Kansas City Southern breaks; Toys 'R' Us up on numbers; Niska cuts pricing; VJCS adds step down

By Sara Rosenberg

New York, May 1 - In the secondary market Monday, The Kansas City Southern Railway Co.'s credit facility freed for trading with the term loan quoted atop par, and Toys "R" Us Inc.'s term loan headed higher as financial results were not as bad as people feared they might be.

Moving to the primary, Niska Gas Storage (CR Gas Storage) lowered pricing on all term loan tranches contained in its credit facility by 50 basis points, and VJCS Acquisition firmed pricing on its term loan and added a step down to the deal.

Kansas City Southern allocated its credit facility on Monday, with the $246.2 million institutional term loan freeing for trading at par ¼ bid, par 5/8 offered and remaining in that context throughout the session, according to a trader.

The term loan is priced with an interest rate of Libor plus 175 basis points.

The Bank of Nova Scotia is the lead bank on the $371.2 million credit facility (B1) that also includes a $125 million revolver.

Proceeds will be used by the Kansas City, Mo., freight transporter to refinance its existing credit facility.

Toy 'R' Us trades up

Toys "R" Us saw its term loan trade higher by about a quarter of a point as financial results, although not great, were not as bad as some investors had expected, according to a trader.

The term loan closed the session quoted at par ¼ bid, par 5/8 offered, up from previous levels of par bid, par ¼ offered, the trader said.

"They had a better liquidity position than people expected. The coupon is 300. Good security. People have kind of jumped on it. The paper has been on a nice rise over the past two weeks," the trader added.

For the quarter ended Jan. 28, unaudited results included net sales of about $4.9 billion and total operating expenses of about $1.1 billion.

Toys "R" Us is a Wayne, N.J., specialty toy retailer.

Movie Gallery firmer

Movie Gallery Inc.'s term loan B felt stronger during Monday's session as levels moved up to 92¼ bid, 93¼ offered from 92 bid, 93¼ offered, according to traders.

Over the course of last week, Movie Gallery spent every day, other than Friday (during which levels came in by about half a point), heading upwards as positive earnings were released by both Netflix Inc. and Blockbuster Inc.

No credit-specific news was released on Monday to cause the slight rise in Movie Gallery's term loan B levels; however, the sector as whole felt pretty good with Blockbuster's term loan also quoted higher by about a quarter of a point at par ¼ bid, 101 offered, on trader added.

Movie Gallery is a Dothan, Ala.-based movie rental company. Blockbuster is a Dallas-based movie rental company

Niska trims spreads

Switching to the primary, Niska Gas Storage (CR Gas) lowered pricing on its three term loan tranches by 50 basis points to Libor plus 175 basis points from original talk at launch of Libor plus 225 basis points, according to a market source.

The deal contains a $525 million Canadian equivalent term loan, a $175 million U.S. term loan and a $100 million asset-sale term loan.

Niska's $1.05 billion credit facility (Ba3/BB-) also includes a $250 million revolver.

Bank of America is the lead bank on the deal that will be used to help fund the purchase of EnCana Corp.'s gas storage business interests by Carlyle/Riverstone Global Energy and Power Fund for approximately $1.5 billion.

VJCS firms pricing

VJCS Acquisition finalized pricing on its $160 million term loan B at the low end of original guidance and added a step down to the deal, according to a market source.

The term loan B is now priced at Libor plus 225 basis points, the tight end of the Libor plus 225 to 250 basis points talk that the deal was launched with, and there is a step down to Libor plus 200 basis points that is based on ratings, the source said.

VJCS' $190 million credit facility also contains a $30 million revolver.

Bank of America and Merrill Lynch are the lead banks on the deal, with Bank of America the left lead.

Proceeds will be used to fund the Berkshire Partners' acquisition and combination of Cumberland Swan Holdings Inc., a Smyrna, Tenn.-based personal care products company, and Vi-Jon, a St. Louis-based health and beauty care company.

Quiznos tweaks deal

Quiznos made a round of changes to its credit facility, including upsizing the first-lien term loan B, downsizing the second-lien term loan and cutting pricing on all tranches by 25 basis points, according to a market source.

With the changes, the first-lien term loan B is now sized at $650 million, up from an original size of $600 million, and pricing has been reverse flexed to Libor plus 225 basis points from original price talk at launch of Libor plus 250 basis points, the source said.

Meanwhile, the second-lien term loan is now sized at $225 million, down from an original size of $250 million, and pricing on the tranche came down to Libor plus 575 basis points from original talk at launch of Libor plus 600 basis points, the source continued.

In addition, pricing on the $75 million revolver was also lowered to Libor plus 225 basis points from original talk at launch of Libor plus 250 basis points, the source added.

The second-lien term loan contains call protection of 102 in year one and 101 in year two.

Deutsche Bank and Goldman Sachs are the lead banks on the now $950 million credit facility - up from an original size of $925 million.

Proceeds from the new deal will be used to help fund JPMorgan Partners' purchase of a significant ownership in Quiznos.

Quiznos is a Denver-based quick-service restaurant chain.

Cebridge cuts second-lien spread

Cebridge Connections Inc. revised pricing and call protection on the cash pay portion of it second-lien term loan and added a step down in pricing to the first-lien term loan B tranche, according to a market source.

The $337.5 million of cash pay second-lien term loan debt is now priced with an interest rate of Libor plus 450 basis points, down from original talk of Libor plus 475 basis points when the loan was first added to the capital structure last week, the source said.

In addition, call protection on the cash pay portion of the second-lien loan was changed to non-callable for two years, then at 102 in year three and 101 in year four, the source continued. Originally, the call protection on this paper was expected to be 103 in year one, 102 in year two and 101 in year three.

The $675 million eight-year second-lien term loan (caa1) also contains $337.5 million of pay-in-kind debt. Pricing on the PIK paper was left unchanged at Libor plus 600 basis points and the debt continues to be non-callable for three years.

Meanwhile, the $2.1 billion 71/2-year first-lien term loan B (B1/B+) that is priced at Libor plus 225 basis points was modified as well, with the addition of a step down to Libor plus 200 basis points when leverage is below 6x or the corporate credit rating - currently B2 - improves to B1, the source added.

Last week, the term loan B was upsized from $2 billion and the second-lien loan was added to the deal as the company decided not to go ahead with a $775 million bond offering that was originally part of its acquisition financing plans.

Cebridge is purchasing Cox Communications Inc.'s cable television systems, with backing by majority investors GS Capital Partners and Oaktree Capital Management LLC.

In addition to the two term loans, Cebridge is getting a $200 million seven-year revolver (B1/B+) with an interest rate of Libor plus 225 basis points and a 50 basis point commitment fee, and a $280 million 11/2-year interim term loan.

Goldman Sachs and Credit Suisse are joint lead arrangers on the $3.255 billion credit facility, with Goldman the left lead.

Allocations on the deal are expected to go out on Tuesday.

Cebridge is a St. Louis-based provider of cable television and internet access.

WideOpenWest closes

Avista Capital Partners completed its leveraged buyout of WideOpenWest Holdings LLC from Oak Hill Capital Partners and ABRY Partners, according to a company news release.

To help fund the LBO, WideOpenWest got a new $720 million credit facility consisting of a $510 million seven-year term loan B (B2) with an interest rate of Libor plus 225 basis points, a $60 million revolver (B2) with an interest rate of Libor plus 225 basis points and a 50 basis point commitment fee, and a $150 million eight-year second-lien term loan (B3) with an interest rate of Libor plus 500 basis points.

During syndication, pricing on the term loan B was reduced from Libor plus 275 basis points, pricing on the second-lien loan was lowered from Libor plus 550 basis points and pricing on the revolver was lowered from Libor plus 275 basis points.

The second-lien loan contains call protection of 102 in year one and 101 in year two.

Credit Suisse acted as the lead bank on the deal.

WideOpenWest is an Englewood, Colo., provider of cable television, high-speed internet and telephone services.

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