Genesis Health Ventures term loan removed from primary as acquisition falls through

By Sara Rosenberg

New York, Dec. 16 - Genesis Health Ventures Inc.'s $100 million add-on 18-month term loan C (Ba3/B+) that was priced at Libor plus 450 basis points has been cancelled after the company's agreement to acquire NCS Healthcare Inc. was terminated, according to a syndicate source.

On Dec. 13, NCS invited bids on the acquisition of its outstanding shares of Class A and Class B common stock from both Omnicare and Genesis. Following this, Genesis and Omnicare negotiated a termination and settlement agreement on Sunday under which Genesis abandons its bid and receives $22 million in cash from Omnicare.

Goldman Sachs and Wachovia were the lead banks on the credit facility, which first launched in October as a $200 million five-year add-on term loan with an interest rate of Libor plus 350 basis points. A few days after the launch, the loan was flexed up to Libor plus 375 basis points. Last, the term loan was restructured into a $100 million 18-month add-on term loan C.

Genesis Health is a Kennett Square, Pa. owner and manager of geriatric care facilities.

Overall, the secondary bank loan market was relatively quiet on Monday, according to both par and distressed traders.

One distressed trader did report seeing some trades on Warnaco Group Inc.'s bank paper at around "31 and change", which is a little bit lower than previous trading levels, although no particular reason for the slight drop was immediately evident.

Warnaco is a New York apparel company that filed for Chapter 11 on June 11, 2001. The company anticipates emerging from Chapter 11 in early 2003.

AES Corp.'s bank debt, which was a big mover last week and experienced a lot of trading activity on Friday, was surprisingly quiet on Monday, the distressed trader said.

Since the Arlington, Va. power company managed to complete the refinancing of its credit facility, the bank paper moved up about 10 points, with the term loan B and the pro rata trading in the low 90s, the trader added. On Thursday, the restructured term loan B was quoted with an 84 bid and an 86 offer. The revolver and term loan A were quoted with an 88 bid and a 90 offer, a trader previously told Prospect News.

AES announced late Thursday that is closed on its $1.6 billion senior secured credit facility and its exchange offer relating to $500 million of its outstanding debt securities. Citibank was the lead bank on the credit facility.

This refinancing substantially eliminates all scheduled parent maturities until November 2004, improving liquidity, reducing debt service burden and enhancing financial flexibility.

The credit facility consists of a $350 million revolver, three tranches of term loans totaling approximately $1.2 billion and a reimbursement agreement associated with a £52.5 million letter of credit, all due July 15, 2005 with an interest rate of Libor plus 650 basis points.

Security for the loan is a first priority lien on all of the capital stock of domestic subsidiaries owned directly by AES and 65% of the capital stock of certain foreign subsidiaries owned directly by AES and inter-company receivables and notes receivable and inter-company tax sharing agreements.

The company accepted all bonds tendered in its exchange offer for its outstanding $300 million 8.75% senior notes due 2002 and $200 million 7.375% remarketable or redeemable securities due 2013, which are putable in 2003. Approximately $240.013 million of the 2002 notes and $173.889 million of the ROARs were tendered.

The new senior secured notes, totaling about $258 million, bear a coupon of 10% and will mature on July 15, 2005 unless certain conditions are met to extend them to Dec. 12, 2005.

In follow-up news, Wackenhut Corrections Corp. closed on its $175 million senior secured facility (Ba3/BB), consisting of a $50 million five-year revolver with an interest rate of Libor plus 300 basis points and a $125 million six-year term loan with an interest rate of Libor plus 400 basis points and a Libor floor of 2% for the first 18 months. BNP Paribas and Wachovia Securities, Inc. acted as co-lead arrangers on the deal.

The term loan contains quarterly amortization requirements beginning March 31, 2003 in an aggregate principal of $1.25 million in years one through five and $118.75 million in year six, according to a news release.

Security for the facility is the company's tangible and intangible assets.

The new facility replaces the company's $30 million revolver and $154.3 million operating lease facility that would have expired on Dec. 18.

Proceeds of the new loan were used to purchase four properties in operation under the operating lease facility for approximately $155 million.

"The new $175 million senior secured credit facility will provide Wackenhut Corrections Corporation with ample liquidity to pursue its short and long-term growth objectives," said George C. Zoley, chairman and chief executive officer, in the news release. "We are proud of the credit ratings assigned to the Facility by Moody's and S&P as they are the highest in the offender management industry. We believe that the company's strong financial history and experienced senior management contributed to these ratings."

Wackenhut is a Palm Beach Gardens, Fla. operator of private correctional facilities.

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