Energy, cable names take losses in overall weaker market; Jean Coutu, Intertape Polymer break

By Sara Rosenberg

New York, July 27 - It was a rough day for some in the secondary as the overall market was down with cable names and energy names especially notable. However, deals that broke for trading Tuesday, such as Jean Coutu Group Inc. and Intertape Polymer Group Inc., were none the worse, with both deals' term loans reaching that ever so popular new issue level of plus 101 during their first day of trading.

In the energy sector, Calpine Generating Co. LLC and Reliant Energy Inc. were spotlighted as the CalGen second-lien term loan was quoted lower by about three points at 86 bid, 87 offered and Reliant, which was previously trading north of par, was quoted lower by about a half a point to a point at 99½ bid, par offered, according to a trader.

"The market was down in general. High-yield bonds started coming and we followed them. In general it was really hard to get bids on stuff but it got a little better at the end of the day," the trader added.

CalGen is a wholly owned subsidiary of Calpine Corp., a San Jose, Calif., power company.

Reliant is a Houston electricity and energy services company.

In the cable sector, Charter Communications Inc.'s term loan A and term loan B were a prime example of market weakness, as each tranche headed lower by about a point on the day.

The term loan A was quoted at 97¼ bid, 98 offered by day's end, but it did go as low as 97 bid, 98 offered during market hours.

The term loan B was quoted at 98 3/8 bid, 99¼ offered by day's end but it got as low as 98¼ bid, 98¾ offered during market hours, a trader said.

"Charter bonds started coming back at the end of the day," the trader added in explanation of why the paper regained some of its losses prior to close.

On Monday a different trader had the term loan A quoted at 97 7/8 bid, 98 1/8 offered and the term loan B quoted at 98 7/8 bid, 99¼ offered.

The St. Louis communications company's paper had been under some pressure since last week on news of a term B auction and a negative equity report that was put out by UBS. On Thursday, there was an auction on the term loan B at which time about $8 million was sold off at around 99 to 991/4. On Wednesday, UBS put out an equity report cutting its rating on Charter's stock to "reduce" from "neutral."

But the losses were not limited to energy and cable alone. Centennial Communications Corp., a Wall, N.J., telecommunications company, saw its bank debt drop by about a quarter to a half a point with the paper quoted at par ¼ bid, 101 offered by the end of the day, the trader added.

Jean Coutu 101¼ bid

Jean Coutu's term loan B was quoted at 101¼ bid, 101½ offered pretty steadily throughout the day, although at one point it did manage to get as high as 101½ bid, 101¾ offered before dropping back down to pretty much breaking levels, according to a trader.

The $1.1 billion seven-year term loan B is priced with an interest rate of Libor plus 225 basis points. Originally, the tranche went out at Libor plus 275 basis points at launch and then pricing was said to have been reduced to Libor plus 250 basis points before ending up at 225 over Libor.

"I heard allocations were awful. Some guys only got $1 million, which is a surprise being that it was so huge," a market source said regarding the term loan B.

The credit facility (B1/BB) also contains a $350 million five-year revolver and a $250 million five-year term loan A, with both tranches priced at Libor plus 275 basis points.

Deutsche, National Bank of Canada and Merrill Lynch are the lead banks on the deal, with Deutsche on the left.

Proceeds from the credit facility, combined with proceeds from a bond offering, will be used to fund Jean Coutu's acquisition of the Eckerd drugstores for $2.375 billion from J.C. Penney Co. Inc.

Jean Coutu is a Longueuil, Quebec-based drugstore chain.

Intertape Polymer 101 bid

Intertape Polymer's term loan B was quoted at 101 bid, 101¼ offered by day's end, pretty much unchanged from where "it hit," a trader said.

The $200 million term loan is priced with an interest rate of Libor plus 225 basis points. Originally, the tranche was launched with a size of $175 million and pricing of Libor plus 275 basis points, but the size was later increased and pricing was later decreased.

The credit facility (Ba3/B+) also contains a $75 million revolver with an interest rate of Libor plus 275 basis points.

Citigroup is the lead bank on the deal.

Proceeds from the credit facility and bonds will be used to repay an existing credit facility, redeem all three series of existing senior secured notes and pay related make-whole premiums, accrued interest and transaction fees.

Intertape Polymer Group is a Bradenton, Fla., developer and manufacture of specialized polyolefin plastic and paper packaging products and complementary packaging systems.

PlayCore shifts sizes

PlayCore Inc., as expected, upsized its first-lien five-year term loan to $55 million from $50 million, upsized its six-year second-lien term loan to $55 million from $40 million and decreased its 61/2-year third-lien term loan to $20 million from $40 million, according to a market source.

Furthermore, pricing on the second-lien term loan was increased to Libor plus 950 basis points from Libor plus 900 basis points, although it's still "obviously [a] large improvement from a weighted average cost of capital," the source said. The tranche, which is being obtained at the operating company level, has a 2% Libor floor.

Pricing on the first-lien term loan, which is being obtained at the operating company level, remained at Libor plus 500 basis points and pricing on the third-lien term loan, which is being obtained at the holding company level, remained unchanged at 18%, split into 5% cash and 13% PIK.

Market speculation regarding this shuffling of some funds from the third-lien tranche into its first- and/or second-lien term loans has been circulating since early last week, with some saying that the changes are a result of oversubscription on the first- and second-lien tranches allowing the company to lower the cost of capital and others saying that the third lien was short on commitments so the syndicate needed to reshuffle some funds to get the deal done.

The credit facility also contains a $15 million five-year revolver with an interest rate of Libor plus 500 basis points at the operating company level.

Leverage multiples include 3.7x second-lien debt at the operating company, 1.7x first-lien debt at the operating company and 5.7x total debt at the holding company.

Credit Suisse First Boston is the sole lead arranger and bookrunner on the deal.

Proceeds will be used by the Chattanooga, Tenn., playground equipment manufacturer to refinance existing debt.

Rockwood decreases term loans

Rockwood Specialties Group Inc. decreased the size of its seven-year term loan B to $985 million from $1.05 billion and the size of its eight-year euro term loan C to $272 million from $300 million as the company opted to leave "some debt at [the] Dynamit [businesses] rather than refinancing it" as part of the acquisition, a market source said.

Allocations on Rockwood are expected to take place Wednesday.

The term loan B is priced with an interest rate of Libor plus 250 basis points with a stepdown to Libor plus 225 basis points if leverage falls below 2.25x. Initially, the tranche was priced at Libor plus 275 basis points but was reverse flexed last week, at which time the stepdown was added as well.

The term loan C is priced with an interest rate of Libor plus 300 basis points with no grid. Pricing on the tranche was unchanged since launch.

Rockwood's facility also contains a $250 million six-year revolver priced with an interest rate of Libor plus 250 basis points and a commitment fee of 50 basis points, and a $250 million six-year term loan A priced with an interest rate of Libor plus 250 basis points.

Credit Suisse First Boston, UBS and Goldman Sachs are the joint lead arrangers and joint bookrunners on the financing.

Proceeds from the now $1.757 billion credit facility (B1/B+), combined with proceeds from a bond offering and equity, will be used to help fund the acquisition of four chemical businesses of Germany-based Dynamit Nobel.

The equity for the transaction will be provided by Rockwood's internal resources, its existing majority shareholder Kohlberg Kravis Roberts & Co. LP and by CSFB Private Equity. The sponsors bid €2.25 billion for the four business units.

Closing of the transaction is planned for the third quarter of 2004 and is subject to approval by the supervisory board and annual general meeting of MG Technologies, parent company of Dynamit Nobel, as well as by the relevant antitrust authorities.

Rockwood is a Princeton, N.J., specialty chemicals and advanced materials company.

NUI consents due

Lender consent on NUI Corp.'s amendment that would result in the extension of the existing credit facilities of NUI and NUI Utilities to Nov. 21, 2005 and allow for a $95 million credit facility was due on Tuesday, according to a market source, with basically everybody signing up for the transaction.

Lenders receive a 25 basis points amendment fee and a 50 basis points extension fee in return for their consents.

The $95 million credit facility, which will provide the company with liquidity until the merger with AGL Resources Inc. is completed, consists of a $75 million senior secured credit facility due May 15, 2005 with an interest rate of Libor plus 475 basis points at NUI Utilities and a $20 million senior unsecured credit facility due Nov. 21, 2005 with an interest rate of Libor plus 600 basis points at NUI.

Credit Suisse First Boston is the lead bank on the deal.

Under the merger agreement AGL Resources, an investment-grade company, will acquire all of the outstanding shares of common stock of NUI for $13.70 per share in cash, representing a total equity value of about $220 million.

If the proposed new financing is not completed by Sept. 30, AGL Resources has the right to terminate the merger agreement.

NUI is a Bedminster, N.J., energy company. AGL Resources is an Atlanta-based energy services holding company.

Quest Cherokee closes

Quest Cherokee LLC closed on its new $155 million credit facility consisting of a $20 million five-year revolver with an interest rate of Libor plus 375 basis points, a $15 million five-year synthetic letter-of-credit facility with an interest rate of Libor plus 400 basis points and a $120 million six-year term loan with an interest rate of Libor plus 400 basis points.

Initially, the term loan was launched with pricing of Libor plus 425 basis points but was reverse flexed during syndication. Also, the synthetic letter-of-credit facility had initially gone out to lenders at Libor plus 375 basis points but was flexed higher during syndication.

The revolver is available for issuance of letters of credit, future working capital needs and general corporate purposes. The synthetic letter-of-credit facility provides credit support for Quest Cherokee's gas hedging program.

The facility replaces the company's approximately $104 million existing credit facilities. After the payment of fees and other obligations related to this transaction, Quest Cherokee will have about $9 million of cash remaining from the proceeds of the term loan and $15 million of availability under its new revolver, according to a company news release.

The company plans to use the increased liquidity to aggressively accelerate the drilling and completion of new gas wells on its existing leasehold acreage. The additional funds will also be used to expand its gas gathering pipeline system to provide increased gathering capabilities in operational areas where a significant number of these new wells are being drilled and completed, the release added.

UBS was the sole bookrunner and lead arranger on the deal that officially closed on Thursday.

Quest Cherokee is an independent energy company focused entirely on developing and expanding coalbed methane reserves in the Cherokee Basin in Kansas and Oklahoma. It is owned by Cherokee Energy Partners, a subsidiary of ArcLight Energy Partners, and Quest Resource Corp.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.