Boise Cascade sets price talk, sparks interest; Calpine second lien drops back as bonds dip

By Sara Rosenberg

New York, Sept. 29 - Boise Cascade LLC came out with opening pricing on its $2.905 billion credit facility that ranges from Libor plus 225 to 250 basis points depending on the tranche, and so far, the deal has sparked interest in a broad spectrum of potential investors. Meanwhile, Calpine Corp.'s bank debt was weaker in Wednesday's market in reaction to bond performance.

Boise Cascade LLC has not only caught the eye of typical institutional lenders and commercial banks but farm credit companies and insurance companies have shown interest as well, according to a market source.

However, no commitments came in prior to the Wednesday morning bank meeting since the book hadn't been posted until about 1 a.m. ET that day, the source said.

With the posting of the bank book, the syndicate revealed opening pricing levels on the deal, with the $350 million six-year revolver talked at Libor plus 225 basis points, the $1.33 billion seven-year term loan B talked at Libor plus 250 basis points and the $1.225 billion six-year term loan C talked at Libor plus 225 basis points. The revolver has an undrawn fee of 50 basis points.

The reason behind the 25 basis point variation in pricing between the term loan B and the term loan C has to do with a repayment provision.

"The C is different because if they sell the timberland assets, [proceeds] repay the C in its entirety before going toward the B. The C gets first dibs. They do have plans to sell the timberland assets," the source explained.

Boise Cascade LLC, a new company formed by Madison Dearborn Partners LLC that will be based in Boise, Idaho, is getting this new credit facility to acquire Boise Cascade Corp.'s paper, forest products and timberland assets for about $3.7 billion.

Under the timberland portion of the acquisition, Boise Cascade LLC will own or control approximately 2.3 million acres of timberland in the United States, 35,000 acres of eucalyptus plantations in Brazil, and a 16,000-acre cottonwood fiber farm near Wallula, Wash.

Also being acquired is Boise Building Solutions, a producer of plywood, lumber, particleboard and engineered wood products, and Boise Paper Solutions, a manufacturer of uncoated free sheet papers.

In addition to getting the new credit facility, the company is also planning on approaching the high-yield market with a $650 million bond offering to help fund this transaction as well. The acquisition is expected to close by mid-November.

JPMorgan and Lehman Brothers are joint lead arrangers on the loan, with JPMorgan listed on the left. Deutsche Bank and Goldman Sachs have signed on as agents.

Calpine down with bonds

Calpine's second-lien term loan was down anywhere from half a point to a point, depending on which trader was asked, with one source quoting the paper at 87 bid, 88 offered and another source quoting the paper at 87½ bid, 88 offered.

On Tuesday, one trader quoted the paper at 88 bid, 89 offered while another trader had the paper quoted at 88 bid, 88½ offered. During the Tuesday session, the bank debt was up by about a point on news that the bond deal cleared and on the bonds' trading performance.

"It really just followed the bonds," a trader said. "The bonds were up yesterday and down today [on market technicals]."

On Tuesday, the San Jose, Calif., power company priced $785 million of 9 5/8% first-priority senior secured notes due 2014, offered at 99.212%.

Calpine also priced $725 million of unsecured convertible notes due 2014, offered at 83.9%.

Proceeds from the bonds will be used to redeem or repurchase existing debt through open-market purchases. Proceeds from the convertibles will be used to redeem in full its High Tides I and High Tides II preferred securities, to repurchase about $100 million of its High Tides III preferred securities and to repurchase other existing debt through open- market purchases.

Celero upsizes

Celero Energy LP upsized its in-market seven-year second-lien term loan to $110 million from $100 million, according to a syndicate document, resulting in an overall larger credit facility of $510 million. Whether pricing on the term loan remained at Libor plus 525 basis points was unclear prior to press time.

The size of the four-year revolver was left unchanged at $400 million. Pricing on the revolver was also left unchanged at Libor plus 200 basis points.

Credit Suisse First Boston and Wachovia are the lead banks on the deal that will be used by the new company to acquire producing and non-producing oil and gas properties.

RailAmerica closes

RailAmerica Inc. closed on its $450 million credit facility (Ba3/BB), consisting of a $100 million six-year revolver priced at Libor plus 175 basis points and a $350 million seven-year term loan priced at Libor plus 200 basis points, according to a market source. UBS was the sole bookrunner on the deal.

Proceeds from the credit facility, combined with proceeds from the previously announced sale of RailAmerica's Australian railroad to Pacific National for $204 million, were used to tender for existing 12 7/8% senior subordinated notes due Aug. 15, 2010 and refinance the existing credit facilities.

Leverage for the Boca Raton, Fla., short line and regional rail service provider is in the mid 3x area and consists of all senior debt.

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