U.S. TelePacific postponed; NuSil sets talk; Carmike breaks; United Air Lines up with numbers

By Sara Rosenberg

New York, Jan. 27 - U.S. TelePacific postponed the bank meeting for its proposed credit facility, which was supposed to take place on Wednesday, and NuSil Technology came out with price talk on its new deal.

Over in the secondary market, Carmike Cinemas Inc.'s credit facility allocated and freed up for trading during Wednesday's session, and United Air Lines Inc.'s term loan headed higher following the release of quarterly earnings results.

Also in trading, Warner Chilcott plc's strip of term loan B-1 and B-2 moved around as news emerged that the company's amendment/repricing proposal officially failed and, as a result, was pulled from market.

U.S. TelePacific delayed

The Wednesday bank meeting for U.S. TelePacific's proposed $385 million credit facility has been pushed off on the back of ratings coming out, but the deal "will be back in a few days," according to a buyside source.

"S&P facility rating CCC+ with pro forma corporate family rating B-. That seems to have been a surprise/marketing issue. Good company, so this is a technicality that could get solved in a variety of ways, in my opinion," the source said.

"If I were the agent, I would start by talking to the analyst to get the reasoning, which was not clear in the ratings release. If there's a structural reason, then perhaps shifting the structure slightly [debt structure] so the first-lien has a more obvious advantage would make sense," the source added.

U.S. TelePacific ratings

Late Tuesday, Standard & Poor's released the CCC+ rating on U.S. TelePacific's new loan and said that upon successful completion of the proposed financing and assuming that financial maintenance covenants provide the company with sufficient headroom, the corporate rating would be raised to B- from CCC+.

S&P also said that the prospective rating reflects the expectation that the company's operating performance will remain stable over the next year and that the cushion under the proposed bank facility financial covenants will be at least 10%.

Meanwhile, Moody's Investors Service rated the credit facility at B2 and upgraded the corporate family rating to B2 from B3.

Moody's rating actions "reflect the improved liquidity and demonstrated strength of operating performance, notwithstanding severe economic conditions in the company's markets, both of which lend support to higher ratings via expectations of future revenue growth, deleveraging and free cash flow generation," the release said.

U.S. TelePacific structure

As initially proposed, U.S. TelePacific's credit facility is expected to consist of a $25 million revolver and a $360 million term loan.

Credit Suisse, Deutsche Bank and Bank of America are the lead banks on the deal.

Proceeds will be used to refinance the company's existing credit facility and ass some cash to the balance sheet.

U.S. TelePacific is a Los Angeles-based competitive local exchange carrier.

NuSil price talk

NuSil Technology held a bank meeting on Wednesday to launch its proposed $185 million credit facility and in connection with the launch, price talk was announced, according to sources.

The $175 million term loan B was presented to lenders with talk of Libor plus 400 bps with a 2% Libor floor and an original issue discount of 99, sources said.

The facility also includes a $10 million revolver.

JPMorgan is the lead bank on the deal that will be used for a dividend recapitalization.

NuSil is a Carpinteria, Calif.-based formulator and manufacturer of silicone compounds for health care, aerospace, electronics and photonics applications.

Carmike frees to trade

Moving to trading news, Carmike Cinemas' credit facility hit the secondary market, with levels on the term loan B quoted above the original issue discount price at which it was sold during syndication, according to traders.

The $265 million term loan B due January 2016 was quoted by one trader at par 3/8 bid, par ¾ offered after settling down from par ½ bid, 101 offered on the break. A second trader was quoting the loan at par ¼ bid, par ¾ offered, after seeing levels slide a bit from a high of par 5/8 bid, 101 1/8 offered. And, a third trader was quoting the loan at par ¼ bid, par ½ offered, down from par ½ bid, 101 offered on the open.

Pricing on the term loan B is Libor plus 350 basis points with a 2% Libor floor, and it was sold at an original issue discount of 99.

During syndication, pricing on the term loan B was reverse flexed from initial talk of Libor plus 350 bps and the discount price tightened from 981/2.

Also, the size firmed from the original description of up to $275 million since the company "just didn't need the excess cash," an informed source told Prospect News.

Carmike gets revolver

Carmike Cinemas' $295 million credit facility (B1/B-) also includes a $30 million revolver due January 2013 that is priced at Libor plus 400 bps with a 2% Libor floor.

JPMorgan, Citigroup and Macquarie Capital acted as the joint lead arrangers and joint bookrunners on the deal that was used to refinance existing bank debt.

The existing term loan that was replaced had a balance of $250.8 million outstanding at Dec. 31 and was going to mature in May 2012, while the existing revolver was sized at $50 million and was going to mature in May 2010.

Carmike Cinemas is a Columbus, Ga.-based digital cinema and 3D motion picture exhibitor.

United rises on earnings

United Air Lines' term loan gained some ground in trading after the company's parent, UAL Corp., announced fourth-quarter earnings that showed a smaller net loss compared to the previous year, according to a trader.

The Chicago-based airline company's term loan was quoted at 80½ bid, 81 offered, up from 79½ bid, 80 offered, the trader said.

For the fourth quarter ended Dec. 31, 2009, UAL reported a net loss of $240 million, or $1.44 per basic share, compared to a net loss of $1.315 billion, or $10 per share, last year.

Revenues for the quarter were $4.193 billion, compared to $4.547 billion in the fourth quarter of 2008.

Operating cash flow for the quarter was $88 million and free cash flow was break-even.

UAL improves liquidity

During the quarter, UAL raised more than $2.1 billion from various transactions, adding more than $1 billion in new liquidity.

The company closed the quarter with total cash of $3.4 billion, unrestricted cash of more than $3 billion, and restricted cash of $341 million.

"We have clearly taken the liquidity issue off the table, having improved our unrestricted cash balance by more than $1 billion and, through our refinancings, significantly lowered our fixed obligations over the next few years," said Kathryn Mikells, chief financial officer, in a news release.

"With business and premium traffic strengthening and the benefit of an improved cost structure, we are well on the road to closing the profitability gap," Mikells added.

Warner Chilcott gyrates

Warner Chilcott's strip of term loan B-1 and term loan B-2 seesawed following word that the company's amendment/repricing did not get enough lender consents to pass - which was expected from the start, according to traders.

In order for the amendment/repricing to go through, the company needed majority consent from its bank loan lenders.

The strip of debt was quoted by one trader at par 3/8 bid, par 5/8 offered, down a little from Tuesday's closing levels of par ½ bid, par ¾ offered, and by a second trader at par ½ bid, par ¾ offered, unchanged on the day, although he said that levels did move around a little throughout the session.

Late Tuesday the debt rose to the par ½ bid, par ¾ offered context from par 1/8 bid, par 3/8 offered on the expectation of the amendment failure.

Last week, before the amendment was announced, the strip was being quoted in the par ½ bid, 101 offered area, so now, with the failure, levels have basically moved back to where they were, the second trader added.

Warner Chilcott proposal details

Under the amendment request, pricing on the term loan B-1 and B-2 would have been reduced to Libor plus 325 bps from Libor plus 350 bps, and the Libor floor on the B-1, B-2 and term loan A would have been cut to 1.75% from 2.25%.

As a result of strong opposition, unofficial changes to the proposal were being discussed with some lenders, including only taking the floor down to 2%, adding 101 soft call protection and adding an amendment fee of 12.5 bps, as opposed to no fee at all. However, investors were not pleased with these choices either.

Lenders were given until Tuesday to consent to the amendment after an extension was granted from the end of last week.

Credit Suisse is the administrative agent, but Bank of America is the left lead on the deal.

Warner Chilcott is a Rockaway, N.J.-based specialty pharmaceutical company.

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