Springs Window ups spread; Clarke American breaks; Reliant dips on amendment; Calpine fall continues

By Sara Rosenberg

New York, Dec. 8 - Springs Window Fashions Inc. increased pricing on its term loan by 50 basis points, with the expectation being that with this spread change the deal will get done.

In trading, Clarke American Corp. freed up for trading atop par, Reliant Energy Inc. was a touch softer as the company initiated a covenant amendment process and Calpine Corp.'s second-lien loan levels weakened once again as the battle with bondholders raged on.

Springs Window flexed pricing higher on its $250 million term loan to Libor plus 275 basis points from Libor plus 225 basis points as a way to entice enough investors to the deal to fill out the book, according to a buy-side source.

"I heard it was maybe halfway there before the flex," the source said about the number of term loan commitments. "I'm guessing they wouldn't have gone out with this pricing if they didn't know they could get it done there."

The company's $350 million credit facility (B1) also contains a $100 million revolver.

JPMorgan and Wachovia are the lead banks on the Middleton, Wis., window treatment company's deal.

Proceeds will be used to help fund the spin-off of the company from Springs Industries Inc. In October, Springs Industries and Brazilian-based Coteminas announced that they would be combining their home textile businesses in a joint venture named Springs Global. As a result of the joint venture, Springs Window is being spun-off.

Clarke trades atop par

Clarke American allocated its credit facility on Thursday, with the term loan B first seen at par bid, par ½ offered, according to one trader, and then moving up to par ½ bid, par 7/8 offered where it closed out the session, according to a second trader.

The $440 million term loan B, which was originally issued to investors at 991/2, is priced with an interest rate of Libor plus 325 basis points and contains 101 soft call protection for 18 months. During syndication, pricing on the tranche was flexed up from Libor plus 300 basis points and the original issue discount and the soft call were added.

Other modifications to the term loan during syndication include increasing the amortization by $5 million per year in 2008, 2009 and 2010, and changing the interest coverage test to a fixed charge coverage test.

Clarke American's $480 million credit facility (B1/B+) also contains a $40 million revolver with an interest rate of Libor plus 300 basis points.

Bear Stearns and JPMorgan are the lead banks on the credit facility, with Bear Stearns left lead.

Proceeds will be used, along with proceeds from a $175 million bond offering and cash on hand, to help fund M&F Worldwide Corp.'s acquisition of Novar USA Inc., the parent company of the businesses operated by Clarke American and related companies, from Honeywell International Inc. for $800 million in cash.

The acquisition, which is subject to certain customary conditions, is targeted to close prior to the end of the year.

Following the acquisition, Clarke will operate as a separate stand-alone business.

Clarke American is a San Antonio, Tex., provider of check-related products and extensive servicing to financial institution customers.

Reliant weakens on covenant issues

Reliant Energy's bank debt was lower by about an eighth to a quarter of a point on Thursday as the company launched an amendment to its credit facility in order to gain more covenant room, according to a trader.

The term loan B1 ended the day at 99½ bid, par offered, the term loan B2 ended the day at 99¾ bid, par offered and the revolver ended the day at 95 bid, 96 offered, the trader said.

Reliant is a Houston-based power company.

Calpine trades off

Calpine Corp.'s second-lien bank debt was lower by about two points on Thursday as the company continued to engage in legal wrangling with noteholders and tried to ward off any acceleration of debt payments that could potentially lead to a Chapter 11 filing becoming a necessity.

The second-lien debt was quoted at 74 bid, 75 offered by the end of the session, but had moved to as low as 73½ bid in the morning hours, according to a trader. By comparison, the bank debt was being quoted at 76 bid, 77 offered at the close Wednesday and at 78 bid, 80 offered on Tuesday.

The downfall really started on Wednesday after news surfaced that Wilmington Trust Co., trustee for bondholders, notified Calpine that it could default on $3 billion in second-lien secured debt unless it immediately repays the approximately $312 million that was ruled to be improperly spent on asset purchases, to the Bank of New York collateral account.

Under the recent court ruling, the San Jose, Calif., power company was given until Jan. 22, 2006 to repay the funds. This ruling is currently being appealed by Calpine, which is saying that there was no misuse of asset proceeds, and bondholders are appealing the ruling, saying that Calpine should have to return the money to the collateral account immediately. The Supreme Court of the State of Delaware has granted expedited review and has scheduled oral arguments on the appeals for Dec. 15.

Calpine had filed a temporary restraining order earlier this week against bond trustees from accelerating the repayment of second-lien notes on or before Jan. 22.

But late Thursday, Calpine said the two sides had reached agreement. Calpine withdrew the request for a restraining order while the second-lien note trustees and an informal committee of noteholders have agreed that they will not accelerate any of the debt, a company news release said.

Nasdaq closes

The Nasdaq Stock Market Inc. completed its acquisition of Instinet Group Inc. for $1.88 billion in cash, or $5.44 per share, according to a company news release.

As previously announced, under the acquisition agreement, INET, Instinet's electronic marketplace, is being combined with Nasdaq's current operations, but, Instinet, the institutional broker business, was sold to Silver Lake Partners.

To help fund the transaction, Nasdaq got a new $800 million credit facility (Ba2/BBB-) consisting of a $750 million six-year term loan B with an interest rate of Libor plus 150 basis points and a $50 million five-year revolver with an interest rate of Libor plus 150 basis points.

JPMorgan and Merrill Lynch acted as the lead banks on the deal, with JPMorgan left lead.

Nasdaq is a New York-based provider of securities listing, trading, and information products and services.

Gibraltar closes

Gibraltar Industries Inc. closed on its $230 million seven-year senior secured term loan B (Ba1/BB) that is priced with an interest rate of Libor plus 175 basis points with a step down to Libor plus 150 basis points when total leverage is less than 2.5x and upon receipt of Sept. 30, 2006 numbers. The step down was added early this week before syndication wrapped.

Proceeds from the term loan and from a senior subordinated notes offering, were used to repay a $300 million term loan drawn down by the company for the purpose of acquiring Alabama Metal Industries Corp. and to repay some outstanding borrowings under the company's existing $300 million revolver.

KeyBank acted as the lead arranger and administrative agent on the Buffalo, N.Y., steel products and services company's term loan.

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