% Libor floor and an upfront fee ranging from 225 bps to 300 bps based on commitment size.

The company's now $240 million credit facility (Ba3) also includes a $25 million working capital revolver that is priced at Libor plus 500 bps with a 3% Libor floor.

Terra-Gen closing this week

Closing on Terra-Gen's credit facility is expected to take place this week.

BNP Paribas and Citigroup are the joint lead arrangers on the deal that will be used to refinance existing debt, with BNP the administrative agent.

Back in June, the company came to market with a $275 million credit facility led solely by Citigroup, consisting of a $25 million working capital revolver and a $250 million term loan talked initially in the Libor plus 550 bps area with a 2.5% Libor floor and an original issue discount in the 96 to 98 context. This deal, however, was later pulled.

Terra-Gen is a New York-based renewable energy company.

Rural/Metro attracts attention

Rural/Metro's proposed $190 million credit facility is "going very well" since launching last Tuesday as the primary market seems to have "come back," according to a market source.

The facility consists of a $40 million revolver and a $150 million term loan, with both tranches talked at Libor plus 525 bps with a 2% Libor floor and an original issue discount of 98.

RBC is the lead bank on the deal that will be used to refinance an existing credit facility that is due in 2011.

This credit facility refinancing is a condition of the company's tender offer for its 12.75% senior discount notes due 2016.

Commitments towards the new credit facility are due from lenders on Nov. 5.

Rural/Metro is a Scottsdale, Ariz.-based provider of emergency and non-emergency ambulance services and private fire protection services.

Lear closes

Lear Corp. closed on its $400 million five-year first-lien term loan (Ba2) that is priced at Libor plus 550 bps, with a step-down to Libor plus 525 bps based on leverage, and contains a 2% Libor floor, according to an 8-K filed with the Securities and Exchange Commission on Monday.

The loan was sold at an original issue discount of 99 and carries 101 soft call protection for one year.

During syndication, pricing on the loan was reduced from Libor plus 575 bps, the step down was added and the original issue discount was lowered from 981/2.

Up to $200 million of the first-lien term loan is delayed draw for 35 days after the closing date.

JPMorgan acted as the lead bank on the deal that was completed on Friday.

Proceeds are being used to refinance the company's existing $500 million DIP/exit facility that is priced at Libor plus 1,000 basis points with a 3.5% Libor floor.

Lear is a Southfield, Mich.-based automotive parts supplier.

Dayton Superior closes

Dayton Superior Corp. closed on its $110 million four-year exit financing revolving credit facility that was led by Bank of America, UBS and KeyBank, according to a news release.

The company also closed on a new $100 million term loan in connection with its emergence from Chapter 11 on Monday.

Proceeds are being used to refinance a debtor-in-possession financing facility, issue standby or commercial letters of credit, make plan payments and for working capital and general corporate purposes.

Dayton Superior is a Dayton, Ohio, provider of specialized products consumed in nonresidential concrete construction and concrete forming.

Rite Aid closes

Rite Aid Corp. closed on its $300 million of incremental bank debt comprised of a $125 million tranche-4 term loan add-on due June 2015 and a $175 million revolver add-on, according to a news release.

The term loan add-on is priced in line with the existing loan at Libor plus 650 bps with a 3% Libor floor, and there is call protection of 105, 103, 101. The add-on was issued to investors at a price of 103.

The revolver add-on priced in line with the existing revolver at Libor plus 450 bps with a 3% Libor floor.

Proceeds from the term loan and borrowings under the upsized revolver were used to help repay and cancel the company's accounts receivable securitization facilities that had $475 million drawn.

Citigroup acted as the left lead bank and a bookrunner on the incremental bank debt, and Bank of America, Wells Fargo and Goldman Sachs acted as joint bookrunners as well.

Rite Aid is a Camp Hill, Pa.-based drugstore chain.

MDC closes

MDC Partners Inc. closed on its new $75 million five-year revolving credit facility that is priced at Libor plus 325 basis points, according to an 8-K filed with the SEC on Monday.

Wells Fargo Foothill is the agent on the deal.

Financial covenants include a fixed-charge coverage ratio not less than 1.25:1, a senior leverage ratio not greater than 2:1, and a minimum EBITDA level of $50 million.

Proceeds were used to replace the company's current revolver.

MDC Partners is a Toronto-based marketing and communications network.

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