Northwest term C has some griping over pricing; Adam's Outdoor sets price talk; Conversent breaks

By Sara Rosenberg

New York, March 30 - Northwest Airlines Corp.'s term loan C launch had some investors walking away unhappy as disappointment set in regarding pricing. Meanwhile, Adam's Outdoor Advertising LP revealed price talk on its term loan as the deal launched to the existing bank group only on Wednesday.

In the secondary, Conversent Communications Inc. freed up for trading wrapped around the mid-par context and Fidelity National Information Services Inc. saw good flow with levels feeling a touch stronger.

Northwest Airlines' $147.75 million term loan C due Nov. 23, 2010 was launched with opening pricing of Libor plus 525 basis points - the same pricing that the company's existing $575 million term loan A carries but far below the Libor plus 675 basis points pricing level that the existing $400 million term loan B carries.

"[It's] not good," a buyside source told Prospect News. "Others weren't pleased with it either.

"They're essentially creating a new loan that is the same as the existing B loan but pricing will be the same as the existing term loan A. In other words they're under pricing the new C loan."

Proceeds from the term loan C will be used to refinance the $147.75 million amortization payment due Nov. 23 on the existing term loan A and term loan B.

When asked whether the desire to refinance amortization payments was of any concern to lenders, the buyside source responded, "They have the cash to make the payments but they want to conserve their cash because of uncertainties related to oil [fuel] prices and lower revenue because of lower ticket prices."

The term loan C, which is being done as an amendment, was launched via a conference call Wednesday morning to existing lenders only - "unless they can't get enough interest in it," the source added.

Call protection on the term loan C is 103 through Nov. 23, 2005, 102 through Nov. 23, 2006, 101 through Nov. 23, 2007 and par thereafter. Northwest's existing term loan A and term loan B, which were obtained in November 2004, also contain call protection of 103 in year one, 102 in year two and 101 in year three.

Amortization is 1% per year beginning on Nov. 23, 2006, with a bullet payment at maturity.

Consents and commitments are due from lenders on April 12. Lenders will get a 12.5 basis point amendment fee if they sign off on the deal.

JPMorgan and Citigroup are the lead banks on the deal.

On Friday, the Eagan, Minn.-based airline revealed in an 8-K filed with the Securities and Exchange Commission that it was in talks with lenders about refinancing the amortization payments.

Northwest also said in the filing that it is looking to amend the fixed charge coverage covenant contained in the credit agreement.

Adam's Outdoor sets price talk

Adam's Outdoor went out to its existing lending group with price talk of Libor plus 200 basis points on its $260 million term loan B, which launched via a conference call Wednesday afternoon, according to a market source.

Furthermore, the tranche will contain a step down to Libor plus 175 basis points, based upon leverage, the source added.

Proceeds from the term loan and a $25 million revolver that was also launched Wednesday will be used to refinance the company's existing credit facility and take out the existing second-lien term loan.

The term loan B, which is being refinanced and increased so that there are enough funds to take out the second-lien loan, currently contains pricing of Libor plus 225 basis points.

The company is hoping to lower the interest rate on its term loan B given its financial performance, the current loan market environment and expectation that first-lien ratings of B1/B+ will be affirmed - which was already done by Moody's Investors Service as it came out with a B1 rating on Tuesday.

Basically, the syndicate is looking to have existing lenders recommit their pro rata share to the new deal. And, even before the conference call took place, a good amount of recommitments had already been "soft circled," a source previously told Prospect News.

Wachovia is the sole lead bank on the Atlanta-based outdoor advertising company's $285 million credit facility.

Conversent starts trading

Conversent Communications' $200 million term loan hit the secondary loan market on Wednesday with levels seen at par ¼ bid, par ¾ offered steadily throughout the day, according to a trader.

"It was pretty well placed so it really didn't trade around a lot," the trader added.

Proceeds from the $225 million credit facility (B3/B), which also contains a $25 million revolver, will be used to refinance existing debt and to fund a redemption of some ownership interests in Conversent Holdings Inc. and Mountaineer Telecommunications LLC.

Bank of America is the lead bank on the deal.

Conversent Communications is the new company being formed for the merger of Conversent Holdings, a facilities-based communications provider, and Mountaineer Telecommunications, a local exchange carrier.

Fidelity National feels stronger

Fidelity National's term loan B traded up to par ½ on Wednesday before settling down to par ¼ bid, par ½ offered by day's end, according to a trader, who said that the paper was maybe up an eighth to unchanged.

"There has been a lot of flow in the name," the trader added.

Fidelity National is a Jacksonville, Fla., provider of technology solutions, processing services and information services to the financial services and real estate industries.

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