Six Flags rises with Chapter 11 filing; LCDX slides; USI readies launch; BRSP oversubscribed

By Sara Rosenberg

New York, June 15 - Six Flags Inc.'s term loan B headed higher during a quiet Monday trading session following news that the company filed for bankruptcy protection and, under its plan of reorganization, loan lenders will get repaid in full through new debt and equity.

In more secondary happenings, the LCDX 12 index retreated slightly as stock ended the day weaker.

Over in the primary market, USI Holdings Corp. is getting ready to kick off syndication on a proposed incremental senior secured term loan and with the launch so near, price talk and original issue discount details were being circulated.

Also, BRSP LLC's term loan was so well received by the market that the deal ended up being strongly oversubscribed by Monday's commitment deadline.

Six Flags moves up

Six Flags' term loan B gained some ground on the back of the company's announcement that it filed for Chapter 11 and is seeking expedited approval of its pre-negotiated plan of reorganization, according to traders.

One trader had the term loan B quoted at 92½ bid, 94¾ offered, up from the low-to-mid 80s at the end of last week, a second trader had the loan quoted in the area of 92¼ to 92½ bid, 94¼ to 94½ offered, and a third trader had the loan quoted at 92½ bid, 941/2, up from around 82 bid on Friday.

The plan of reorganization has unanimous support of the lenders' steering committee and JPMorgan, the administrative agent for the company's $1.1 billion senior secured credit facility.

As a result of the plan, the company's balance sheet would be deleveraged by about $1.8 billion and more than $300 million of mandatorily redeemable preferred stock obligations would be eliminated.

"The current management team inherited a $2.4 billion debt load that cannot be sustained, particularly in these challenging financial markets," said Mark Shapiro, president and chief executive officer, in a news release. "As a result, we are cleaning up the past and positioning the company for future growth."

Six Flags plans $750 million exit facility

On the effective day of the plan of reorganization, Six Flags will obtain a new $150 million four-year secured revolving or multi-draw term credit facility and a new $600 million five-year term loan, according to an 8-K filed with the Securities and Exchange Commission on Monday.

Pricing on the term loan will be Libor plus 700 basis points with a 2.5% Libor floor. Within the first two years, 150 bps of the interest rate may be PIK.

Call protection on the term loan is 103 in year one, 101.5 in year two and par thereafter.

Financial covenants under the term loan will include leverage requirements, minimum interest coverage and maximum capital expenditures.

Security for the revolver will be first liens on substantially all of the company's assets. These liens will be pari passu with the liens securing the new term loan but the revolver will rank as "first out" and the term loan will rank as "last out."

The filing also said that a traditional first-lien/second-lien structure could be considered if necessary to raise the new revolver.

Six Flags loan lenders being repaid

Under Six Flags' bankruptcy plan, existing credit facility obligations will be repaid in full by distribution of the new term loan and shares of common stock having a value equal to the balance of such claim and representing 92% of the issued and outstanding new common stock.

"Loan guys are the guys that will be owning this thing," one of the traders remarked.

All claims other than the credit facility obligations will be unimpaired.

Noteholders will receive shares of the company's new common stock in the reorganization.

Meanwhile, the company's existing equity holders will receive no recovery.

Six Flags is a New York-based regional theme park company.

LCDX dips

Also in trading, the LCDX 12 index was a little softer on Monday as equities were lower, according to a trader.

The index was quoted at 87.10 bid, 87.40 offered, down from Friday's levels of 87.60 bid, 87.90 offered, the trader said.

As for stocks, Nasdaq closed down 42.42 points, or 2.28%, Dow Jones Industrial Average closed down 187.13 points, or 2.13%, S&P 500 closed down 22.49 points, or 2.38%, and NYSE closed down 181.35 points, or 2.95%.

USI launching new loan

Switching to new deal happenings, USI has scheduled a conference call for Tuesday to launch syndication of its proposed roughly $117 million incremental senior secured term loan, an informed source told Prospect News on Monday.

The term loan is talked at Libor plus 575 basis points with an original issue discount of 90, the source said, adding that there is no Libor floor.

Other terms of the loan will be substantially the same as the company's existing term loan B, including the maturity of May 2014.

Goldman Sachs is the lead bank on the deal that will be used to fund a cash tender offer for up to $100 million of the company's outstanding senior floating-rate notes due 2014 and 9.75% senior subordinated notes due 2015.

USI is a Briarcliff Manor, N.Y.-based distributor of property and casualty insurance and employee benefits products.

BRSP overfills

BRSP's proposed $275 million five-year senior secured term loan (BB-) was more than two times oversubscribed by Monday's commitment deadline as investors were attracted to the pricing and the original issue discount, according to a market source.

Price talk on the loan is Libor plus 450 bps with a 3% floor and an original issue discount in the 92 to 93 area.

There is call protection of 104 in year one, 102 in year two and 101 in year three.

Covenants include a debt service coverage ratio.

Barclays Capital is the lead bank on the deal, which will be used to refinance an existing term loan that was put in place in 2006.

BRSP is a special purpose entity covering two gas-fired power plants - Broad River and South Point - that are operated by Calpine Corp.

Neiman upfront fee emerges

Neiman Marcus Inc. is offering lenders 150 basis points upfront for commitments of $50 million towards its in-market $500 million asset-based revolving credit facility, according to a market source.

The revolver, which was launched into syndication last Thursday, is being led by Bank of America and Wells Fargo.

As was previously reported, price talk on the revolver is Libor plus 425 bps, with an unused fee that can range from 75 bps to 100 bps based on availability.

Proceeds will be used to refinance the company's existing $600 million asset-based revolver that matures on Oct. 6, 2010.

Pricing on the existing revolver that will be replaced through this new deal can only reach a high of Libor plus 175 bps and has an unused fee that can range from 25 bps to 37.5 bps.

As of May 2, the company had no borrowings outstanding under its existing asset-based revolver and had over $500 million of unused borrowing availability, after giving effect to $30 million used for letters of credit.

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

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