Sugarhouse tweaks deal; SemGroup talk emerges; Claire's rallies on numbers; Navistar slides

By Sara Rosenberg

New York, Sept. 10 - Sugarhouse HSP Gaming Prop. Mezz LP (Sugarhouse Casino) made some changes to its credit facility, including increasing the size of the funded term loan and modifying covenants.

In more primary happenings, SemGroup LP came out with price talk on its exit financing credit facility as syndication on the deal kicked off with a bank meeting that took place on Thursday.

Moving to the secondary market, Claire's Stores Inc.'s term loan B jumped up by a few points following better-than-expected earnings and Navistar International Corp.'s unsecured term loan dipped lower with its quarterly results.

Sugarhouse ups term size

Sugarhouse revised its credit facility structure, upsizing the term loan by $15 million, according to a market source.

The funded term loan is now sized at $165 million, up from $150 million, the source said. Pricing was left unchanged at Libor plus 825 basis points, with a 3% Libor floor and an original issue discount of 96.

The company's $10 million revolver and $20 million delayed-draw term loan were left unchanged, the source continued. The revolver and the delayed-draw term loan are both priced at Libor plus 825 bps with a 3% Libor floor as well.

In addition, the company's furniture, fixtures and equipment loan was increased to $35 million from $30 million using vendor financing from three different sources, and the weighted average interest rate on this loan is about 7.1%, compared to 11.25% in the original structure.

And, the seller note was downsized to $9.2 million from $9.7 million, with a corresponding decrease in the purchase price of the Pier 49-50 Property. The assumed rate on the seller note is 6%.

Sugarhouse revises covenants

On top of the changes to the sizes of the financing package, Sugarhouse also modified the credit facility covenants to reflect the new structure, the source remarked.

The maximum total leverage ratio is now 4.85 times for fourth quarter 2010 through third quarter 2011, 4.75 times for fourth quarter 2011 through second quarter 2012, 4.6 times for third quarter 2012, 4.45 times for fourth quarter 2012 through first quarter 2013, 4.35 times for second quarter 2013 through third quarter 2013, and 4.05 times for fourth quarter 2013 and thereafter.

The minimum interest coverage ratio was changed to 1.75 times for all projected periods.

Recommitments were due at noon ET on Thursday.

Sugarhouse led by two

Sugarhouse's now $195 million, up from $180 million, credit facility (B3/B-) is being led by Credit Suisse and Jefferies.

Proceeds will be used to fund the construction of the Sugarhouse Casino on the Delaware River in Philadelphia by HSP Gaming, LP.

The incremental $20 million of proceeds raised through the size changes, excluding the seller note, will be used to fund about $2.7 million of additional development costs, reimburse the sponsor for about $15.3 million of previously paid development costs and fund about $2 million of incremental interest expense reserve.

The revised structure will not have an impact on ratings.

Closing is anticipated to take place on Tuesday or Wednesday, assuming board approval in Pennsylvania is obtained on Tuesday.

SemGroup set talk

SemGroup held a bank meeting on Thursday to launch its proposed $500 million exit financing credit facility and in connection with the launch, price talk was announced, according to a market source.

Both the $400 million revolver and the $100 million pre-funded letter-of-credit facility were presented to lenders with talk of Libor plus 600 basis points with a 1.5% Libor floor, the source said.

Upfront fees on the tranches range from 200 bps to 300 bps based on ticket size, the source added.

BNP Paribas, Bank of America and Calyon are the lead banks on the deal that will be used for working capital once the company exits Chapter 11 - which is expected to occur in November.

Under the reorganization plan, the company will emerge from bankruptcy as a publicly traded company with its creditors owning substantially all of the equity in the reorganized company.

The plan also calls for the creation and funding of a litigation trust for the purpose of continuing to pursue claims against the estate.

SemGroup is a Tulsa, Okla.-based privately held limited partnership that provides midstream services to North America's energy industry.

Claire's strengthens with earnings

Over in trading, Claire's Stores' term loan B gained some ground as the company came out with financial results for the second quarter that beat expectations, according to traders.

The term loan B was quoted by one trader at 70½ bid, 71½ offered, up from 66¾ bid, 67¾ offered, by a second trader at 71 bid, 72 offered, up from 67 1/8 bid, 68 1/8 offered, and by a third trader at 70 bid, 71 offered, up from 67 bid, 68 offered.

For the quarter, the company reported a net loss of 3.7 million versus a net loss of $16.9 million in the second quarter of 2008.

And, net sales for the quarter were $314.2 million, down 12.7% from $360 million in the comparable period last year.

Claire's EBITDA slightly lower

Claire's also reported adjusted EBITDA for the second quarter of $50.5 million, compared to $58.1 million in the prior year.

"While we continue to feel the effect of a challenging retail environment as well as the impact of negative consumer confidence, our second-quarter sales performance had monthly sequential same store sales improvement," said Gene Kahn, in a news release.

"While it is difficult to compare our third-quarter performance at this point, because of various changes in the calendar, our quarter to date same store sales are in the negative low single digits. Looking forward, we see no reason to believe the retail environment will see significant near-term improvement and, therefore, will continue to focus on controlling expenses and maximizing available sales while generating positive free cash flow," Kahn added.

Claire's reduces capex

Claire's had $5.9 million of capital expenditures during the 2009 second quarter, of which $4.3 million related to new store openings and remodeling projects, compared with $16 million of capital expenditures during the second quarter 2008.

At Aug. 1, cash and cash equivalents were $182.4 million and $194 million continued to be drawn on the company's revolver.

As previously disclosed, the company drew the full available amount under the facility during the 2008 third quarter in order to preserve the availability of the commitment because a member of the facility syndicate, Lehman Brothers, filed for bankruptcy.

The agent bank has not yet found a replacement for Lehman Brothers in the facility syndicate or arranged for the assumption of Lehman Brothers' commitment by a creditworthy entity.

The company said in the earnings release that it will continue to assess whether to pay down all or a portion of this outstanding balance based on various factors, including the creditworthiness of other syndicate members and general economic conditions.

Claire's is a Pembroke Pines, Fla.-based specialty retailer of value-priced fashion accessories and jewelry for girls and young women.

Navistar softens

Navistar's unsecured term loan headed downwards on Thursday on the back of the company's release of third-quarter numbers late Wednesday, according to a trader.

The unsecured term loan was quoted at 92½ bid, 93½ offered, down from 92¾ bid, 93¾ offered on Wednesday.

For the quarter, the company had a net loss of $12 million, or $0.16 per diluted share, compared with net income of $331 million, or $4.47 per diluted share, last year.

Revenues for the quarter were $2.51 billion, compared to $3.95 billion in the 2008 third quarter.

And, cash and cash equivalents at July 31 were $821 million, up from $678 million in the prior year.

Navistar lowers guidance

Also on Wednesday evening, Navistar lowered its guidance for net income for its fiscal year ending Oct. 31 to a revised range of $182 million, or $2.55 per diluted share, to $207 million, or $2.85 per diluted share, excluding the Ford settlement and related charges.

Including the impact of the Ford settlement, net of related charges, earnings for the year should be in the range of $4.95 to $5.25 per diluted share.

"While we are lowering our guidance, we still expect to be strongly profitable at $4.95 to $5.25 per share, and I am encouraged by the results of the company and our commitment to generate positive results for our shareholders during these challenging economic times," said Daniel C. Ustian, chairman, president and chief executive officer, in a news release.

"The third quarter is traditionally our most challenging quarter, but we remain focused on the long-term success of the company. Therefore, we elected not to implement drastic short-term cost cutting actions that would have impacted our ability to deliver long-term results," Ustian added.

Navistar is a Warrenville, Ill.-based holding company whose subsidiaries and affiliates produce commercial and military trucks, diesel engines, school and commercial buses, recreational vehicles and chassis for motor homes and step vans.

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