MGM Mirage up on numbers; Dynegy softens; Orbitz rises; RehabCare price talk emerges

By Sara Rosenberg

New York, Nov. 5 - MGM Mirage's term loan gained some ground during the trading session as the company released third-quarter results that were better than expected, Dynegy Inc.'s strip of institutional bank debt was weaker despite good earnings and Orbitz Worldwide Inc.'s term loan was better on earnings and news of an equity injection.

In more loan happenings, RehabCare Group Inc. came out with price talk on its proposed credit facility as the deal was launched to investors on Thursday and Revlon Consumer Products Corp. is still working with lenders on its proposed amendment as the consent deadline was extended.

MGM Mirage strengthens

MGM Mirage's term loan was better in trading following the company's quarterly earnings announcement, according to traders.

One trader had the term loan quoted at 90 bid, 91 offered, up about half a point on the day, and a second trader had the term loan quoted at 90¾ bid, 91¾ offered, up from 89¼ bid, 90¼ offered.

For the third quarter, MGM Mirage reported a net loss of $750 million, or $1.70 per share, compared to net income of $61 million, or $0.22 per share, in the prior year.

The company said that results were impacted by non-cash impairment charges totaling $1.17 billion, or $1.72 loss per diluted share net of tax, including a pre-tax non-cash impairment charge of $956 million related to its investment in CityCenter and a pre-tax non-cash charge of $203 million related to impairment of CityCenter's residential real estate under development.

Revenues for the quarter were $1.53 billion, compared to $1.79 billion in the third quarter of 2008.

Property EBITDA was $415 million in the quarter, down 12% from 2008, and EBITDA was negative $793 million, compared to positive $442 million last year.

MGM Mirage amends

Also on Thursday, MGM Mirage revealed that it amended its senior credit facility on Wednesday to allow for the issuance of additional unsecured debt and equity.

Proceeds from the unsecured debt will be used to refinance certain existing debt so long as the maturity of the newly issued debt is not earlier than the maturity of the debt being refinanced or six months after the date the senior credit facility is set to mature.

In addition to the refinancing debt, the company can issue up to $1 billion of other unsecured debt, provided that 50% of the net cash proceeds over $250 million be used to permanently reduce outstanding credit facility balances.

With any equity offering, 50% of the net cash proceeds over $500 million must be applied to reduce outstanding bank debt.

At Sept. 30, the company had about $4.3 billion of borrowings outstanding under its credit facility with available borrowings of $1.4 billion. The company's cash balance was $897 million.

MGM Mirage is a Las Vegas-based gaming, hospitality and entertainment company.

Dynegy slides

Dynegy's strip of institutional bank debt was lower on Thursday even though the company posted good numbers, as there was some selling pressure in the name, according to a trader.

"Never trades, so if one seller comes out, it pushes it down," the trader remarked.

The strip was quoted at 95¼ bid, 96¼ offered, down from 96 bid, 97 offered, the trader added.

For the third quarter, Dynegy reported a net loss of $212 million, or $0.25 per diluted share, compared to net income of $605 million, or $0.72 per diluted share, last year.

Revenues for the quarter were $673 million, compared to $1.759 billion in the previous year.

Adjusted EBITDA for the quarter was $388 million, compared to $269 million for the third quarter of 2008.

As of Sept. 30, liquidity was $1.9 billion, consisting of $703 million in cash on hand and $1.2 billion in unused availability under the company's credit facility.

The company's previously disclosed transaction with LS Power is expected to be completed in the fourth quarter, with an anticipated increase in available cash and liquidity of more than $1 billion.

Dynegy updates guidance

In addition, Dynegy revised estimates for full-year adjusted EBITDA, adjusted cash flow from operations and adjusted free cash flow from the previous ranges presented on Aug. 10.

The company now expects a range of adjusted EBITDA of $730 million to $760 million, a range of adjusted cash flow from operations of $75 million to $105 million, and a range of adjusted free cash flow of negative $425 million to negative $395 million.

The adjusted EBITDA outlook improved due to the sale and assignment of a power sales contract, partially offset by the purchase of additional options that provide downside protection in future periods.

The decline in adjusted cash flow from operations and adjusted free cash flow estimates resulted from increased cash collateral postings related to 2010 and 2011 contracted positions.

Dynegy is a Houston-based producer and seller of electric energy, capacity and ancillary services.

Orbitz trades up

Orbitz's term loan headed higher on the back of earnings results and an announcement that the company is getting an equity investment in exchange for bank debt, according to a trader.

The term loan was quoted on the either side of 90 on Thursday, up from levels that were on the either side of 88 at the close of the previous session, the trader said.

For the third quarter, the company had net income of $7 million, or $0.08 per share, compared to a net loss of $287 million, or $3.44 per share, last year.

Net revenues for the quarter were $187 million, down 22% from $240 million in the third quarter of 2008.

And, adjusted EBITDA for the quarter was $44 million, up 2% from $43 million in the previous year.

Orbitz exchanging debt

Also on Thursday, Orbitz revealed that it has entered into an agreement with PAR Investment Partners to exchange $49.68 million of its senior term loan debt for 8.16 million shares of its common stock.

Orbitz will retire the debt it receives from PAR in accordance with the amendment to its senior credit agreement that it entered into with lenders in June.

Also, in a separate transaction, Travelport has entered into a definitive agreement to make a $50 million investment in Orbitz's common stock.

The funds received from Travelport are expected to be used for general corporate purposes, which could include additional investments and debt repayments.

Both equity investments were priced at $5.54 per share based on the market closing price of the company's common stock on Nov. 3.

These investments are expected to close in January 2010.

Orbitz is a Chicago-based online travel company.

RehabCare sets talk

Switching to the primary market, RehabCare held a bank meeting on Thursday at 9:30 a.m. ET in New York to launch its proposed $625 million senior secured credit facility (Ba3/BB), and in connection with the launch, price talk was announced, according to a buyside source.

Both the $125 million revolver and the $500 million term loan B are being talked at Libor plus 400 basis points, the source said.

The term loan B has a 2% Libor floor.

And, the term loan B is being offered at an original issue discount of 98, the source continued.

RehabCare viewed favorably

The buyside source also told Prospect News that RehabCare's bank meeting "went well" and that the deal itself "will go well most likely."

Bank of America, RBC and BNP Paribas are the lead banks on the deal that will be used to help fund RehabCare's acquisition of Triumph HealthCare for a purchase price of $570 million.

The revolver is expected to be substantially unfunded at the close of the transaction.

Closing on the acquisition is expected to take place on Dec. 1, pending customary closing conditions, including regulatory approvals.

RehabCare is a St. Louis-based provider of physical rehabilitation services. Triumph HealthCare is a Houston-based developer and operator of long-term acute care hospitals.

Revlon still accepting consents

Revlon's consent deadline for its credit facility amendment proposal has become fluid as it has been communicated to accounts that the lead bank is still willing to work with them even though the Wednesday 5 p.m. ET deadline has already passed, according to a market source.

Through the amendment, the company is looking to gain permission to do certain refinancing transactions.

These transactions would include refinancing the company's 9.5% senior notes due April 2011 on a secured basis.

Citigroup is the leading the amendment.

Revlon is a New York-based cosmetics, hair color, beauty tools, fragrances, skincare, anti-perspirants/deodorants and beauty care products company.

Norwegian Cruise closes

In other news, Norwegian Cruise Line closed on its new $750 million senior secured revolving credit facility, according to a news release.

Proceeds are being used to help refinance the company's existing senior secured credit facility and discharge 10 5/8% senior notes.

Norwegian Cruise Line is a Miami-based cruise ship operator.

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