Styron starts trading; Cablevision dips with acquisition news; Citgo tweaks deal again

By Sara Rosenberg

New York, June 14 - Styron's credit facility allocated and freed up for trading during Monday's market hours, with the term loan quoted above its original issue discount price, and Cablevision Systems Corp.'s term loan B-1 was softer as the company announced that it will purchase Bresnan Communications.

Over in the primary, Citgo Petroleum Corp. came out with a new round of revisions to its credit facility, including increasing the size of both its term loans and adding call protection to the tranches, and based on what happens with its downsized bond offering, it's possible that the loans may see a further upsizing.

Also, Michael Foods Inc. launched its credit facility to investors but held off on disclosing price talk since it is waiting on ratings.

Styron frees to trade

Styron's credit facility hit the secondary market early on in the day, with the $800 million first-lien term loan quoted by one source at 99½ bid, par offered on the break and then inching up to 99 5/8 bid, par 1/8 offered, and by a second source at 99¾ bid, par ¼ offered.

Pricing on the term loan is Libor plus 575 basis points with a 1.75% Libor floor, and it was sold at an original issue discount of 98. There is 101 soft call protection for one year.

During syndication, the term loan was upsized from $675 million as the company eliminated a $125 million second-lien term loan from its capital structure, pricing was flexed up from the Libor plus 550 bps area and, prior to that, from Libor plus 475 bps, the discount was revised from 98½ to 99 guidance and, prior to that, from just 99, and the call protection was added.

The second-lien term loan that was canceled was being talked at Libor plus 775 bps with a 1.75% Libor floor and an original issue discount in the 98 to 99 area. The tranche was going to carry call protection of 103 in year one, 102 in year two and 101 in year three.

Styron getting revolver, too

Styron's $1.04 billion senior secured transaction (B2/B+) also includes a $240 million revolving credit facility.

Deutsche Bank, Barclays and HSBC are the lead banks on the deal that will be used to help fund the buyout of the company by Bain Capital from Dow Chemical for $1.63 billion.

Under the agreement, Dow Chemical has an option to receive up to 15% of the equity of Styron as part of the sale consideration.

The transaction is expected to close by August, subject to the completion of customary conditions and regulatory approvals.

Styron is a diversified chemicals and plastics company that is expected to have $3.5 billion in revenue based on 2009.

Cablevision B-1 slides

Cablevision's term loan B-1 headed lower after the company revealed plans to acquire Bresnan Communications in a transaction valued at $1.365 billion. Some thought, however, that the pressure on the debt had more to do with market technicals than the actual news.

The term loan B-1 was quoted by one trader at 97¾ bid, 98¾ offered, down from 98 bid, 99 offered, and by a second trader at 97½ bid, 98 offered, down from 97¾ bid, 98½ offered.

As for the company's term loan B-2, the first trader had that flat on the day at 97½ bid, 98 offered, while the second trader had it at 97¾ bid, 98¼ offered, down from previous levels of 98¼ bid, 99 offered.

The first trader also had the company's term loan B-3 unchanged from Friday at 96¾ bid, 97¼ offered.

Cablevision subsidiary getting debt

Cablevision expects to fund the acquisition of Bresnan with roughly $1 billion in debt financing, which will include a new credit facility and high-yield bonds and will be obtained by a newly formed, unrestricted subsidiary, according to a market source.

The financing, led by Bank of America and Citigroup, is non-recourse to Cablevision and its CSC subsidiary.

Other funding for the transaction will come from an equity investment by Cablevision of less than $400 million.

Total leverage at the new subsidiary will be around 6.0 times.

Closing on the acquisition is expected to occur late this year or early next year, subject to customary conditions, including regulatory approval.

Cablevision is a Bethpage, N.Y.-based telecommunications, media and entertainment company. Bresnan is a Purchase, N.Y.-based broadband telecommunications company.

Citgo reworks structure

Switching to the primary, Citgo upsized its credit facility for a second time and is now contemplating selling $300 million of secured notes instead of the $1.5 billion that was initially being marketed, according to sources.

In addition, there is still the possibility that the downsized notes offering may end up being rolled into the company's term loans, depending on how the bonds progress, and that there may be no notes at all. The roadshow for the bonds began around mid-May but pricing has yet to take place.

Under the revised credit facility structure, the five-year term loan is sized at $600 million, up from a most recent size of $500 million to $550 million, and the seven-year term loan is sized at $650 million, up from a most recent size of $500 million, sources said.

The company's revolver is still sized at $750 million, after being increased late last week from $700 million.

Citgo adds call protection

With the latest upsizing, Citgo added call premiums to its two term loans. The five-year loan has call protection of 102 in years one and two, and 101 in year three, while the seven-year loan is non-callable for two years, then at 102 in year three and 101 in year four, sources continued.

As before, the five-year term loan is priced at Libor plus 600 bps and the seven-year term loan is priced at Libor plus 700 bps, with both tranches having a 2% Libor floor and being offered at an original issue discount of 98.

The revolver is priced at Libor plus 450 bps with a 62.5 bps unused fee, It is being offered at upfront fees ranging from 100 bps to 150 bps based on order size. The spread is determined by a ratings grid.

When the credit facility was first launched in May and the bonds were expected at $1.5 billion, the company was looking to get a $300 million five-year term loan that was being talked at Libor plus 350 bps with a 1.75% Libor floor and an original issue discount of 981/2. And, price talk on the revolver at that time had been Libor plus 325 bps.

Citgo sets deadline

Following these changes, the lead banks on Citgo's now $2 billion, up from up to $1.8 billion and from $1 billion prior to that, senior secured credit facility (Ba2/BB+/BB+) asked lenders to get their commitments in by Thursday, sources remarked.

BNP Paribas, RBS and UBS are the lead banks on the deal, with BNP the left lead.

Proceeds from the credit facility and the bonds will be used to refinance existing debt.

As a condition of the deal, the company must raise at least $1 billion between the term loans and the new notes.

Citgo is a Houston-based refiner and marketer of transportation fuels, lubricants, petrochemicals and other industrial products.

Michael Foods awaiting ratings

Michael Foods held its bank meeting at 1 p.m. ET on Monday, but price talk was presented as still to be determined as the company is waiting on ratings from Standard & Poor's, which should be available by the close of business on Tuesday, according to a market source.

A rating from Moody's Investors Service for the $865 million credit facility, however, did emerge at B1.

As was previously reported, tranching on the facility is comprised of a $790 million term loan and a $75 million revolver

Bank of America, Goldman Sachs and Barclays are the lead banks on the deal, with Bank of America the left lead.

Michael Foods being acquired

Proceeds from the credit facility and $430 million of senior unsecured notes will be used to help fund the buyout of Michael Foods by GS Capital Partners from Thomas H. Lee Partners LP in a transaction valued at $1.7 billion.

Following completion of the transaction, Thomas H. Lee will retain an ownership stake of about 20% in the company.

In connection with the buyout, the company is refinancing its existing bank debt and tendering for its $150 million of 9¾% senior discounted notes due 2013 and roughly $154 million of 8% senior subordinated notes due 2013. The tender offers will expire at midnight ET on July 2.

Michael Foods is a Minnetonka, Minn.-based producer and distributor of food products to the foodservice, retail and food ingredient markets.

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