Plum Point firms structure; Easton-Bell reaches massive oversubscription; Movie Gallery inches up

By Sara Rosenberg

New York, March 10 - Plum Point Energy Associates LLC finalized details on the tranching of its credit facility and is now readying allocations for early in the March 13 week, and Easton-Bell Sports Inc.'s new deal is ridiculously oversubscribed, leading investors to believe that a cut in pricing is just a matter of time.

In trading, Movie Gallery Inc.'s term loan was a touch higher on a day-over-day basis, with levels really moving up in the morning hours in conjunction with some improvement in bond levels and then giving up some of those gains after a new ratings downgrade emerged.

Plum Point Energy has firmed up structural details on its in-market credit facility, tweaking all tranche sizes by some amounts, and is now readying to give out allocations first thing Monday morning as Friday's 2 p.m. ET recommitment deadline passed with the deal oversubscribed, according to a market source.

Under the changes, the five-year revolver (B1/B) is now sized at $50 million, down from an original size of $65 million, the eight-year synthetic letter-of-credit facility (B1/B) is now sized at $102 million, down minimally from an original size of $105 million, and the eight-year term loan B (B1/B) is now sized at $423 million, down from an original size of $590 million - for a total first-lien credit facility size of $575 million, the source said.

In addition, the 81/2-year second-lien term loan that was said to be added to the capital structure about a week ago ended up being sized at $175 million as opposed to the originally rumored size of $250 million, the source continued.

Early on in March, news that Plum Point added a second-lien term loan to its deal made its way around the market, with some saying that the first-lien term loan B was being downsized by $250 million to $340 million and that $250 million would reemerge in the form of a second-lien loan. Other talk had the company downsizing all first-lien tranches by some sort of amount, but specifics had been scarce. Even Moody's Investors Service, when it reaffirmed its ratings on the deal a few days ago, was vague, sizing the second-lien anywhere from $150 million to $250 million, and sizing the first-lien term loan B at $450 million.

Turns out, the finalization of these tranche sizes was based on $20 million of equity that the company recently agreed to put in so as to preserve the loan ratings and oversubscription, the source explained.

Pricing on all first-lien bank debt (revolver, synthetic letter-of-credit facility and term loan B) remained at Libor plus 325 basis points throughout the entire syndication process. The revolver carries a commitment fee of 50 basis points.

Pricing on the second-lien term loan is set at Libor plus 325 basis points plus 200 basis points pay-in-kind - the same rate as was heard around the market when news of the second lien first surfaced.

Credit Suisse, Goldman Sachs and Merrill Lynch are the lead banks on the $750 million credit facility (down from an original size of $760 million), with Credit Suisse the left lead.

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.

The credit facility is expected to close and fund on Tuesday.

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.

Easton-Bell sees strong interest

Easton-Bell's $335 million term loan B has been met with overwhelming market interest since it first launched on March 2, creating the anticipation of a pricing reduction soon, according to a market source.

"I've heard there's like $2.4 billion in the book," the source said. "A flex is coming."

The term loan is talked at Libor plus 200 basis points. Prior to the bank meeting taking place, the term loan was talked in the Libor plus 200 to 225 basis points context, but being that commitments had already started to come in before the launch, lenders were told that the deal was essentially being marketed at the low end of that talk.

Easton-Bell's approximately $415 million senior credit facility (B1) also contains a $70 million revolver and a C$12 million revolver.

Wachovia and Goldman Sachs are joint lead arrangers and joint bookrunners on the deal, with Wachovia the left lead.

Proceeds from the facility will be used to help fund the merger of Riddell Bell Holdings with Easton Sports, forming the newly named branded sports company Easton-Bell, to refinance existing debt, and for working capital and other general corporate requirements.

York Street Capital Partners, a U.S.-based mezzanine debt fund principally sponsored by Teachers' Private Capital, will increase its existing equity investment in Riddell Bell as part of the transaction.

Riddell, a portfolio company of Fenway Partners and Teachers' Private Capital, is a Dallas-based designer, developer and marketer of head protection equipment and related accessories for numerous athletic and recreational activities. Easton is a Van Nuys, Calif.-based developer, manufacturer, marketer and distributor of baseball, softball, hockey and cycling equipment.

Movie Gallery tiptoes higher

In secondary happenings, Movie Gallery's term loan started Friday's session on a strong note as levels moved up by over a point, but then things took a turn after Moody's downgraded the company's debt, according to a trader.

The bank debt closed the day quoted at 90 bid, 91 offered, up slightly from Thursday's closing levels of 89¾ bid, 90½ offered but not nearly as good as the 91 bid, 92½ offered levels that were seen on Friday morning, the trader said.

Initially, the term loan was up on the coattails of the company's bonds feeling stronger, but once Moody's came out with a ratings cut, debt levels overall came back in, the trader added.

Moody's downgraded Movie Gallery's bank debt to Caa1 from B2 and notes to Caa3 from B3, while leaving the ratings with a negative outlook, explaining that the downgrade reflects the expectation that the company's performance will deteriorate during 2006 resulting in significantly weakened liquidity, further erosion in credit metrics and negative free cash flow.

Volatility in Movie Gallery's bank debt has been apparent since early on in the week after it became widely known that the company held lender calls on the afternoon of March 6 to discuss the overall business environment and the amendment of financial covenants.

The Dothan, Ala.-based operator of video retail stores is not in default under its covenants but is looking for relief going forward and in return, would likely give lenders an amendment fee and higher pricing on all loan tranches.

Primedex closes

Primedex Health Systems Inc. closed on its new $161 million senior secured credit facility consisting of a $15 million five year revolver (B3/B+), an $86 million five-year term loan (B3/B+) and a $60 million six-year second-lien term loan (Caa1/CCC+), according to a company news release.

The revolver and term loan B carry an interest rate of Libor plus 400 basis points, and the second-lien term loan carries an interest rate of Libor plus 850 basis points.

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

General Electric Capital Corp. acted as the lead arranger and will be administrative agent on the deal.

Proceeds were used to refinance substantially all of the company's existing debt, except for $16.1 million of outstanding subordinated debentures and about $5 million of capital lease obligations.

The revolver was substantially undrawn at closing.

The loans are subject to acceleration on Dec. 27, 2007, unless the company has made arrangements to discharge or extend its outstanding subordinated debentures by that date.

"The facility is a transforming financial transaction for our company. The resulting capital structure greatly increases our liquidity, and will allow us to use significantly more of the cash that we generate to grow our business and capitalize on future business opportunities," said Mark Stolper, chief financial officer, in the release.

Primedex is a Los Angeles-based operator of outpatient diagnostic imaging facilities.

Serena closes

Silver Lake Partners completed its $1.2 billion leveraged buyout of Serena Software Inc. on Friday, according to a news release.

To help fund the LBO, Serena got a new $475 million credit facility (B1/B) consisting of a $400 million seven-year term loan B with an interest rate of Libor plus 225 basis points and a step down to Libor plus 200 basis points once leverage is less than 5.5x, and a $75 million six-year revolver with an initial interest rate of Libor plus 250 basis points. The revolver contains a pricing grid that allows for rates to range anywhere from Libor plus 175 basis points to Libor plus 250 basis points.

During syndication, the term loan was upsized from $375 million as the company downsized its bond deal by $25 million to $200 million, and pricing on the term loan debt was reverse flexed from Libor plus 250 basis points with the addition of the step down.

Lehman Brothers, Merrill Lynch and UBS Securities acted as the joint lead arrangers on the credit facility, with Lehman acting as administrative agent.

Serena is a San Mateo, Calif., provider of software products for managing process and controlling change across the information technology environment.

HealthSouth closes

HealthSouth Corp. closed on its new $3.55 billion in credit facilities, which were used to prepay substantially all of its existing debt, according to a company news release.

The new bank debt includes a $2.05 billion senior secured term loan B with an interest rate of Libor plus 325 basis points, a $500 million senior secured revolver and a $1 billion senior unsecured interim term loan with an interest rate of Libor plus 450 basis points, stepping up to Libor plus 550 basis points after six months and by 50 basis points every three months thereafter.

At launch, the term loan B carried price talk of Libor plus 250 basis points, but the spread was then revised upwards to a range of Libor plus 300 to 325 basis points. At the time of the revision it was anticipated by many that final pricing would end up at the high end of the revised guidance, which indeed proved to be the case.

In addition, the interim loan was originally launched with a size of $1.3 billion but was recently reduced using proceeds from a $400 million convertible perpetual preferred stock offering.

HealthSouth anticipates refinancing the remaining $1 billion in interim loan debt in the second or third quarter through an issuance of debt securities.

JPMorgan, Citigroup and Merrill Lynch acted as joint lead arrangers and joint bookrunners on the senior secured credit facility, with JPMorgan the left lead. Merrill Lynch, Citigroup and JPMorgan acted as bookrunners on the interim loan, with Merrill the left lead. Deutsche Bank Securities Inc., Goldman, Sachs & Co. and Wachovia Capital Markets LLC acted as co-managers on both the senior secured credit facility and the senior unsecured interim loan.

"The new capital structure is a significant step in strengthening our balance sheet. It allows us to better execute on key operational initiatives, address the changing regulatory environment, take advantage of the strong capital market conditions, and maximize pre-payable debt to allow for future de-leveraging," said John Workman, chief financial officer, in the release.

HealthSouth is a Birmingham, Ala., provider of outpatient surgery, diagnostic imaging and rehabilitative health care services.

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