FairPoint breaks; NewPage trades up; LCDX rallies on Clear Channel rumors; Venture Transport sets talk

By Sara Rosenberg

New York, March 25 - FairPoint Communications Inc.'s credit facility allocated and freed up for trading on Tuesday afternoon, with the term loan B quoted above its original issue discount price, and NewPage Corp.'s term loan was stronger on earnings results.

Also in trading, LCDX 9 skyrocketed late in the day on rumors that the buyout of Clear Channel Communications Inc. may not go through.

In other news, Venture Transport Logistics LLC came out with price talk on its credit facility as the deal was launched to investors with a bank meeting during the session, and Chiquita Brands LLC downsized its credit facility and increased pricing.

FairPoint's credit facility hit the secondary market on Tuesday, with the $1.13 billion seven-year term loan B trading higher than the discount price at which it was sold, according to a trader.

The term loan B was quoted at 88 1/8, 88 5/8 offered on the break and then levels moved to 88¼ bid, 88½ offered, where they closed out the day, the trader said.

Pricing on the term loan B is Libor plus 275 basis points, with a 3% Libor floor for three years, and call protection of 102 in year one and 101 in year two against optional prepayments, and was sold to investors at an original issue discount of 88.

During syndication, the original issue discount on the term loan B was increased from 93 and the Libor floor was added.

FairPoint's credit facility also includes a $200 million six-year revolver priced at Libor plus 275 bps, a $500 million six-year term loan A priced at Libor plus 250 bps and a $200 million one-year delayed-draw term loan, with seven-year final maturity, priced at Libor plus 275 bps.

The revolver, term loan A and delayed-draw term loan were marketed together.

There were two tiers of upfront fees towards the revolver, term loan A and delayed-draw term loan. Senior managing agents committing $60 million got an upfront fee of 5%, while managing agents committing $40 million got an upfront fee of 4%.

The revolver has a 37.5 bps unused fee and the delayed-draw term loan has a 75 bps unused for six months, stepping up to 125 bps thereafter.

The delayed-draw term loan carries call protection of 102 in year one and 101 in year two against optional prepayments.

Financial covenants under the credit facility include a minimum cash interest coverage ratio of 2.50 to 1.00 and a maximum total leverage ratio of 5.50 to 1.00.

During syndication, improvements were made to the excess cash flow sweep under the entire $2.03 billion senior secured credit facility agreement (Ba3/BB+/BB+) that aligned it with regulatory stipulations and change-of-control language was modified so that it became a 95% lender issue as opposed to a majority lender issue.

Lehman Brothers, Morgan Stanley, Bank of America, Deutsche Bank, Wachovia, Merrill Lynch and CoBank are the lead banks on the deal, with Lehman the left lead.

Proceeds from the credit facility will be used to help fund FairPoint's merger with Verizon Communications Inc.'s wireline operations in Maine, New Hampshire and Vermont.

In the merger, FairPoint will issue about 53.8 million of its common shares to be distributed in a tax-free Reverse Morris Trust transaction to the shareholders of Verizon as well as assume roughly $1.7 billion of debt. The transaction will give FairPoint's shareholders 40% ownership and Verizon's shareholders 60% ownership of the combined company.

Other financing will come from $540 million of senior unsecured notes.

FairPoint expects that it will borrow at least $150 million under the delayed-draw term loan during the one-year delayed-draw period to fund certain capital expenditures and other expenses associated with the merger.

Pro forma as of Dec. 31, the combined company's senior secured debt to EBITDA is 2.5 times, total debt to EBITDA is 3.4 times, net debt to EBITDA is 3.3 times, EBITDA to interest expense is 3.6 times and EBITDA minus capital expenditures to interest expense is 2.5 times.

FairPoint is a Charlotte, N.C., provider of communications services to rural communities.

NewPage better on numbers

NewPage's term loan moved higher on Tuesday as the company reported fourth quarter and full year 2007 financials, according to traders.

One trader said that the term loan ended the day at 97¾ bid, 98¼ offered, but traded as high of 98 bid, 98½ offered, while a second trader still had the term loan quoted at 98 bid, 98½ offered late in the session. On Monday, the debt went out around 97 bid, 98 offered.

For the fourth quarter, net sales were $652 million, compared to $519 million in the fourth quarter of 2006, an increase of 25.6%, and net loss was $4 million, compared to a net loss of $20 million in the fourth quarter of 2006.

EBITDA was $93 million for the fourth quarter compared to EBITDA of $56 million for the fourth quarter of 2006.

For the full year, net sales were $2.168 billion, compared to $2.038 billion for 2006, an increase of 6.4%, and net loss was $8 million, compared to a net loss of $32 million in 2006.

And, EBITDA was $284 million for full year 2007, compared to $262 million in 2006.

"Fourth quarter 2007 volume improved significantly compared to the fourth quarter of 2006 and, in fact, it was the highest volume quarter on record for NewPage," said Mark A. Suwyn, chairman of the board and chief executive officer, in a news release.

"For the year 2007, coated paper volumes increased primarily as a result of growth in the second half as some competitive capacity was shut down. Selling prices began to improve in the fourth quarter as a result of the tighter market for coated paper."

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

LCDX rises with Clear Channel chatter

LCDX 9 got a late day boost as rumors were flying around that the massive Clear Channel leveraged buyout deal may be off, according to a trader.

The index was quoted at 93.90 bid, 94.10 offered, up from 93.30 bid, 93.50 offered, the trader said.

Levels on the index rallied on the rumors because it would mean considerably less overhang in the loan market, which would obviously be a positive, the trader explained.

Under the buyout agreement, Clear Channel is supposed to be acquired by Thomas H. Lee Partners, LP and Bain Capital Partners, LLC for $39.20 per share.

According to filings with the Securities and Exchange Commission, the buyout would be funded in part with a $19.525 billion credit facility.

Tranching on the deal was outlined as a $1 billion receivables-backed revolver, a $2 billion senior secured revolver, a $1.25 billion senior secured term loan A, a $12.65 billion senior secured term loan B, a $625 million senior secured delayed-draw term loan and an up to $2 billion senior secured term loan C that would be reduced by proceeds from asset sales prior to closing.

Citigroup, Deutsche Bank, Morgan Stanley, Credit Suisse, RBS and Wachovia are the lead banks on the facility.

Clear Channel is a San Antonio media and entertainment company specializing in "gone from home" entertainment and information services.

Venture Transport talk surfaces

Moving to the primary, Venture Transport Logistics held a bank meeting on Tuesday afternoon to kick off syndication on its proposed $200 million senior credit facility, and in connection with the launch, price talk was announced, according to a market source.

Both the $50 million revolver and the $150 million term loan B were presented to lenders with talk of Libor plus 500 bps, the source said.

Furthermore, both tranches are being offered at an original issue discount of 98 and both contain a 3.25% Libor floor for life, the source remarked.

GE Capital and CIT are the lead banks on the deal that will be used to help fund acquisitions and refinance existing debt.

Senior leverage is 3.0 times and leverage through the holdco notes is 3.9 times, the source added.

Venture Transport, a Welsh, Carson, Anderson & Stowe portfolio company, is a Lafayette, La.-based provider of expedited land transportation and logistics services.

Chiquita reworks structure

Chiquita made some changes to its credit facility, including downsizing the deal and raising pricing, and with these modifications, syndication wrapped up and allocations were able to go out on Tuesday, according to a market source.

Under the revisions, the revolver was reduced to $150 million from $200 million and pricing on the tranche was increased to Libor plus 350 bps from original talk of Libor plus 325 bps, the source said.

In addition, pricing on the $200 million term loan A was flexed up to Libor plus 425 bps from initial talk at launch of Libor plus 325 bps, the source continued.

Both the revolver and the term loan A were sold with upfront fees that were under a point; however, the specific fees are not being disclosed.

Rabobank is the lead bank on the now $350 million, down from $400 million, six-year senior secured deal (Ba3/B+) that was fully syndicated to banks.

The agreement governing the new credit facilities contains two material financial maintenance covenants, an operating company leverage ratio and a fixed-charge coverage ratio, both of which will be set at levels that provide significant added flexibility.

Proceeds will be used to help refinance the company's existing $200 million revolver and $326 million term loan C.

Also helping repay the term loan C are proceeds from a $200 million 4.25% convertible senior notes offering that was completed in February. The convertible deal was originally expected to be sized at $150 million but was increased prior to close. It's because of this upsizing to the convertible offering that the company ended up deciding to downsize the revolver, the source explained.

Closing on the credit facility is expected to take place on Friday.

Chiquita is a Cincinnati-based marketer and distributor of fresh and value-added food products.

Abitibi flexes higher

Abitibi-Consolidated Inc. raised the price talk on its $450 million 364-day senior secured term loan (B1) to Libor plus 800 bps from Libor plus 700 bps, and revised the original issue discount guidance to 96 to 97 from the 97 area, according to a market source.

The term loan has a 3% Libor floor, the source said. Under original guidance, the Libor floor was being discussed somewhere in the range of 3% to 3.5%.

Commitments from lenders were due at the close of business Tuesday.

Goldman Sachs is the lead bank on the deal that will be used to help refinance existing debt, including the company's 6.95% notes, 5¼% notes, 7 7/8% notes, and credit facilities A and B.

Other funding for the refinancing will come from $415 million of three-year senior secured notes, $350 million of convertible notes and $267 million of exchange senior notes - assuming only the amount of notes necessary to satisfy the minimum tender condition are exchanged in the exchange offer.

The company also plans on closing the sale of its Snowflake, Ariz., mill in mid-April. The sale is expected to generate proceeds of $161 million, of which a portion will be used to repay some term loan debt.

Abitibi is a Montreal-based producer of newsprint and commercial printing papers, market pulp and wood products.

MoneyGram closes

MoneyGram International Inc. closed on its $250 million five-year senior term loan B, according to a news release.

The term loan B is priced at Libor plus 500 bps, with a 2.5% Libor floor, and call protection of 102 in year one and 101 in year two, and was sold at an original issue discount of 931/2.

During syndication, the original issue discount was increased from 95 and the loan was upsized from $200 million after the company amended its recapitalization that is being led by Thomas H. Lee Partners LP and Goldman Sachs.

Covenants include a senior secured debt ratio and a ratio of minimum EBITDA to cash interest expense.

JPMorgan acted as the lead bank on the term loan B that is being used to repay revolver borrowings and for general corporate purposes.

Under the recapitalization agreement, the investors purchased $760 million of series B and series B-1 preferred stock, which are initially convertible - at a price of $2.50 per share - into about 79% of the common equity of the company.

In addition, the company got a $500 million 13¼% 10-year senior second-lien note that is non-callable for five years from affiliates of Goldman Sachs.

MoneyGram is a Minneapolis-based provider of payment services.

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