MetroPCS breaks, trades up to 101 context; Calpine loan levels boosted by asset sale news

By Sara Rosenberg

New York, May 31 - MetroPCS Wireless Inc.'s $750 million senior secured credit facility freed up for trading Tuesday morning in the upper-par region but then treaded higher throughout the session to reach 101 plus levels.

In other secondary happenings, Calpine Corp.'s various bank debt - including that of Calpine Generating Co. LLC (CalGen) - was stronger Tuesday as the company announced the sale of its England-based Saltend power plant.

MetroPCS' $500 million first-lien term loan and $250 million seven-year second-lien term loan began trading Tuesday - although the tranches were allocated this past Friday - with both loans opening up in the par ½ bid, 101 offered range, according to a market source.

However, as the session progressed, the first-lien term loan worked its way higher to end the day quoted around par ¾ bid, 101½ offered, a trader said.

Furthermore, the bid on the second-lien term loan also took a turn for the better, reaching a level of 101, with no offers, by the end of the day, the trader added.

Pricing on the first-lien term loan is set at Libor plus 450 basis points. The spread was increased from opening price talk at launch of Libor plus 375 basis points during syndication.

The size of the first-lien term loan was reduced to $500 million from $700 million during syndication.

And, the tenor of the first-lien term loan was changed to six years from an originally proposed seven-year maturity at launch.

Also, call protection on the first-lien term loan was changed to 103 in year one, 102 in year two and 101 in year three during syndication from the original proposal that called for protection of 102 in year one and 101 in year two.

Lastly, a $50 million greenshoe was added to the first-lien term loan, but it is only available after MetroPCS' audited financials are released.

As for the $250 million seven-year second-lien term loan, pricing is set at Libor plus 700 basis points. The spread was increased from opening price talk at launch of Libor plus 575 basis points during syndication.

Call protection on the second-lien term loan is non-callable for two years then at 102 in year three and 101 in year four. This was changed during syndication from original terms calling for protection of 102 in year one and 101 in year two.

A greenshoe was added to the second-lien term loan as well, although this one is sized at $100 million, and like the first-lien greenshoe, it is only available after MetroPCS' audited financials are release.

Another modification to the deal that was made during syndication was that a leverage covenant was added to the credit agreement of maximum 5x leverage through the first lien.

The $750 million senior secured credit facility is unrated at this time because financial statements are unavailable, but as a reference spot, the senior unsecured notes at the holding company level are rated B3, and this credit facility is a secured deal at the operating company level.

Bear Stearns is the sole lead arranger and bookrunner on the deal that will be used to fund a tender offer for MetroPCS Inc.'s $150 million 10¾% senior notes due 2011 and refinance $540 million of existing debt, with remaining proceeds going toward cash on the balance sheet for build-out and corporate uses.

With the previous downsizing of the facility to $750 million from $950 million, the use of proceeds for this deal was not significantly changed since the debt refinancings are still going to take place. The only modification is that the amount of cash that is going toward the balance sheet will be less than was originally proposed, the source concluded.

MetroPCS Wireless is a Dallas-based provider of wireless communications services.

Calpine up on Saltend sale

Calpine's CalGen bank debt, as well as the Calpine Corp. bank debt, posted gains during Tuesday's session as the company revealed that it has agreed to sell its 1,200-megawatt Saltend Energy Centre for a total purchase price of £490 million.

The CalGen first-lien paper was up about a quarter of a point with levels of par ½ bid, 101 offered, and the CalGen second-lien paper was up about a half a point with levels of 96 bid, 97 offered, according to a trader.

As for the Calpine Corp. second-lien bank debt, that was up about two points on the day, with levels of 76 bid, 78 offered, according to a second trader.

The sale of Saltend is expected to generate gross proceeds to Calpine of about $925 million after adjustments for working capital expected to be about $19 million. These proceeds will be used by the San Jose, Calif.-based power company to redeem two existing series of redeemable preferred shares for about $620 million.

The plant is being sold to a partnership between International Power plc and Mitsui & Co. Ltd., and the transaction is expected to close around July 26, pending regulatory approval and other conditions of closing.

"Calpine continues to focus on optimizing the value of our core North American power plant assets and strengthening our balance sheet. We acquired the Saltend power plant in August 2001 for $810 million. This transaction is an excellent opportunity for Calpine to capture significant value for our Saltend investment," said Bob Kelly, chief financial officer, in a company news release.

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