Spansion, Cedar Fair tweak deals; U.S. TelePacific resurfaces quickly; US Airways, Ford rise

By Sara Rosenberg

New York, Jan. 28 - On the new deal front on Thursday, Spansion Inc. revised the Libor floor on its exit financing term loan, and Cedar Fair LP increased the size of its term loan B due to strong demand and, as a result, downsized its bond offering.

Also in the primary market, U.S. TelePacific launched its proposed credit facility on Thursday after postponing the deal by one day, a move which was speculated to be a result of unexpected ratings.

Over in the secondary, US Airways Group Inc. and Ford Motor Co. both saw their term loans gain some ground after they each released results for the fourth quarter that showed a year-over-year improvement in earnings.

Spansion changes floor

Spansion reduced the Libor floor on its $450 million five-year term loan to 2% from 2.5% in the early afternoon and gave investors until 5 p.m. ET on Thursday to recommit to the transaction, according to a market source.

All other terms of the loan were left unchanged, including the Libor plus 550 basis points spread, the original issue discount of 98 and the 101 soft call protection for one year.

Allocation on the deal are hoped to go out within the next couple of days, the source remarked.

Spansion lead banks

Barclays and Morgan Stanley are the lead banks on Spansion's exit financing term loan, which was very well received by the market.

Also as part of the exit financing package, the company will be getting a new $65 million ABL revolver; however, different banks are leading this part of the transaction.

Total leverage is less than 2.0 times.

Spansion is a Sunnyvale, Calif.-based maker of flash memory products.

Cedar Fair could up B loan

Cedar Fair upsized its very well-received six-year term loan B to $1.2 billion from $1 billion and reduced its bond offering to $500 million from $700 million, according to a market source.

Pricing on the term loan B was left unchanged at Libor plus 375 bps with a 1.5% Libor floor, the source said.

As before, new lenders to the term loan B are being offered the paper at an original issue discount of 991/2, and lenders who extended their term loan B commitments during the company's previous amend and extend transaction are getting 50 bps for rolling over their commitments and waiving the 101 call protection.

The company's $1.45 billion, up from $1.25 billion, senior secured credit facility (Ba3/BB) still includes a $250 million five-year revolver priced at Libor plus 375 bps with a 1.5% Libor floor.

Cedar Fair being acquired

Proceeds from Cedar Fair's credit facility, notes and up to $765 million in equity will be used to fund Apollo Global Management's buyout of the company for $11.50 in cash per limited partnership unit. The transaction is valued at about $2.4 billion, including the refinancing of outstanding debt.

Bank of America, JPMorgan, Barclays Capital, UBS and KeyBanc Capital Markets are the lead banks on the credit facility.

Initially, the company was planning to do an amend and extend with an incremental loan, but it then changed to a whole new deal with new documentation and new debt tranches since market conditions are favorable.

Under the original proposal, the company was asking to extend its existing $250 million revolver and non-extended term loan debt to 2014 from 2012 with pricing of Libor plus 400 bps with no Libor floor. The amended term loan would have been sized at $1 billion, including $100 million of incremental debt.

Cedar Fair amends existing loan

Despite creating a new credit facility, Cedar Fair still had to amend its existing credit facility to allow for the change of control resulting from the buyout, and talk is that this amendment has already passed.

Lenders were offered a 5 bps amendment fee for the change of control. When the company was thinking of just doing an amend and extend, lenders were being offered 12.5 bps for the change of control.

Closing on the buyout is expected by the beginning of the second quarter of 2010, subject to approval of holders of two-thirds of Cedar Fair's outstanding units, the receipt of regulatory approvals and other conditions.

Cedar Fair is a Sandusky, Ohio-based amusement-resort operator.

U.S. TelePacific launches

U.S. TelePacific ended up holding a bank meeting on Thursday at 2 p.m. ET for its proposed $385 million credit facility, according to market sources.

Initially, the deal was set to launch on Wednesday, but that meeting was delayed to sometime within the "next few days" after ratings were announced, a source had told Prospect News.

According to that source, the Standard & Poor's CCC+ credit facility rating with pro forma corporate family rating B- was a surprise/marketing issue. However, he also said that U.S. TelePacific is a good company, so the rating issue was a technicality that could be solved.

Moody's Investors Service, meanwhile, rated the credit facility at B2 and upgraded the corporate family rating to B2 from B3.

U.S. TelePacific price talk

In connection with the Thursday meeting, U.S. TelePacific released price talk on its 51/2-year first-lien term loan, sources said.

The $360 million term loan was presented to lenders with talk of Libor plus 750 bps, with a 2% Libor floor, an original issue discount of 98 and 101 soft call protection for one year.

"Looks like pricing might be more generous, which would be [a] way to solve the [S&P ratings] problem. I hear the ratings issue was about recovery ratings for CLECs in S&P's methodology," one buyside source remarked.

U.S. TelePacific getting revolver

U.S. TelePacific's new deal also includes a $25 million revolving credit facility.

Proceeds will be used to refinance the company's existing credit facility and add some cash to the balance sheet.

Credit Suisse, Deutsche Bank and Bank of America are the lead banks on the deal.

U.S. TelePacific is a Los Angeles-based competitive local exchange carrier.

US Airways soars

Switching to trading happenings, US Airways' term loan jumped up on Thursday following the company's release of quarterly results, according to traders.

The term loan was quoted by one trader at 75 bid, 76 offered, up from 71½ bid, 72½ offered, and by a second trader at 75½ bid, 76½ offered, up from 74 bid, 75 offered.

For the fourth quarter of 2009, US Airways reported a net loss of $79 million, or $0.49 per share, compared to a net loss of $543 million, or $4.76 per share, for the same period in the previous year.

Excluding special items, the net loss for the quarter was $32 million, or $0.20 per share, compared to a net loss of $222 million, or $1.94 per share, in the 2008 fourth quarter.

US Airways revenues soften

US Airways' total operating revenues for the quarter were $2.626 billion, down 4.9% from $2.761 billion in the prior year.

And, total cash and investments on Dec. 31 was $2 billion, of which $500 million was restricted, versus $2 billion in total cash, of which $700 million was restricted on Dec. 31, 2008.

"Our fourth-quarter and full-year results reflect the extremely difficult environment the industry experienced in 2009. Given that environment, we are particularly pleased with the significant improvement in financial performance versus 2008," said Doug Parker, chairman and chief executive officer, in a news release.

"We enter 2010 with encouraging momentum and well positioned to take advantage of the improving economic environment," Parker added.

US Airways is a Tempe, Ariz.-based provider of air transportation for passengers and cargo.

Ford revs higher

Ford's old term loan B-1 was another piece of debt that saw positive momentum with earnings news during the trading session, according to traders.

The old term loan B-1 was quoted by one trader at 93¾ bid, 94 offered, up from 93 1/8 bid, 93 5/8 offered, and by a second trader at 93½ bid, 94 offered, up from 93 bid, 93½ offered.

For the fourth quarter, Ford generated net income of $868 million, or $0.25 per share, compared to a net loss of $5.978 billion, or $2.51 per share, in the fourth quarter of 2008.

On an after-tax basis, excluding special items, the company posted an operating profit of $1.6 billion in the fourth quarter, or $0.43 per share, compared with a loss of $3.3 billion, or $1.40 per share, a year ago.

Revenues for the quarter were $35.4 billion, up from $29 billion in the previous year's comparable period.

The company finished 2009 with $25.5 billion in automotive gross cash, compared with $23.8 billion at the end of the third quarter of 2009. Automotive operating-related cash flow was $3.1 billion positive during the fourth quarter.

Ford sees profitability in 2010

Ford also said on Thursday that it now expects to be profitable for full-year 2010 on a pre-tax basis, excluding special items, for North America, total automotive and total company, with positive automotive operating-related cash flow.

Although positive, full-year automotive operating-related cash flow is expected to be less than the run rate implied by the strong second half 2009 cash flow since recent performance was heavily influenced by seasonal factors and significant non-recurring factors.

In addition, the company's full-year 2011 guidance remains unchanged. Based on its planning assumptions, Ford thinks it is on track to be solidly profitable on a pre-tax basis excluding special items, with positive automotive operating-related cash flow.

Ford is a Dearborn, Mich.-based manufacturer and distributor of automobiles.

ResCare closes

In other news, ResCare Inc. closed on its new $275 million revolving credit facility (Ba1) due July 28, 2013, which replaced an existing $250 million revolver set to mature on Oct. 3, according to a news release.

The revolver was expected to have a pricing grid that could range from around Libor plus 275 bps to 400 bps based on leverage.

JPMorgan and Bank of America acted as the lead banks on the deal that will be used for working capital and general corporate purposes, including funding acquisitions.

There is a $50 million accordion feature.

ResCare is a Louisville, Ky.-based provider of home care to the elderly and persons with disabilities.

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