MGM Mirage, Graham Packaging rise on amendments; NewPage dips; PharmaNet tweaks deal

By Sara Rosenberg

New York, May 13 - MGM Mirage's bank debt jumped higher by a couple of points on Wednesday as the company announced an amendment to its credit facility that provides for a number of repayment scenarios.

Also strengthening on amendment news during market hours was Graham Packaging Co. LP's term loan B, although this amendment relates to extending loan maturities and, as incentive for consents, sweetening pricing.

In more trading happenings, NewPage Corp.'s term loan softened following the company's first-quarter earnings announcement that showed a decline in earnings as well as sales and EBITDA.

Meanwhile, over on the new deal front, PharmaNet Development Group Inc. made some changes to its credit facility, including raising pricing - a move that had been speculated about since last week - and reducing the term loan A size.

MGM Mirage rallies

MGM Mirage's term loan and revolving credit facility debt saw a fairly large improvement in the secondary market following the release of details of an amendment that was completed on Tuesday, but is still subject to all sorts of conditions before becoming effective, according to a trader.

The term loan was quoted at 79½ bid, 81½ offered, up from around 74 bid, 75 offered and the revolver was quoted at 78 bid, 81 offered, up from around 72½ bid, 74 offered, the trader said.

The trader went on to explain that the positive momentum in trading levels was due in large part to all the repayment demands contained in the amendment, which were outlined in a 424B2 filed with the Securities and Exchange Commission.

MGM Mirage paydown covenants

One such repayment requirement under MGM Mirage's amendment is that $750 million of the credit facility borrowings be permanently paid down with proceeds from two offerings that were announced on Wednesday morning - a $1.5 billion private placement of senior secured notes and the sale of 81 million shares of common stock.

The repayment will be allocated between the term loan and the revolver on a pro rata basis and to the extent that the gross proceeds of the offerings are in excess of $2.5 billion, 50% of that excess amount must also be used to permanently repay bank debt borrowings.

In addition, the amendment provides that the company must use 50% of the net proceeds from any future asset sales to permanently reduce the term loan and revolver on a pro rata basis.

Another repayment requirement is that the company can incur up to $500 million of additional unsecured debt, but only if 50% of the net proceeds are used to permanently reduce the term loan and revolver on a pro rata basis.

Lastly, the amendment says that the $400 million in aggregate repayment of the credit facility borrowings made as a condition to earlier amendments to the credit facility must be treated as a permanent prepayment of the facility.

MGM Mirage pricing increasing

MGM Mirage's amendment didn't only address repayment provisions, it also raised pricing on the bank debt by 100 basis points to Libor plus 400 bps.

Furthermore, the amendment eliminated the total leverage and interest charge coverage ratios and permanently waived any prior non-compliance with the ratios for the quarter ended March 31, and requires the company to meet a quarterly minimum EBITDA test.

The amendment also limited annual capital expenditures, and permanently waived any potential default from the inclusion of a going concern opinion for the years ended or ending Dec. 31, 2008 and Dec. 31, 2009.

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

Graham Packaging trades up

Graham Packaging's term loan B gained some ground on Wednesday as the company approached lenders with an amendment that would push out maturities in return for higher pricing, traders told Prospect News.

The term loan B was quoted at 93½ bid, 94½ offered, up from Tuesday's levels of around 92¾ bid, 94 offered, traders said.

Under the proposal, which was launched to investors with an conference call in the morning, the company is looking to extend the maturity on a targeted $1.065 billion of the currently outstanding $1.815 billion term loan B to April 2014 from October 2011.

The amendment would also extend the maturity of up to $125 million of the company's currently undrawn $250 million revolver to October 2013 from October 2010.

According to a news release, the amendment is being sought after now in order to take advantage of the company's strong operational performance and limit the risk of a future refinancing.

Graham proposes pricing change

As part of the amendment, Graham Packaging is offering lenders increased pricing of Libor plus 425 bps with a 2.5% Libor floor on the extended term loan B and revolving credit facility commitments.

Currently, the term loan B carries pricing of Libor plus 225 bps and the revolver carries pricing of Libor plus 275 bps.

Lenders are not being offered an amendment fee.

Deutsche Bank is leading the amendment and consents from lenders are due on May 21.

Graham Packaging is a York, Pa.-based designer, manufacturer and seller of customized blow molded plastic containers for the branded food and beverage, household, automotive lubricants and personal care/specialty product categories.

NewPage off with numbers

NewPage's term loan traded lower during the session after the company came out with first-quarter results, according to a trader.

The term loan was quoted at 77 bid, 78½ offered, down from 79¼ bid, 81¼ offered, the trader said.

For the quarter, the company's net loss was $109 million, compared to net income of $7 million in the same period last year.

And, net sales for the quarter were $722 million, down 39% from $1.19 billion in the first quarter of 2008.

NewPage EBITDA declines

Also in the first quarter, NewPage's debt covenant EBITDA was $97 million, down from $179 million in the comparable prior year period.

The company closed the quarter with $249 million of liquidity, consisting of $2 million of cash and $247 million of additional borrowing availability under its revolving credit facility.

NewPage is a Miamisburg, Ohio-based coated paper manufacturer.

PharmaNet reworks loan

Switching to the primary market, PharmaNet Development Group came out with some pricing and size revisions to its credit facility, and with the changes, the deal is now oversubscribed, according to a market source.

Under the new structure, the term loan A is sized at $65 million, down from $75 million, while the revolver size was left unchanged at $20 million.

Pricing on the two tranches was increased to Libor plus 700 bps with an original issue discount of 94 from original talk at launch of Libor plus 600 bps with an original issue discount of 97, however the 3% Libor floor was left unchanged, the source said.

PharmaNet getting equity

To replace the $10 million in lost term loan A funds, PharmaNet is getting some equity, the source remarked.

He went on to say that the pricing adjustment was made to accommodate some CLOs.

Jefferies and CIT are the co-lead arrangers and co-bookrunners on the now $85 million credit facility, with Jefferies the left lead.

Proceeds will be used to refinance convertibles.

Closing is expected to take place by the end of next week.

PharmaNet is a Princeton, N.J.-based drug-development services company.

Jones Apparel closes

Jones Apparel Group Inc. closed on its $650 million ABL revolver (Ba2/BB-) due May 2012, according to a news release.

JPMorgan and Citigroup acted as the lead banks on the deal.

The loan had been talked at Libor plus 450 bps.

Proceeds will be used to refinance an existing $600 million ABL facility, to repay notes and for general corporate purposes.

Jones is a New York-based designer, marketer and wholesaler of branded apparel, footwear and accessories.

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