El Paso rallies in secondary on asset sale; Bresnan launches $400 million credit facility

By Sara Rosenberg

New York, Feb. 24 - El Paso Corp.'s bank debt moved up on Monday in secondary trading as investors showed support for the company's latest announced asset sale. Meanwhile, in primary news, Bresnan Broadband Holdings LLC kicked off a relatively full week of new issues with the launch of its $400 million credit facility.

El Paso's bank paper was quoted with a 91 bid and a 93 offer, up a few points from previous quotes, according to a trader.

"It's been creeping up in the 80's all last week, but this asset sale was definitely good [news] for them." the trader said.

On Monday afternoon, El Paso announced that it was selling some of its gas reserve assets to Chesapeake Energy Corp. for $500 million. The acquisition is expected to close before March 31, 2003, will have an effective date of April 1, 2003 and is subject only to satisfaction of customary closing conditions.

Chesapeake intends to finance the transaction by issuing a combination of equity and long-term debt, according to a news release.

El Paso is a Houston provider of natural gas services. Chesapeake is an Oklahoma City independent natural gas producer.

Bresnan's proposed $400 million credit facility consists of a $100 million seven-year revolver with an interest rate of Libor plus 350 basis points, a $75 million seven-year delayed draw term loan A with an interest rate of Libor plus 350 basis points and a $225 million 71/2-year term loan B with an interest rate of Libor plus 375 basis points, sources said.

JPMorgan Chase, TD Securities and Wachovia are the lead banks on the deal.

Proceeds from the credit facility, combined with common and preferred equity, will be used to help fund the acquisition of Comcast Corp.'s cable television systems serving 317,000 basic subscribers in Montana, Wyoming, Colorado and Utah. The transaction is expected to close by March 31, 2003, subject to customary closing conditions.

Bresnan opted to use bank debt for the acquisition as it is cheaper than high-yield bonds, a spokesperson previously explained to Prospect News.

Bresnan Communications is a White Plains, N.Y. broadband communications provider.

Very tentative pricing on AmeriPath Inc.'s $365 million credit facility, which is expected to launch on Wednesday, was revealed with the $290 million term loan B anticipated to carry an interest rate of Libor plus 400 basis points and the $75 million revolver anticipated to carry an interest rate of Libor plus 350 basis points, according to a syndicate source.

Credit Suisse First Boston and Deutsche Bank are the lead banks on the deal.

Proceeds, combined with proceeds from a bond offering, will be used to help fund leveraged buyout of AmeriPath by Welsh, Carson, Anderson & Stowe.

The buyout is expected to be completed before April 30, 2003. Completion of the transaction is subject to shareholder approval, the closing of financing arrangements, the expiration of the applicable waiting period under Hart-Scott-Rodino and other customary conditions.

AmeriPath is a Riviera Beach, Fla. provider of cancer diagnostics, genomic, and related information services.

Other deals that are expected to launch this week include Constellation Brands Inc., Gaylord Entertainment Co. and Moore Corp. Ltd.

Constellation Brands is expected to hit the primary market on Thursday with a new $1.6 billion credit facility, according to market sources. JPMorgan, Salomon Smith Barney and UBS Warburg are the lead banks on the deal.

The credit facility consists of an $800 million six-year term loan B, a $400 million five-year term loan A and a $400 million five-year revolver. There is also a $400 million bridge loan that is available to the company if necessary.

The new credit facility will be used to help fund the acquisition of BRL Hardy Ltd. for approximately $1.4 billion. The transaction is subject to approval of BRL Hardy's shareholders and customary closing conditions, and is expected to close in early April 2003.

Constellation is a Fairport, N.Y. producer and marketer of beverage alcohol brands. BRL Hardy is an Australian wine producer.

Gaylord Entertainment is expected launch a $225 million credit facility later this week. Deutsche Bank, Bank of America and CIBC are the lead banks on the deal.

The facility consists of $200 million in term loans and a $25 million revolver, all maturing in three years.

Proceeds will be used to first repay the company's existing $60 million term loan, second to complete the construction of Gaylord Opryland Texas Resort & Convention Center and third, if there are excess funds remaining, for general corporate purposes.

Gaylord Entertainment is a Nashville, Tenn. diversified entertainment and communications company.

Moore is schedule to launch an $850 million credit facility on Wednesday via Deutsche Bank, Salomon Smith Barney and Morgan Stanley.

The loan consists of a $500 million term loan B and a $350 million revolver.

Proceeds from the loan, combined with proceeds from a bond offering, will be used to help fund the acquisition of Wallace Computer Services Inc. Moore will pay aggregate consideration of approximately $1.3 billion consisting of approximately $606 million in cash, approximately $470 million in Moore's common shares, and the assumption of approximately $210 million in debt. The combined company will be renamed as Moore Wallace.

Moore is a Mississauga, Ont. manager and distributor of print information. Wallace is a Lisle, Ill. provider of printed products and print management services.

In follow-up news, the NY Mets baseball team's credit facility is essentially completed, according to a syndicate source. Syndication of the deal was being wrapped up on Friday and people are now being brought in on assignment.

The facility consists of a $137 million three-year term loan with an interest rate of Libor plus 325 basis points, flexed up from initial pricing of Libor plus 275 basis points.

"We're done," the syndicate source said. "We made the necessary changes and bringing guys in on assignment this week."

Lehman Brothers is the lead bank on the deal.

This financing for the Mets was already funded in August 2002. Proceeds from the loan were used to help Fred Wilpon purchase the remaining 50% ownership in the team from Nelson Doubleday.

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