Rhodes sets price talk, nets orders; LIN Television spread emerges at launch; Mitchell, LSP Kendall break

By Sara Rosenberg

New York, Oct. 11 - Rhodes Homes came out with price talk on its proposed credit facility as the deal kicked off with a bank meeting in Las Vegas on Tuesday, and the deal was off with a bang as commitments had already come in prior to the actual launch.

Also, in the primary, LIN Television Corp. released price talk on its credit facility as it too launched via a bank meeting during market hours Tuesday.

And, in secondary doings, Mitchell International Inc.'s upsized and repriced first-lien term loan allocated and freed up for trading, with levels closing out the day right atop 101. And, LSP-Kendall Energy LLC broke for trading right above par.

Rhodes set opening pricing guidance on its $600 million credit facility as the deal launched via a lender presentation in Las Vegas, according to a market source.

Furthermore, before the meeting took place, there were already "a bunch of orders in the book", the source said, indicating that syndication was not only off to a good start but should move smoothly along throughout the process as well.

The $450 million five-year term loan B is talked at Libor plus 275 basis points and the $150 million 51/2-year second-lien term loan is talked at Libor plus 600 basis points, the source said.

The second-lien term loan contains call protection of 103 in year one, 102 in year two and 101 in year three.

Both term loans are being offered to investors at par.

Credit Suisse First Boston is the lead arranger on the deal.

Proceeds will be used by the Las Vegas-based homebuilder to refinance existing debt, fund future development and land acquisition costs and fund an approximately $100 million dividend.

LIN TV price talk

LIN Television announced opening price talk of Libor plus 125 basis points on both its $250 million six-year revolver and $250 million six-year delayed-draw term loan as the deal was launched to investors on Tuesday.

JPMorgan and Deutsche Bank are the lead banks on the deal, with JPMorgan left lead.

Proceeds from the $500 million credit facility (BB-) will be used to refinance the company's existing credit facility, to fund the purchase of five network-affiliated television stations from Emmis Television Broadcasting for $260 million in cash and for general corporate purposes, including potential share repurchases.

The Emmis Stations that LIN agreed to acquire back in August serve the Mobile, Ala., Green Bay, Wis., Terre Haute, Ind. and Albuquerque, N.M., markets. The agreement provides for the possibility of different closing dates for each station group. The closing dates are expected to occur during the fourth quarter of 2005 through the second quarter of 2006 depending on when Federal Communications Commission consent is received. At each partial closing, LIN Television will pay the amount allocated to that station.

LIN is a Providence, R.I.-based owner and operator of television stations.

School Specialty loan fate in question

School Specialty Inc.'s credit facility is anticipated by some to essentially be going away - at least in its current form - in the wake of the Libor cap in the merger agreement being exceeded and the $350 million bond offering being cancelled, according to market sources.

"From what I've heard it's been tabled. There hasn't been much discussion on it lately which isn't a good sign. I'm not really sure what's going on," one market source told Prospect News.

Meanwhile, a buy-side source said that the credit facility, as is, will likely be pulled but could potentially reemerge in some sort of reworked fashion, assuming that the buying group and School Specialty work out its issues.

The $650 million senior secured credit facility (B1/B+) currently consists of a $175 million six-year revolver, a $325 million term loan B and a $150 million delayed-draw term loan, with all tranches priced at Libor plus 225 basis points.

The Greenville, Wis., education company, had downsized its delayed-draw term loan to $150 million from $250 million, upsized its term loan B to $325 million from $300 million, and cut pricing on both tranches to Libor plus 225 basis points from Libor plus 250 basis points during syndication.

JPMorgan and Bank of America are co-lead arrangers on the credit facility. JPMorgan, Bank of America and Deutsche Bank are joint bookrunners. JPMorgan is also acting as administrative agent, Bank of America as syndication agent and Deutsche as documentation agent.

Proceeds from the credit facility, along with proceeds from the recently cancelled bond offering and equity contributions, were to be used to fund the leveraged buyout of the company by Bain Capital and Thomas H. Lee Partners in a transaction valued at $1.5 billion including assumption of non-convertible debt totaling $101 million.

After a number of tweaks, School Specialty ended up downsizing its bond offering to $350 million from $650 million and pricing the eight-year senior notes above the 9¼% to 9½% price talk levels at par to yield 10%.

Then, early last week, Banc of America Securities, JP Morgan and Deutsche Bank Securities, underwriters of the senior notes, terminated the issue because certain conditions under the notes purchase agreement were not been and could not be satisfied.

School Specialty said that it believed that the cancellation of the notes related to disappointing results in August and September and concerns about near-term financial and operating performance.

In addition, this past Friday, School Specialty said that the LBO may not close because, under the transaction agreement, the purchasers' are not required to close the debt financing if one-year Libor exceeded 4.5% on any three days from Sept. 15 through Oct. 31. On Oct. 4, one-year Libor was at 4.53%, on Oct. 5, it was 4.51063% and on Oct. 7 it was 4.51875%.

The company has started responding to the purchasers' requests for more information and will continue to do so during this week.

Mitchell tops 101

Mitchell International's upsized and repriced first-lien term loan freed up for trading on Tuesday, with levels quoted at par 7/8 bid, 101 1/8 offered on the break and then moving a touch higher to 101 bid, 101¼ offered before day's end, according to a trader.

The first-lien term loan (B+) was increased to approximately $135 million from approximately $87 million, and repriced at Libor plus 200 basis points from Libor plus 300 basis points.

Originally, lenders were only asked to reprice the term loan in the Libor plus 225 to 250 basis points range, but pricing came down even further on strong demand.

Proceeds from the first-lien upsizing are being used to repay and terminate the company's second-lien term loan, which carries an interest rate of Libor plus 625 basis points.

Goldman Sachs and Wachovia are the lead banks on the deal, with Goldman left lead.

Mitchell is a San Diego-based provider of information products, software and e-business solutions for the auto insurance, collision repair, medical claims and glass replacement industries.

LSP-Kendall tops par

LSP-Kendall allocated its new deal on Tuesday, with the term loan freeing up for trading in the par bid, par ¼ offered context, according to a trader.

The $422 million eight-year term loan is priced with an interest rate of Libor plus 200 basis points and contains call protection of 103 in year one and 101 in year two. The tranche was upsized from $412 million, reverse flexed from Libor plus 275 basis points and call protection in the first year was increased from 102 to 103 during syndication.

Credit Suisse First Boston, Lehman Brothers and Goldman Sachs are the joint lead arrangers, with CSFB the left lead.

The $432 million credit facility (B1/B) also contains a $10 million liquidity facility priced at Libor plus 200 basis points. This tranche was also reverse flexed from Libor plus 275 basis points during syndication.

Proceeds will be used to refinance existing debt.

LSP-Kendall is the owner of an energy generation facility located in Kendall County, Ill.

Neiman regains ground

The Neiman Marcus Group Inc.'s term loan B traded up by about a quarter of a point on Monday, recouping some of the losses that the paper posted last week, according to a trader.

The term loan was quoted at par ¾ bid, 101 offered, the trader said.

The bank debt spent a good part of last week seesawing between levels of par ½ bid, par ¾ offered and par 5/8 bid, par 7/8 offered. Last Wednesday the paper was quoted at par ½ bid, par ¾ offered then moved up on Thursday to par 5/8 bid, par 7/8 offered on favorable September same-store sales numbers before coming back in to par ½ bid, par ¾ offered on Friday.

Neiman Marcus is a Dallas-based high-end specialty retailer.

Affinion continues grind lower

Affinion Group's term loan B continued to work its way lower during Tuesday's market hours, moving as low as 99 before closing out the day with levels of 99 3/8 bid, 99 7/8 offered, according to a trader.

The bank debt just broke for trading last Thursday around the par ¼ bid, par ½ offered context, proceeded to trade down on Friday to the 99 5/8 bid, par offered area and has, as mentioned above, weakened further from there, the trader said.

"The only thing I can think of is they upsized it to $860 million and there were only like $1 billion in commitments, so not a whole lot of oversubscription," the trader said in regards to why the paper has been experiencing a less than stellar performance.

The term loan was increased to $860 million from $760 million after the company decided to drastically reduce its bond offering. At the time of the term loan upsizing, pricing on the tranche was increased to Libor plus 275 basis points from the Libor plus 225 to 250 basis points range and 101 soft call protection for one year was added.

Affinion is a Norwalk, Conn., direct marketer of membership clubs and insurance products.

Delta DIP dips

Delta Air Lines Inc.'s $1.9 billion debtor-in-possession financing facility saw levels drop by about a quarter of a point across the board in what was described as a choppy secondary loan market, according to a trader.

The $600 million term loan A fell off to 102¼ bid, 102¾ offered from 102 1/8 bid, 102 5/8 offered, the $700 million term loan B fell off to 103 bid, 103½ offered from 103¼ bid, 103¾ offered, and the $600 million term loan C fell off to 102 bid, 102¼ offered from 102 1/8 bid, 102 5/8 offered, the trader said.

The Atlanta-based airline's DIP just began trading this past Friday.

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