Princeton Review OID emerges; Ford takes a step back; Cablevision slides, Windstream weakens

By Sara Rosenberg

New York, Nov. 3 - In new deal happenings on Tuesday, the Princeton Review Inc. released guidance on the original issue discount on its credit facility in connection with the deal's launch early on in the session.

Over in trading, Ford Motor Co.'s bank debt softened on the back of its amendment news, Cablevision Systems Corp.'s term loans came in despite the release of strong earnings results, Windstream Corp.'s term loan dipped following an acquisition announcement and Graham Packaging Co. Inc.'s term loans were stronger as investors are expecting a paydown.

Princeton Review OID talk

Princeton Review held a bank meeting on Tuesday to kick off syndication on its proposed $96 million senior secured credit facility, and with the launch, original issue guidance talk surfaced, according to a market source.

Both the $15 million revolver and the $81 million term loan were presented to lenders with an original issue discount of 97, the source said.

As was previously reported, price talk on both tranches is Libor plus 600 basis points with a 2% Libor floor.

GE Capital is the lead bank on the deal that will be used to help fund the company's acquisition of Penn Foster Education Group Inc. from the Wicks Group of Cos. LLC for $170 million in cash.

Other financing for the acquisition will come from $51 million of senior subordinated notes.

Princeton Review leverage multiplies

Pro forma for the transaction, Princeton Review's senior leverage will be about 2.5 times and total leverage will be about 4.0 times.

The financing structure is different than what was previously outlined by the company. In an 8-K filed with the Securities and Exchange Commission last month, the company said it was getting a $50 million credit facility priced at Libor plus 600 bps, comprised of a $10 million revolver and a $40 million term loan, $50 million of 51/2-year senior subordinated notes priced at 17.5%, $25 million of 61/2-year junior subordinated notes priced at 17.5% PIK, and a $40 million three-year bridge loan initially priced at 15.5%, increasing to 17.5% after 12 months.

Closing on the acquisition is expected by the end of November, subject to customary regulatory approvals, including expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and other conditions.

Princeton Review is a Framingham, Mass.-based provider of college and graduate school test preparation and private tutoring. Penn Foster is a Scranton, Pa.-based provider of online education.

Ford trades lower

Moving to the secondary market, Ford's term loan and revolver were both weaker despite another ratings upgrade, as lenders appeared to be reacting to the company's amend and extend proposal, according to traders.

The term loan was quoted by one trader at 89½ bid, 90 offered, down from 90 bid, 91½ offered and by a second trader at 89 bid, 90 offered, down from 90 bid, 91 offered.

Meanwhile, the revolver was quoted at 89 bid, 91 offered, down from 90½ bid, 91½ offered, the second trader remarked.

"Pressure because of [the] amendment. Less incentive to hold it because of [an] extra two years. Lot of sellers in the market," the second trader added.

Ford seeking revolver extension

Late Monday, Ford announced that it is looking to amend its credit facility to extend the revolver maturity to Nov. 30, 2013 from Dec. 15, 2011, reduce the size of the revolver and increase pricing by 100 bps on the extended debt.

Under the proposal, each revolver lender that agrees to extend the maturity of its commitments may reduce its commitment by up to 25%.

To the extent the company's reduced revolver commitment exceeds certain specified levels, that excess would be converted into a new term loan maturing on Dec. 15, 2013.

Ford would repay revolver loans to the extent necessary to effect the commitment reductions on Dec. 3.

Responses are due on Nov. 18.

So far, certain revolver lenders have indicated that they intend to accept the proposal and extend about $6 billion of commitments.

Ford sales increase

In more Ford news, the company reported sales numbers for the month of October on Tuesday and was upgraded by Standard & Poor's. Moody's Investors Service already upgraded the company's ratings on Monday.

For the month of October, Ford's total sales were 136,920, up 3.1% from 132,838 in October 2008, car sales were 45,225, up 10.7% from 40,854 last year, and truck sales were 87,258, down 1.1% from 88,267 last year.

On the ratings side, S&P raised Ford's corporate credit ratings to B- from CCC+, reflecting the planned extension of the revolver, as well as good third-quarter numbers.

On Monday, the company reported third-quarter earnings, including $1.8 billion in operating-related cash flow from its global automotive operations and consolidated pretax profits of $1.1 billion.

Ford is a Dearborn, Mich.-based automotive company.

Cablevision term loans fall

Cablevision's term loan debt headed lower on Tuesday even with solid earnings as the market in general was weaker on selling pressure, according to traders.

The old term loan was quoted by one trader at 93½ bid, 94¼ offered, down from 94¾ bid, 95¾ offered and by a second trader at 94 bid, 94¾ offered, down from 95 bid, 95½ offered.

And, the new extended term loan was quoted by the first trader at 95¾ bid, 96¾ offered, down from 96½ bid, 97½ offered, and by the second trader at 95½ bid, 96 offered, down from 96 3/8 bid, 96 7/8 offered.

Cablevision earnings improve

For the third quarter, Cablevision reported net income of $98.9 million, or $0.33 per diluted share, compared to net income of $30.9 million, or $0.10 per diluted share, in the third quarter of 2008.

Operating income for the quarter was $381.6 million, up 32.2% from $288.6 million in the previous year.

Net revenues for the quarter were $1.840 billion, up 5.3% from $1.75 billion in the comparable period last year.

Consolidated adjusted operating cash flow for the quarter was $667.7 million, up 14.7% from $582.3 million in prior year.

At the end of the quarter, net debt was $10.76 billion, consolidated net debt to adjusted operating cash flow leverage ratio was 4.1 times and restricted group leverage ratio was 4.2 times.

Cablevision is a Bethpage, N.Y.-based telecommunications, media and entertainment company.

Windstream softens

Windstream's extended term loan B weakened in trading as the company revealed that it is acquiring NuVox Inc. in a transaction valued at about $643 million, according to traders.

The extended term loan B was quoted by one trader at 96 bid, 97 offered, down from 96¼ bid, 97¼ offered, and by a second trader at 95½ bid, 96½ offered, down from 95¾ bid, 96¾ offered.

For the acquisition, Windstream expects to issue about 18.7 million fixed shares of stock valued at $183 million, pay about $280 million in cash and assume estimated net debt of about $180 million.

Funding for the transaction will come from existing cash and borrowings under the company's revolving credit facility.

Closing is targeted for the first half of 2010, subject to necessary approvals from federal and state regulators.

Windstream is a Little Rock, Ark.-based provider of phone, high-speed internet and high-definition digital TV services. NuVox is a Greenville, S.C.-based competitive local exchange carrier.

Graham Packaging rises

Graham Packaging's terms loans gained some ground on the heels of the company's late Monday announcement that it plans to repay a portion of its term loans using proceeds from an initial public offering of common stock, according to sources.

The term loan B was quoted by one source at 97¼ bid, up from 96½ bid, and by a second source at 97 bid, 98 offered, up on the bid side from 96 bid, 98 offered.

The term loan C was quoted by the first source at 99 5/8 bid, up from 99½ bid.

The company's term loan B expires on Oct. 7, 2011 and is priced at Libor plus 225 bps and its term loan C expires on April 5, 2014 and is priced at Libor plus 425 bps with a 2% Libor floor.

Graham Packaging is a York, Pa.-based designer, manufacturer and seller of custom blow molded plastic containers.

Landry's steady on buyout

Also in trading, Landry's Restaurants Inc.'s term loan was pretty much flat on news that the company has reached an agreement to be taken private, according to a market source.

The term loan was quoted at par bid, 101 offered, the source said, explaining that it has been at those levels for quite a while since it is such a short piece of paper and "no one will pay a premium for a deal that's going off in a year or sooner" even if the paper is priced at Libor plus 600 basis points with a 3.5% Libor floor.

Under the buyout agreement, Tilman J. Fertitta, chairman, chief executive officer and president of Landry's, will acquire all of Landry's outstanding common stock that he does not already own for $14.75 per share in cash.

The total value of the transaction is about $1.2 billion.

The proposed acquisition is subject to Landry's refinancing a portion of its outstanding debt, as well as stockholder approval and regulatory approvals.

Closing is expected to take place in the first half of 2010.

Landry's is a Houston-based restaurant company.

Hub closes

In other news, Hub International Ltd. closed on its $200 million incremental term loan, according to a news release.

The loan is priced at Libor plus 475 bps with a 2% Libor floor and it was sold at an original issue discount of 98.

During syndication, pricing on the term loan firmed at the tight end of initial talk of Libor plus 475 bps to 500 bps.

Morgan Stanley and Bank of America acted as the joint lead arrangers and bookrunners on the deal that will be used for general corporate purposes.

Hub is a Chicago-based insurance company.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.