Werner Ladder tops par on the open; Carmike may up delayed-draw fee to fill book

By Sara Rosenberg

New York, May 10 - Werner Ladder Co.'s new second-lien term loan broke for trading Tuesday morning after allocating late in the day Monday, with the paper trading in the lower-par context.

On the primary front, talk is that Carmike Cinemas Inc. may have to sweeten the ticking fee on its delayed-draw term loan as syndication of that tranche appears to be struggling as investors are hesitant about the somewhat lengthy two-year draw time limit.

Werner Ladder's $100 million 41/2-year second-lien term loan (Caa1/CCC) freed up for trading with levels seen at par bid, par ½ offered during Tuesday's session, according to a market source.

The tranche, which closed on Tuesday as well, is priced with an interest rate of Libor plus 1,000 basis points - divided into 850 basis points cash, 150 basis points PIK - and contains call protection of 103 in year one, 102 in year two and 101 in year three.

It took only about one day from launch for the second-lien term loan to reach oversubscription, and because of the strong demand, "everybody got cut back" in terms of allocations, the source added.

Credit Suisse First Boston and Morgan Stanley were joint lead arrangers on the deal, with CSFB the left lead.

Proceeds were used for a recapitalization. The company repaid $65 million of existing first-lien term loan debt and $26.7 million of existing revolver debt.

Concurrent with the closing of the second-lien term loan, the first-lien facility was amended to eliminate the requirement to comply with previously existing debt leverage and cash interest coverage ratios and to initiate new financial covenant requirements.

The amendment also provides for a 50 basis point increase in the annual rate charged on the first-lien term loan and revolving credit facility borrowings.

Werner Ladder is a Greenville, Pa., manufacturer and distributor of fiberglass, aluminum and wooden climbing products.

Carmike may up fee

Market participants are anticipating an increase in Carmike Cinemas' delayed-draw term loan commitment fee since the 50 basis points now being offered has failed to inspire investors to fill up the book, according to a source.

"The funded piece is going fine. The delayed-draw is not doing so fine. It's a two-year delayed-draw piece," the source added.

Carmike Cinemas' delayed-draw tranche, which has a final maturity of seven years, is sized at $185 million with price talk of Libor plus 250 basis points. Proceeds are only available for future acquisitions.

The $170 million seven-year term loan that is said to be moving along nicely is also talked at Libor plus 250 basis points.

Carmike Cinemas' $455 million credit facility (B1/B) also contains a $100 million five-year revolver talked at Libor plus 225 basis points.

Both term loans are being offered to investors at par. Revolver commitments of $15 million or more get an upfront fee of 100 basis points, and revolver commitments of less than $15 million get an upfront fee of 75 basis points.

Bear Stearns is the lead bank on the deal. Wells Fargo Foothill signed on early as documentation agent committing $50 million to the deal.

Proceeds from the revolver and term loan will be used to refinance existing bank debt and help fund the previously announced acquisition of George Kerasotes Corp. for $66 million.

Pro forma for the George Kerasotes purchase, senior leverage will be 2.1x, total leverage will be 31/2x and EBITDA to interest coverage will be around 4.4x.

Columbus, Ga.-based Carmike is the second-largest theater operator in the United States in terms of number of theaters, with operations in 36 states.

Membership adds second lien

North American Membership Group Inc. created a $20 million second-lien term loan by shifting $20 million out of its first-lien term loan as the syndicate is still working on selling out the first-lien tranche, according to a market source.

Furthermore, pricing on the first-lien tranches was lifted by 50 basis points, and the first-lien term loan is now being sold at a discount.

The newly added second-lien term loan is talked at Libor plus 750 basis points, the source said.

The now $75 million first-lien six-year term loan B (B2/B) - downsized from $95 million - is now being talked at Libor plus 325 basis points and is being offered at 991/2, the source continued. The tranche was originally talked at Libor plus 275 basis points.

North American Membership Group's $115 million senior secured credit facility also contains a $20 million five-year revolver that was flexed up as well to Libor plus 325 basis points from Libor plus 275 basis points, the source added. The revolver has a commitment fee of 50 basis points.

Credit Suisse First Boston is the sole lead arranger and sole bookrunner on the deal that will be used to refinance existing debt, to redeem preferred stock and for general corporate purposes.

North American Membership is a Minnetonka, Minn., club-based affinity marketing company.

Wyndham closes

Wyndham International Inc. closed on its $895 million credit facility consisting of a $530 million six-year term loan B (B3/B) with an interest rate of Libor plus 325 basis points, a $140 million 61/2-year second-lien term C (Caa1/CCC+) with an interest rate of Libor plus 800 basis points, a $175 million six-year revolver (B3/B) with an interest rate of Libor plus 325 basis points and a $50 million six-year institutional letter-of-credit facility (B3/B) with an interest rate of Libor plus 325 basis points.

The second lien is non-callable for one year, callable at 103 in year two, 102 in year three and 101 in year four.

Originally, the second-lien term loan was launched with price talk of Libor plus 650 basis points and call protection of 102 in year one and 101 in year two, but pricing was flexed higher and call protection terms were sweetened to attract investors.

Proceeds from the credit facility were used in combination with proceeds from about $944 million of new CMBS debt to refinance about $1.65 billion of the company's outstanding debt, which would include refinancing its corporate credit facility and the majority of its outstanding mortgage debt.

In addition, through the refinancing the company now has availability to $100 million in prefunded capital expenditures to invest in owned properties.

As of Dec. 31, 2004, Wyndham had $68.6 million outstanding under its revolver, $870.8 million outstanding on its term loan I, $284.2 million outstanding on its term loan II, outstanding letters of credit totaling $65.5 million and $932.8 million of mortgage debt outstanding that encumbered 30 hotels and capital leases.

"This refinancing is a clear confirmation by the lending community of Wyndham's financial strength," said Fred J. Kleisner, chairman, president and chief executive officer, in a company news release. "The opportunity to invest more capital in our properties further enhances Wyndham's customer service offerings and provides a strong return through increased guest room rates."

JPMorgan and Bear Stearns were the lead banks on the credit facility, with JPMorgan the left lead.

Wyndham is a Dallas-based provider of upscale and luxury hotel and resort accommodations.

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