Calpine prices and allocates $750 million offering, first lien term loan trades up to 99 area

By Sara Rosenberg

New York, Aug. 7 - Calpine Corp. successfully brought its $750 million debt offering to the capital markets late in the day Thursday, managing to solidify terms and fully distribute the deal by nightfall. Furthermore, the first-lien term loan began trading following allocations, moving up by a point to a point in a half in the secondary.

Under the final terms, the six-year first priority secured term loan is sized at $385 million with an interest rate of Libor plus 600 basis points and the eight-year second priority secured floating rate notes issued under Rule 144A are sized at $365 million with an interest rate of Libor plus 850 basis points, according to a syndicate source.

Furthermore, the first lien tranche is being offered at 98, as compared to the previously expected offer price of 99, contains a 1½% Libor floor and is non-callable for four years and then callable in year five at 103, the source said.

The second lien piece is also being offered at 98, has a 1¼% Libor floor, and is non-callable for six years and then callable in year seven at 1041/4, according to sources.

By evening, the first lien term loan was quoted around 99 bid, 99½ offered.

"The deal got done at the $750 million size we started out with. That's a success," the syndicate source said.

Goldman Sachs is the lead bank on the San Jose, Calif. energy company's deal.

There had been much talk about how the final terms on the deal would actually look. On Thursday afternoon people expected the transaction to consist of a six-year first priority secured term loan sized at $350 million and eight-year second priority secured floating rate notes under Rule 144A sized at $400 to $450 million.

Late Wednesday, a syndicate source told Prospect News that the structure of the deal was a $300 million to $350 million six-year first priority secured term loan talked at Libor plus 500 to 550 basis points and $450 million eight-year second priority secured floating rate notes under Rule 144A talked at Libor plus 800 to 850 basis points.

Meanwhile, during market hours, Calpine Corp.'s second-lien bank debt moved slightly higher as investors gained more confidence in the deal's ability to get done based on the more attractive terms talked in the market, according to traders.

The paper was quoted at 90 bid, 91 offered, up from Wednesday's level of 89½ bid, 90½ offered, according to a trader.

Elsewhere Charter Communications Inc.'s term loan B moved down again on Thursday, this time dipping only by about a quarter of a point in the wake of Wednesday's one point drop. The tranche was quoted at 92½ bid, 91½ offered compared to Wednesday's level of 92¾ bid, 93¾ offered, according to a trader.

Market sources attribute the decline to the company's $1.7 billion senior notes offering, which is currently on the road, saying that the deal might not be going smoothly. One professional added that following a particular call this week investors were unconvinced as to why Charter has chosen to structure its bond offering in this particular fashion.

The offering is split between $850 million at Charter Communications Capital Corp. I LLC and $850 million at Charter Communications Capital Corp. II LLC.

The St. Louis-based cable operator's roadshow started this past Tuesday and will go on until Aug. 13.

In other news, Fresenius Medical Care bumped up pricing on its $500 million term loan B to Libor plus 225 basis points (still 25 basis points lower than the original pricing) after meeting resistance from investors on the suggestion of changing the interest rate to Libor plus 200 basis points, according to a market source.

The German kidney dialysis company obtained its $1.5 billion credit facility (Ba1/BB+) in the beginning of this year with Credit Suisse First Boston, Bank of America and Dresdner leading the deal.

Talk is that Isle of Capri Casinos Inc. is following the example set by so many other companies in the current market environment by speaking with lenders regarding an amendment to its credit facility that would lower interest rates on its institutional tranche, a market participant said.

The company is looking to reduce the rate on the $250 million six-year term loan B by 25 basis points to Libor plus 225 basis points. The amendment to the credit agreement is expected to be completed next week, the market participant added.

CIBC is the lead bank on the Biloxi, Miss. gaming and lodging company's deal, which was originally obtained in April of last year.

Insight Communications Co. Inc. was unable to reprice its term loan B at a lower spread of Libor plus 250 basis points due to a lack of investor support. The company is now just seeking the previously announced add-on to its term B facility and will keep pricing on the tranche at the existing rate of Libor plus 275 basis points, according to a market professional.

Basically, the company is looking to increase the size of its existing $900 million term loan B by $225 million. However, since a change in pricing was expected, the company was previously planning on syndicating the entire $1.125 billion institutional tranche, while allowing existing lenders to recommit to the deal.

JPMorgan and Bank of America are the co-lead arrangers and bookrunners, Bank of New York is the administrative agent, and TD and Fleet are the documentation agents.

The company is seeking this enlarged credit facility in order to refinance all of the outstanding debt at its Ohio operating subsidiary, which consists of $140 million of 10% senior notes due 2006, $55.9 million of 12 7/8% senior discount notes due 2008 and a $22.5 million senior credit facility, according to a news release.

Insight Communications is a New York cable television system operator.

EaglePicher Inc. closed on its $275 million senior secured credit facility (B2/B+), consisting of a $125 million five-year revolver with an interest rate of Libor plus 350 basis points and a $150 million six-year term loan B with an interest rate of Libor plus 350 basis points. ABN Amro and UBS were the lead banks on the deal.

Both tranches are subject to termination in mid-2007 if the 11.75% preferred stock of EaglePicher Holdings is then outstanding.

Proceeds from the credit facility, combined with proceeds from a $250 million note sale, have been used to refinance the company's existing senior credit facility and purchase $209.5 million, or approximately 95%, of its 93/8% senior subordinated notes due 2008.

"This refinancing provides EaglePicher with a solid financial foundation that will allow us to pursue numerous strategic growth opportunities," said John H. Weber, president and chief executive officer, in a news release. "EaglePicher's experience and intellectual assets, coupled with the refinancing, will allow us to accelerate the delivery of superior customer solutions through the application of innovation."

EaglePicher is a Phoenix manufacturer and marketer of products for space, defense, automotive, filtration, pharmaceutical, environmental and commercial applications.

Penn Traffic Co. closed on its $270 million permanent debtor-in-possession financing, which was approved on July 31 by the U.S. Bankruptcy Court. Fleet Capital Corp. and a syndicate of lenders, comprised of existing lenders prior to the chapter 11 filing, is providing the DIP financing facility.

The revolving DIP facility has a term of nine months and carries an interest rate of Prime plus 175 basis points with a 50 basis points commitment fee.

Security is first priority liens on and security interests in the post-petition collateral.

Proceeds will be used for working capital and general corporate purposes.

The company also announced on Thursday that Joseph Fisher has resigned as president and chief executive officer for personal family reasons, effective Aug. 6. Steven G. Panagos, who is currently the company's chief restructuring officer, has been selected to act as interim chief executive officer.

"The company is gratified by the strong support of our lenders as evidenced by the closing of the DIP financing which we view as an important vote of confidence in our company, our people and our potential," Panagos said in a news release.

Penn Traffic is a Syracuse, N.Y. operator of regional food chains.

Moore Corp. closed on the repricing of its $500 million term loan B, changing the interest rate to Libor plus 250 basis points from Libor plus 300 basis points. Deutsche Bank and Citigroup are the lead banks on the facility.

Moore is a Mississauga, Ont. manager and distributor of print information.

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