Regal Cinemas allocates and breaks for trading with B loan hitting par 1/2, par ¾ levels

By Sara Rosenberg

New York, May 6 - Regal Cinemas Corp.'s $1.75 billion credit facility (Ba3/BB-) broke for trading on Thursday, with the term loan B trading around and quoted at plus par levels but never quite reaching the 101 area as there seemed to be some market heaviness in general.

The term loan B was quoted at par ½ bid, par ¾ offered, according to a couple of traders.

"On the break there were a bunch of trades but it didn't really hit that 101 level. A big deal like that, it was a little heavy and was wobbly with the rest of the market," a trader said. The trader noted that "energy - the whole affect of Duke selling its assets for not as high a multiple and Calpine not [having] great earnings" was a factor in the market. "The market has backed off a bit, and everything follows."

"Energy concerns seem to be affecting everything but energy," a second trader said. "At least par energy names, like Reliant, Midwest Generation, they all held in there."

Regal Cinemas' facility consists of a $1.65 billion 61/2-year term loan B with an interest rate of Libor plus 275 basis points and a $100 million five-year revolver with an interest rate of Libor plus 275 basis points. A stepdown in pricing to Libor plus 250 basis points was recently added to the term loan B, according to a market source.

The term loan B was upsized by $400 million during syndication since the company opted to cancel its proposed $400 million subordinated notes offering on strong interest from the institutional loan market.

In fact, syndication of the tranche was seen as going very well from the start with some very large orders finding their way into the books within a few hours after the April 19 bank meeting. The deal attracted attention not only from existing lenders but from new lenders as well.

According to one market source, existing lenders who had previously made up a term loan of approximately $500 million were not only looking to roll over their commitments with this new deal but were looking for a substantial increase in positions as well since this credit has performed well in the past.

As for those investors who maybe chose not to or were unable to get involved in the existing deal, this new credit facility gave them an opportunity to participate as well, which they apparently are responding favorably to, the source previously explained.

Credit Suisse First Boston is the sole lead arranger and bookrunner on the deal.

Proceeds from the credit facility will be used to refinance existing debt and to fund the tender offer and consent solicitation for the company's $350 million aggregate principal amount of 9 3/8% senior subordinated notes due 2012. In addition about $930 million of the proceeds, together with available cash, will be distributed to parent company Regal Entertainment Group, which plans to use about $710 million to pay an extraordinary dividend of about $5.00 per share to its holders of class A and class B common stock, with the balance set aside for general corporate purposes, including potential acquisitions.

Regal Entertainment Group is a Centennial, Colo., theaters circuit.

Calpine off on earnings

Calpine Generating Co. LLC's first lien and second lien term loans bounced around a lot on parent company Calpine Corp.'s first quarter earnings results, with both tranches quoted lower by the end of the day.

The second lien paper was quoted at 91 bid, 93 offered, down about two points from previous levels, while the first lien paper was quoted at 99 bid, par offered, down only about a half a point, according to various traders.

For the quarter, Calpine reported a loss of $71.2 million, or $0.17 per share, compared to a loss of $52.0 million, or $0.14 per share, in the same period last year. Gross profit decreased by $44.6 million, or 27%, to $120.5 million, compared to the first quarter last year as a result of lower spark spreads realized during the quarter and additional costs associated with new power plants coming on line, according to a company news release.

CalGen is a wholly owned subsidiary of Calpine Corp., a San Jose, Calif., power company.

Reliant holds firm

Reliant Energy Inc., however, managed to stay unscathed by market concerns over Calpine's results and Duke Energy's asset sale for a lower-than-expected multiple, with the term loan quoted unchanged 98 bid, 98½ offered and the revolver quoted basically unchanged at 94½ bid, 95½ offered, according to a trader.

Earlier this week, some energy names were said to be a little heavy as Duke Energy announced that it entered into an agreement to sell its merchant generation assets in the Southeast United States for $475 million to KGen Partners LLC. Total proceeds from the transaction, including the sales proceeds and approximately $500 million in tax benefits, will be about $1 billion.

On Tuesday, Reliant's term loan reached the 98 bid level, jumping from previous a level of 97¾ bid as bank loan participants were relatively satisfied with the company's earnings.

For the quarter, the company reported a loss from continuing operations of $46 million, or $0.15 per share, compared to a loss from continuing operations of $52 million, or $0.18 per share, for the same period of 2003. Retail gross margin was $162 million, compared to $185 million in the first quarter of 2003. Wholesale gross margin was $325 million, compared to $281 million in the first quarter of 2003. Operation and maintenance expense was $250 million, compared to $225 million in the same period last year. Other general and administrative expenses were $54 million, compared to $58 million for the first quarter of 2003. And, interest expense, net for the quarter was $105 million, compared to $83 million for the same period last year.

Reliant is a Houston provider of electricity and energy services.

Wellcare reprices

Wellcare Health Plans Inc. increased pricing on its $210 million credit facility (B2) by 75 basis points across the board, according to a syndicate document.

The $50 million four-year revolver is now priced with an interest rate of Libor plus 375 basis points compared to initial pricing of Libor plus 300 basis points and the $160 million five-year term loan B is now priced with an interest rate of Libor plus 400 basis points compared to initial pricing of Libor plus 325 basis points, the document said.

The revolver has a 50 basis points commitment fee.

Credit Suisse First Boston and Morgan Stanley are the joint lead arrangers and joint bookrunners on the deal, with CSFB also acting as administrative agent and Morgan Stanley also acting as syndication agent.

Proceeds will be used for acquisition financing.

Wellcare is a Tampa, Fla., Medicaid managed care provider.

Bear, Lehman join PanAmSat group

Bear Stearns and Lehman Brothers have signed on to PanAmSat Corp.'s proposed credit facility as co-documentation agents, according to a syndicate document. As was previously reported, Credit Suisse First Boston and Citigroup are the joint lead arrangers and joint bookrunners on the deal.

Proceeds from the credit facility, combined with proceeds from a proposed bond offering, will be used to help fund the leveraged buyout of PanAmSat by affiliates of Kohlberg Kravis Roberts & Co. from The DirecTV Group Inc.

The acquisition, which was announced in April, is valued at about $4.3 billion, including the assumption of about $750 million of net debt. Completion is subject to regulatory approvals, including the Federal Communications Commission, and PanAmSat stockholders approvals. The boards of directors of both PanAmSat and DirecTV already voted unanimously in favor of the transaction.

Because of the regulatory approvals needed, timing on the debt financings is still to be determined, a source previously explained to Prospect News.

Also as part of the transaction, DirecTV agreed to extend and enhance some agreements with PanAmSat, at market rates, to assure future revenue flows to PanAmSat and continuity of services.

The LBO is expected to be completed in the second half of 2004.

PanAmSat is a Wilton, Conn., satellite operator.

Metris closes

Metris Cos. Inc. closed on its $300 million three-year term loan that is priced with an interest rate of Libor plus 950 basis points. The tranche was originally offered to investors at 99 during syndication.

The term loan was increased to $300 million from $175 million last week due to the company's decision to pull its proposed $250 million senior secured notes offering, and pricing had been revised to Libor plus 1,000 basis points from a fixed rate of 11%.

Then this week, pricing was once again modified, this time flexing lower to Libor plus 950 basis points.

Goldman Sachs, Banc of America Securities LLC and Deutsche Bank Securities were joint lead arrangers, and RBC Capital Markets was the co-manager for the term loan.

Proceeds from the term loan were used to refinance the company's $125 million one-year term loan that was obtained last June and was priced with an annual interest rate of 12% plus performance payments based on the excess spread in the Metris Master Trust. Proceeds are also being used to refinance existing bonds, including the 10% senior notes due in 2004 and a portion of the 10 1/8% senior notes due in 2006.

Metris is a Minnetonka, Minn., provider of financial products and services.

Holmes closes

The Holmes Group Inc. closed on its $425 million credit facility consisting of a $90 million five-year revolver (B1/B) at Libor plus 325 basis points with a 50 basis points commitment fee, a $250 million first lien term loan (B1/B) at Libor plus 325 basis points and an $85 million seven-year second lien term loan (B3/CCC+) at Libor plus 750 basis points that was offered at 991/2.

The deal was originally launched as a $75 million five-year revolver with an interest rate of Libor plus 325 basis points and a 50 basis points commitment fee, a $240 million first lien term loan with an interest rate of Libor plus 325 basis points and a $105 million seven-year second lien term loan with an interest rate of Libor plus 700 basis points, but was later changed during syndication.

General Electric Capital Corp. and Credit Suisse First Boston were the joint lead arrangers and bookrunners, with GECC also acting as administrative agent and CSFB also acting as syndication agent.

Proceeds were used to refinance bank debt and fund the tender offer for the 9 7/8% senior subordinated notes due 2007. In addition, the company will use about $150 million of the new credit facility to pay a cash dividend to shareholders, according to a company news release.

Holmes Group is a Milford, Mass., consumer products company.

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