Leap falls as merger proposal pulled; Blockbuster down on earnings; TXU dips; LCDX falls with stocks

By Sara Rosenberg

New York, Nov. 1 - Leap Wireless International, Inc. saw its term loan B slide lower as MetroPCS Communications, Inc. withdrew its merger proposal, and while MetroPCS' term loan B was also off a touch, that was more likely a function of the overall market softness than a function of the news.

Also in trading, Blockbuster Inc.'s term loan B gave up some ground as well after the release of third-quarter numbers, Texas Competitive Electric Holdings Co. LLC's (TXU) term loan B-2 and term loan B-3 inched lower, and LCDX traded down in sympathy with equities.

Leap Wireless' term loan B was weaker during Thursday's market hours as the possibility of a merger with MetroPCS vanished, according to a trader.

The term loan B ended the day at 97¾ bid, 98¾ offered, down from Wednesday's levels of 98¾ bid, 99¼ offered, the trader said.

On Sept. 4, MetroPCS announced that it would like to do a stock-for-stock tax-free merger with Leap Wireless. The company proposed that each outstanding share of Leap Wireless common stock be exchanged for 2.75 shares of MetroPCS common stock.

Based on MetroPCS' trailing 20-day volume-weighted average stock price as of Aug. 31, the proposed exchange ratio implied a value of $77.89 for each share of Leap Wireless common stock, or about $5.5 billion in aggregate equity value.

Also under the proposal, MetroPCS said that it would assume or refinance approximately $2 billion of Leap Wireless' existing debt.

However, on Thursday, MetroPCS said that it was withdrawing the merger proposal because it was unable to engage Leap Wireless in meaningful negotiations.

MetroPCS' term loan B was lower during Thursday's trading session, moving down an eighth of a point to 97¾ bid, 98¼ offered, according to a second trader, but this movement seemed to be more in sympathy with the overall secondary market, which was also down about an eighth of a point.

Leap Wireless is a San Diego-based provider of wireless services. MetroPCS is a Dallas-based provider of wireless communications service.

Blockbuster dips with numbers

Blockbuster's term loan B headed down in trading after the company announced not-too-stellar third-quarter financial results, according to a trader.

The term loan B ended the session at 98¾ bid, 99½ offered, down from 99 bid, 99¾ offered, the trader said.

For the third quarter, total revenues decreased 5.7% to $1.24 billion from $1.31 billion for the third quarter of 2006.

Net loss was $35 million, or $0.20 per common share, as compared with a net loss of $24.7 million, or $0.15 per common share, for the third quarter of 2006.

Operating loss for the quarter totaled $5.6 million, compared with operating income of $3.3 million for the same period last year.

The company also said that as part of its previously announced efforts to improve profitability, a plan has been implemented to reduce annualized overhead costs by $45 million through the elimination of staffing and operational redundancies in its in-store and online corporate support structure and through improvements in other operating efficiencies.

Blockbuster is a Dallas-based provider of in-home movie and game entertainment.

Texas Competitive trades off

Texas Competitive Electric Holdings' term loan B-2 and term loan B-3 were both softer during the trading session as a result of some selling pressure as people settled into their positions and because the debt was following the market's overall downward trajectory, according to a trader.

The term loan B-2 ended the day at 99 5/8 bid, 99 7/8 offered, down from Wednesday's levels of 99 7/8 bid, par offered, the trader said.

The term loan B-3 ended the day at 99 5/8 bid 99 7/8 offered, down from par 1/16 bid, par 3/16 offered, the trader added.

The term loan B-3 just hit the market on Wednesday after a quick syndication process that officially began at the start of this week.

When the term loan B-3 was opened up for syndication, it was said that orders were being taken on a minimum $3 billion portion of the loan. Being that there were just under 200 accounts in the book, the syndicate ended up allocating the entire $6 billion tranche.

The term loan B-3 is priced at Libor plus 350 basis points, was sold at par and is non-callable for three years.

Texas Competitive's $7 billion seven-year term loan B-2, which wrapped up syndication last week and broke for trading at that time, is priced at Libor plus 350 bps, was sold at 99¾ and carries soft call protection of 103 in year one, 102 in year two and 101 in year three.

Texas Competitive is a Dallas-based energy company.

LCDX weakens

In other secondary news, LCDX 9 sold off in trading on Thursday in reaction to stocks tumbling lower, according to a trader.

The index went out at 97.75 bid, 97.85 offered, down from Wednesday's closing levels of around 98.45 bid, 98.55 offered, the trader said.

As for equities, Nasdaq closed down 64.29 points, or 2.25%. Dow Jones Industrial Average closed down 362.14 points, or 2.60%, S&P 500 closed down 40.94 points, or 2.64%, and NYSE closed down 289.53 points, or 2.81%.

Tranzact closes

Veronis Suhler Stevenson completed its buyout of Tranzact from Halyard Capital for $185 million, according to a news release.

To help fund the transaction, Tranzact got a new credit facility that was led by BMO Capital Markets, Bank of Ireland and CIT Group, with BMO the left lead.

The deal was done through a club syndication.

Tranzact is a Fort Lee, N.J., provider of end-to-end technology-driven customer acquisition services.

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