Plum Point sets talk; Movie Gallery up again; GM weakens on downgrade; Charter rises on asset sale talk

By Sara Rosenberg

New York, Feb. 21 - Plum Point Energy Associates LLC came out with price talk on its credit facility as the deal was launched to investors on Tuesday.

Meanwhile, in the secondary, Movie Gallery Inc. saw its term loan continue to build momentum on market technicals, General Motors Corp. saw levels on its revolver weaken slightly and widen out following a ratings downgrade and some potentially negative news pertaining to the sale of GMAC, and Charter Communications Inc. saw its bank debt strengthen as rumors of assets sales floated around the market place.

Plum Point Energy set opening pricing guidance on its proposed $827 million credit facility as syndication on the deal officially kicked off with a bank meeting.

All of the loan tranches - a $520 million term loan, a $57 million revolver and two letter-of-credit facilities sized at $125 million each - were presented to lenders with opening price talk set at Libor plus 325 basis points, according to a market source.

"Although with a B1 Moody's rating that spread will have room to compress if people like the project," the source added.

Credit Suisse is the lead bank on the deal.

Proceeds will be used to help finance the construction of the Plum Point Energy Station, a nominal 800 megawatt, coal-fired electric generating plant located near Osceola, Ark.

Chesterfield, Mo.-based Plum Point Energy Associates is a LS Power Group member. St. Louis-based LS Power Group develops, owns and operates large-scale power generation projects.

Movie Gallery trades up

Switching to the secondary, Move Gallery's term loan was stronger during Tuesday's session as more buyers for the paper emerged in what was otherwise deemed a relatively quiet trading day, according to traders.

The term loan closed the day quoted at 92½ bid, 93½ offered, according to some market players, and at 92¼ bid, 93¼ offered, according to some others.

By comparison, last Friday, the term loan closed the week with quotes of 91 bid, 93 offered.

Last Tuesday, Movie Gallery's term loan had fallen to the 89 bid, 91 offered context after news surfaced that there was a new movies-on-demand service being launched called MovieBeam Inc. - leaving some to worry about how this rival would affect Movie Gallery's bottom line.

However, the term loan started to rebound last Thursday, and the trend has apparently continued into this week, given that people had time to digest the competition news and put it in perspective, traders previously explained.

Movie Gallery is a Dothan, Ala.-based operator of video retail stores.

GM lower and wider

Also in trading, levels on General Motors' revolver softened and widened out as the company was hit with another ratings downgrade and reports came out that Wachovia dropped out of the running for the purchase of General Motors Acceptance Corp., according to traders.

On Tuesday, Moody's Investors Service lowered the corporate family rating and senior unsecured rating of GM to B2 with a negative outlook from B1.

"The downgrade reflects increased uncertainty that the company will be able to achieve all of the steps necessary to establish a competitive wage, benefit and supplier cost structure outside of bankruptcy," the rating agency said.

These steps include a successful resolution of the Delphi reorganization and the negotiation of a considerably more competitive labor contract with the UAW during 2007, completing the sale of GMAC, resolving the current SEC investigations into various accounting matters, and dealing with continued pressure on its operating profile by declining U.S. market share and the ongoing shift in consumer preference away from trucks and SUVs, Moody's explained.

GM is in negotiations with Delphi Corp. and The United Auto Workers regarding wage reductions and benefit provisions.

These negotiations were supposed to end this past Friday as bankrupt Troy, Mich.-based auto components maker Delphi had threatened to go into bankruptcy court and ask the judge overseeing its case to toss out the contract - which in turn resulted in the union threatening to strike.

However, on Friday, Delphi announced that, based upon progress in discussions with its major unions and GM, it will continue talks in an effort to achieve a comprehensive agreement no later than March 30.

Once again, Delphi threatened that if an agreement is not met by the new deadline, it will promptly file a motion with the bankruptcy court to reject the collective bargaining agreements and terminate hourly post-retirement health care plans and life insurance.

Also affecting GM's revolver during Tuesday's market hours was the rumor that Wachovia is no longer looking to purchase GMAC.

GM has been trying to sell a 51% stake in GMAC for months now. The company was hoping to sell the stake to an investment-grade financial buyer in hopes that such a sale would restore GMAC's credit rating to investment grade and greatly lower its borrowing costs, but it seemed like a hybrid buying group was the way things were leaning as two potential buyers emerged - a buying group consisting of Cerberus Capital Management LLC and Citigroup's buyout unit, and a group consisting of Wachovia Bank and The Blackstone Group. However, with Wachovia out of the running, the successful completion of a GMAC sale is looking slimmer and slimmer.

In reaction to all this news, GM's revolver closed the session quoted around 79 bid, 84 offered, compared with Friday's closing levels of 80¼ bid, 82¼ offered, one trader said. Another trader said that he had seen levels in the 80 bid, 82 offered context and even in the 83 bid, 85 offered context, but being that the paper didn't really trade it was hard t tell if any of these levels "were real."

GM is a Detroit-based designer, manufacturer, and marketer of cars and light trucks.

Charter rises on sale chatter

Charter Communications' bank debt levels were on the rise Tuesday as talk around the market was that the company may be close to selling some assets, a positive as far as investors are concerned being that the implication is that there may be some improvement to near-term liquidity, according to a trader.

Charter's term loan A closed the session quoted at par 5/8 bid, 101 offered, and its term loan B closed the session quoted at 101 1/8 bid, 101 5/8 offered, the trader said, putting both tranches higher by about a quarter of a point on the day.

Speculation is that Charter is auctioning off about 243,000 subscribers in West Virginia and Virginia and that Cequel III LLC, owner of cable operator Cebridge Connections, is the winning bidder.

Rumor also has it that the transaction may carry a value in the $750 million to $800 million type of range.

Charter is a St. Louis-based provider of broadband services.

United Surgical closes

United Surgical Partners International Inc. closed on its $200 million five-year revolving credit facility on Tuesday, according to an 8-K filed with the Securities and Exchange Commission.

SunTrust acted as the lead bank on the deal.

The revolver carries an initial interest rate of Libor plus 200 basis points with a 50 basis point commitment fee.

The revolver is available for general corporate purposes and to help fund the acquisition of Surgis Inc.

United Surgical Partners is a Dallas-based owner and operator of surgical facilities.

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