Nuveen rises with launch of second-lien, amendment; NRG down on rejected Exelon bid; LCDX dips

By Sara Rosenberg

New York, July 8 - Nuveen Investments Inc.'s term loan gained some ground during the Wednesday trading session as the company launched a new second-lien term loan and an amendment to its existing credit facility.

Also in the secondary, NRG Energy Inc.'s strip of institutional bank debt retreated following news that the company's board of directors unanimously came out against entering into Exelon Corp.'s recently revised acquisition proposal, and the LCDX 12 index softened.

Over in the primary market, Chester Downs and Marina LLC launched a new term loan into syndication, but price talk on the deal has not yet been announced.

Nuveen loan trades up

Nuveen's term loan headed higher in trading after the company held a lender call to launch a new $350 million six-year second-lien term loan and a related amendment to its credit facility, according to traders.

The term loan was quoted by two traders at 79 bid, 80 offered, up from 78½ bid, 79¼ offered on Tuesday.

The new second-lien term loan is structured somewhat like a bond, with the indicative fixed-rate coupon announced at 12.5% with an original issue discount of 90. All-in yield, based on the indicative price talk, is a little over 15%.

Actual pricing on the loan is expected to take place on July 15.

Call protection on the second-lien is non-callable for two years, then at 106 in year three and 103 in year four. In addition, there is a 101 put in the event of a change of control.

Proceeds will be used to repay about $220 million of 5% senior notes due in September 2010 and a portion of the company's first-lien term loan. Amounts raised in excess of $250 million can be used for below-par repurchases of the existing first-lien term loan for up to 180 days. But, after 180 days, excess proceeds will be required for a par paydown of the existing first-lien term loan.

Deutsche Bank is leading the second-lien deal with bookrunners Bank of America, Wells Fargo and Morgan Stanley, and co-managers UBS, Credit Suisse and CIT, officials said in the call.

Nuveen seeks amendment

Nuveen also launched an amendment to its credit facility on Wednesday that would permit the issuance of the second-lien term loan under an already existing accordion feature and allow for first-lien term loan buybacks at a discount.

The company would be allowed to do up to four tender offers within the 180 day timeframe, with a minimum offer size of $20 million and maximum total repurchases of $250 million, and a maximum offer price of 95.

Furthermore, the amendment would covert the remainder of the $500 million accordion capacity post the contemplated transaction to second-lien accordion capacity as opposed to first-lien capacity. Any proceeds from the second-lien debt would be used to pay down the first-lien term loan at a future date.

Lenders are being offered a 50 basis point amendment fee.

Consents for the amendment are due on July 15 and the amendment is hoped to close on that day as well. Closing on the second-lien loan is targeted for July 20.

Nuveen is a Chicago-based seller of investment products.

NRG Energy softens

NRG Energy's strip of institutional bank debt weakened on Wednesday after the company announced that its board of directors turned down Exelon's most recent hostile buyout bid, according to a trader.

The strip of letter-of-credit and term loan debt was quoted at 94¾ bid, 95 3/8 offered, down from 95¾ bid, 96¼ offered, the trader remarked.

NRG said that it is turning down the acquisition proposal because it still significantly undervalues the company and is not in the best interests of stockholders.

In addition, the company also rejected the proposal due to the revised offer's extraordinary conditionality, which remains unchanged from the original offer made last fall.

"While your revised offer is not acceptable as is, it certainly represents a step in the right direction and is a welcome development after more than eight months of the 0.485 offer," NRG management said in an official response to Exelon chairman and chief executive officer, John Rowe.

"The fact that you were able to increase your offer largely through over $200 million per year of newfound synergies identified by your consultants leaves open the possibility that, if you would properly recognize the value created by NRG itself, you would be able to increase your current 0.545 offer by a substantial amount," NRG management continued.

NRG open to higher bid

NRG went on to say on Wednesday that it would be happy to discuss any proposal with Exelon that "properly reflects NRG's fundamental value and extraordinary growth prospects."

Last week, Exelon announced that it increased its hostile takeover bid for NRG by 12.4% to 0.545 of a share of Exelon common stock per NRG share primarily because about $1.5 billion of additional synergies were newly identified.

In addition, Exelon said that the revised offer reflects the value of NRG's recent acquisition of the Reliant Energy retail business.

As part of the buyout bid, Exelon said that based on discussions with its outside advisors, it expects to be able to meet all financing needs associated with the transaction, including the refinancing of $4.7 billion of NRG's senior notes and other NRG debt, if necessary.

And, Exelon anticipates being able to complete the financing plans while maintaining its investment-grade ratings.

NRG is a Princeton, N.J.-based owner and operator of power generation portfolios. Exelon is a Chicago-based electric utility.

LCDX slides

The LCDX 12 index was lower on the day, while the stock market was mixed, according to a trader.

The index was quoted at 85.40 bid, 85.80 offered, down from around 86 bid, 86.40 offered, the trader said.

Meanwhile, Nasdaq was up 1.00 point, or 0.06%, Dow Jones Industrial Average was up 14.81 points, or 0.18%, S&P 500 was down 1.47 points, or 0.17%, and NYSE was down 30.07 points, or 0.53%.

Chester Downs launches

Switching to new deal happenings, Chester Downs and Marina held a conference call at 2 p.m. ET on Wednesday to kick off syndication on its proposed $230 million seven-year secured term loan (B3/B), according to a market source.

Libor margin, Libor floor and original issue discount on the loan are still to be determined, the source said.

Citigroup, Bank of America, JPMorgan and Jefferies are the joint leads on the deal that will be used to refinance existing debt and purchase partnership interests, with Citi the left lead.

Commitments are due from lenders on July 16.

Chester Downs is the operator of a racetrack casino in Chester, Pa.

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