Celanese adds $250 million second lien term loan; decreases bond deal

By Sara Rosenberg

New York, May 25 - Celanese AG increased the size of its credit facility by adding a $250 million second lien term loan to the deal as the company opted to decrease its proposed bond offering by the same amount to $1.315 billion.

"The second lien will price according to the bonds so we won't know [pricing] till later this week," a fund manager said.

The bond offering was probably reduced and the second lien was probably added due to the strength of the bank loan market and strong investor demand, the fund manager added. In fact, according to another market source, the credit facility is doubly oversubscribed.

Besides the new second lien tranche, Celanese's fully dollar-denominated credit facility also contains a term loan B equivalent to €500 million with an interest rate of Libor plus 275 basis points, a revolver equivalent to €312.5 million with an interest rate of Libor plus 250 basis points and a letter-of-credit facility equivalent to €187.5 million with an interest rate of Libor plus 250 basis points.

Proceeds will be used to help fund the acquisition of Celanese by The Blackstone Group in a public-to-private transaction for a price of €32.50 per share, or about €3.1 billion.

Since the purchase price is in euros, Celanese is using euro equivalents so as to make sure it raises the full amount needed to complete the acquisition with the intention being that there will be a currency swap back when the facility closes.

Originally, the deal was expected to be euro denominated with a small portion marketed toward U.S. investors.

Deutsche Bank, Morgan Stanley and Bank of America are the lead banks on the deal.

Celanese is a Germany based chemical company.

Pegasus D loan up

Pegasus Media & Communications Inc.'s term loan D is being "nursed along" with the paper higher by about a quarter to a half a point as some investors are gaining confidence in the idea that even if the company has to reorganize under Chapter 11 they will still be paid out at par, according to a trader.

The term loan was quoted at 98½ bid, 99 offered. In comparison, on Friday, the paper was quoted at 96 bid, 98 offered.

"There are still bankruptcy fears. It's up because there are more buyers now. People feel comfortable that they're covered on the bank debt," the trader explained.

Pegasus Satellite Communications Inc.'s bank debt, however, was basically unchanged on the bid side at 95½ bid, while the offer side widened out a little since the end of last week, moving to 97½ from 96½ on Friday, the trader added.

Bankruptcy concerns have been floating around since last week due to a court case involving DirecTV, in which DirecTV won a judgment of $51.5 million against Pegasus, plus interest - money Pegasus says it does not have. Furthermore, DirecTV said Monday that Judge Lourdes Baird of the U.S. District Court for the Central District of California had entered a judgment in favor of DirecTV Inc. against Pegasus Satellite Television Inc. and Golden Sky Systems Inc. (Pegasus) of some $62.6 million, which includes prejudgment interest. DirecTV is also entitled to recover its legal costs.

Late Monday, Moody's Investors Service lowered the senior implied rating for Pegasus Satellite Communications to Ca from Caa1 and the senior secured bank debt rating for subsidiary Pegasus Media & Communications to Caa1 from B3 saying that the downgrade reflects the belief that probability of default over the nearer term has increased due to two different judgments against the company.

Pegasus is a Bala Cynwyd, Pa., diversified media and communications company.

Adesa allocates

Adesa Inc.'s $525 million credit facility (Ba2/BB) allocated on Tuesday; however, the paper was not seen trading since there was no institutional market for the deal as the paper was tucked away into funds, according to a trader.

"The deal was doubly oversubscribed so everybody got roughly half of what they wanted," a market source said regarding allocations."

The credit facility consists of a $200 million six-year term loan B priced at Libor plus 250 basis points, a $175 million five-year term loan A priced at Libor plus 225 basis points and a $150 million five-year revolver (size left unchanged as well) priced at Libor plus 225 basis points.

Upfront fees on the pro rata allocated amount are 62.5 basis points for a $50 million commitment, 50 basis points for a $35 million commitment and 37.5 basis points for a $25 million commitment.

Originally, the deal was launched with the term loan B sized at $150 million and the term loan A sized at $200 million; however, the tranches were sized toward the end of April, resulting in an increase of the total credit facility size by $25 million as the company opted to downsize its proposed bond offering by $25 million to $125 million.

There never was a formal launch of the term loan B to institutional investors since there were sufficient commitments on the B loan from pro rata lenders.

UBS and Merrill Lynch are the joint lead arrangers on the deal, with UBS listed on the left.

Security for the credit facility is expected to be a lien on some assets.

Proceeds from the loan combined with proceeds from the senior subordinated notes offering and an initial public offering of Adesa's common stock will be used to help fund Adesa's spinoff from Allete Inc.

More specifically, Adesa will replace and repay its existing credit facility, pay a $100 million dividend to Allete, repay $200.2 million of outstanding debt owed to unaffiliated third parties and repay all outstanding intercompany debt owed to Allete and its subsidiaries, which totaled $136.1 million as of Dec. 31, 2003.

The IPO is expected to be completed in the second quarter of 2004. After the IPO, Allete will own at least 80% of the equity of Adesa. The company anticipates completing the subsequent spinoff within four months of the IPO, according to an Allete news release.

Adesa is a Carmel, Ind., operator of used vehicle and auto salvage auctions.

Cygnus pricing

Cygnus Business Media's first lien bank debt is being talked in the context of Libor plus 400 basis points, while its second lien bank debt is being talked in the context of Libor plus 600 basis points now that the deal launched via a bank meeting on Tuesday, according to a market source.

More specifically, the $220 million facility consists of a $140 million term loan B, a $30 million second lien term loan, a $20 million delayed draw term loan and a $30 million revolver.

GE Capital and Union Bank of California are the lead banks on the deal.

Proceeds will be used to refinance existing debt.

Cygnus Business Media is a Westport, Conn., publisher of business-to-business media products.

Otis Spunkmeyer launch

Market talk is that Otis Spunkmeyer Inc. will be launching a new term loan on Wednesday with Merrill Lynch and JPMorgan leading the deal, according to a source.

The term loan is going to be used to refinance the San Leandro, Calif., cookie company's existing term loan, the source added.

No further details were available prior to press time.

Axia reworked

Axia Inc. restructured its 61/2-year term loan B, reducing the size to $130 million from $140 million and increasing pricing to Libor plus 400 basis points from Libor plus 350 basis points, according to a fund manager.

Wachovia is the lead bank on the deal.

The now $150 million facility also contains a $20 million five-year revolver with an interest rate of Libor plus 350 basis points.

Proceeds will be used to refinance existing debt.

Axia is a Houston designer, manufacturer, marketer and distributor of proprietary engineered products.

Tower Auto closes

Tower Automotive Inc. closed on a new $580 million credit facility, upsized from an original launch size $565 million. Morgan Stanley and JPMorgan were the lead banks on the deal, with Morgan Stanley listed on the left.

The facility consists of a $375 million five-year first lien term loan B (B1/B+) with an interest rate of Libor plus 425 basis points, a $155 million 51/2-year second lien synthetic letter-of-credit facility (B2/B-) with an interest rate of Libor plus 700 basis points, reverse flexed from original price talk of Libor plus 750 basis points and upsized from $140 million during syndication, and a $50 million five-year revolver (B1/B+) with an interest rate of Libor plus 425 basis points.

The books on Tower's credit facility closed with $1.7 billion raised, clearly bringing this deal into the blowout category.

Leverage through the first lien is 1.8x, and leverage through the first and second lien is 2.3x.

Proceeds, combined with proceeds from a $125 million 5.75% convertible senior debentures offering, were used to refinance the existing credit facility eliminating near-term amortization pressure, refinance the 5% convertible subordinated notes due Aug. 1 and for general corporate purposes.

Tower Automotive is a Novi, Mich., designer and producer of structural components and assemblies used by automotive original equipment manufacturers.

American Tower closes

American Tower Corp. closed on a $1.1 billion senior secured credit facility (B1/B) consisting of a $400 million revolver due Aug. 15, 2008 with an initial interest rate of Libor plus 200 basis points, a $300 million term loan A due Aug. 15, 2008 with an initial interest rate of Libor plus 200 basis points and a $400 million term loan B due Oct. 31, 2008 with an interest rate of Libor plus 225 basis points.

Pricing on the revolver and term loan A can range from Libor plus 150 to 250 basis points depending on leverage.

Toronto Dominion and JPMorgan were joint lead arrangers on the deal, with TD listed on the left as administrative agent and JPMorgan acting as syndication agent. General Electric Capital Corp., Citigroup and Credit Suisse First Boston are co-documentation agents.

The term loan A starts amortizing in 2006 with $22.5 million due. In 2007, $52.5 million is due, $60 million is due in 2008 and 2009, $82.5 million is due in 2010 and $22.5 million is due in 2011.

The term loan B starts amortizing in 2004 with $2 million due. In 2005 through 2010, $4 million is due, with a final payment of $374 million due in 2011.

Covenants include a leverage ratio, a senior leverage ratio, an interest coverage ratio and a fixed charge coverage ratio, according to an 8-K filed with the Securities and Exchange Commission on Tuesday.

The leverage ratio is set at no greater than 5.50-to-1.00 through June 30, 2005, decreasing to 5.25-to-1.00 at July 1, 2005, to 5.00-to-1.00 at Jan. 1, 2006, to 4.75-to-1.00 at April 1, 2006, to 4.50-to-1.00 at July 1, 2006 and to 4.00-to-1.00 at Jan. 1, 2007 and thereafter.

The senior leverage ratio is set at no greater than 4.00-to-1.00 through Dec. 31, 2005, decreasing to 3.75-to-1.00 on Jan. 1, 2006, to 3.50-to-1.00 on July 1, 2006 and to 3.00-to-1.00 on Jan. 1, 2007 and thereafter.

The interest coverage ratio is set at no less than 2.50-to-1.00.

And, the fixed charge coverage ratio is set at no less than or equal to 1.00-to-1.00.

Security is a pledge of substantially all the company's assets.

At closing, the company received about $685 million of net proceeds from borrowings under the new facility, after deducting related expenses and fees. About $670 million of the net proceeds were used to repay principal and interest on the outstanding borrowings of the company's previous credit facility. The company plans to use the remaining $15 million of net proceeds for general corporate purposes, including refinancing other debt, according to a company news release.

There was about $373 million of availability under the revolver, net of undrawn letters of credit of about $27 million at closing.

The new facility extends the maturity dates to 2011 from 2007 for a majority of the borrowings outstanding under the new credit facility and permits American Tower to use borrowings under the new facility and internally generated funds to repurchase other debt without seeking approval from the lenders under the new facility.

American Tower is a Boston wireless and broadcast communications infrastructure company.

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