Calpine bounces on revised offer; Warner Chilcott dips; McClatchy up; Language Line talk emerges

By Sara Rosenberg

New York, Oct. 15 - Calpine Corp.'s first-lien term loan was quoted all over the place during the trading session following news that the company increased the amount of loans it is willing to accept in exchange for new notes.

Also in the secondary market, Warner Chilcott plc's strip of term loan debt was a little softer on its second day of trading and McClatchy Co.'s term was stronger after quarterly earnings were released.

Over on the new deal front, Language Line Holdings Inc. released official pricing guidance on its credit facility as syndication on the deal kicked off with a bank meeting that took place on Thursday morning.

Calpine seesaws

Calpine's first-lien term loan was quoted differently by traders, with some seeing the paper higher, some seeing it unchanged and some seeing it lower, as the company upsized its loan to notes exchange offer.

The first-lien term loan was quoted by one trader at 92¼ bid, 92¾ offered, up from 91½ bid, 92 offered on Wednesday.

A second trader, however, had the loan quoted at 91¼ bid, 92¼ offered, down from 92 bid, 92½ offered.

A third trader quoted the same loan at 91½ bid, 92½ offered, down from 92 bid, 93 offered.

And, a fourth trader was quoting the term loan at 91¾ bid, 92¼ offered, unchanged on the day.

Calpine raises offer

On Thursday, Calpine announced that it increased its offering so that it swapped $1.2 billion of 7.25% senior secured notes due 2017 for $1.2 billion of first-lien term loan debt, as opposed to doing a $750 million exchange.

The notes are guaranteed by the company's current and future subsidiaries that guarantee the existing credit facility and secured by the same assets.

The offering is expected to close on Oct. 21.

Calpine is a San Jose, Calif.-based power generation company.

Warner Chilcott dips

Warner Chilcott's strip of term loan A, term loan B and delayed-draw term loan debt was a little softer on Thursday after having a strong break during the previous session, according to traders.

The strip of term loan debt was quoted at par 5/8 bid, par ¾ offered, down from par ¾ bid, 101 offered, traders said.

The company's strip of bank debt first freed up for trading on Wednesday with initial levels seen at par 1/8 bid, par 3/8 offered and then it continued to inch higher over the course of the day.

Pricing on Warner Chilcott's $1 billion five-year term loan A is Libor plus 325 basis points, and pricing on the $1.6 billion 51/2-year term loan B and the $350 million delayed-draw term loan B is Libor plus 350 bps. All tranches have a 2.25% Libor floor and the original issue discount was 99. The delayed-draw commitment fee is 175 bps.

Warner Chilcott is a Rockaway, N.J.-based specialty pharmaceutical company.

McClatchy up with numbers

McClatchy's term loan was stronger in trading following the company's third-quarter earnings announcement, according to a trader.

The term loan was quoted at 84½ bid, 87½ offered, up from 83 bid, 86 offered, the trader said.

For the quarter, net income was $23.6 million, or $0.28 per share, compared to $4.2 million, or $0.05 per share, in the 2008 quarter.

Adjusted earnings for the quarter were $11 million, or $0.13 per share, compared to $10.4 million, or $0.13 per share, last year.

Revenues in the third quarter were $347.4 million, down 23.1% from $451.6 million in the third quarter of 2008.

McClatchy reduces debt

At the end of the quarter, McClatchy's outstanding principal of debt was $1.99 billion, down $134.3 million from the end of 2008.

The company's leverage ratio at the end of the quarter was 5.7 times and its interest coverage ratio was 2.8 times.

"Both of these ratios are well within the covenant requirements under our credit agreement of a leverage ratio of less than 7.0 times and an interest coverage ratio of greater than 2.0 times. At the end of the quarter, we had approximately $172.0 million available under our bank credit line," said Pat Talamantes, chief financial officer, in a news release.

McClatchy is a Sacramento, Calif.-based newspaper company.

Language Line guidance

Switching to the primary market, Language Line held a bank meeting on Thursday morning to launch its $575 million credit facility (Ba3/B+) to investors, and in connection with that meeting, price talk on the deal was released, according to a fund manager.

Both the $50 million five-year revolver and the $525 million six-year term loan were presented to lenders with talk of Libor plus 325 basis points to 350 bps, the fund manager said.

Prior to the launch, price talk on the tranches was being guided in the Libor plus 350 bps context.

In addition, the revolver and the term loan both have a 2% Libor floor - a feature that was disclosed to the market earlier this week when the deal was first announced.

Coming out for the first time with the bank meeting was the original issue discount on the term loan, which is being talked at 99, the fund manager added.

Language Line lead banks

Language Line's credit facility is being led by Bank of America, Credit Suisse and Morgan Stanley, with Bank of America the left lead.

Proceeds will be used to refinance existing debt.

On Tuesday, the company announced in a press release plans to talk to lenders about financing options that would reduce its overall cost of capital.

Language Line is a Monterey, Calif.-based provider of language-based services.

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