Nortek, Cinram break for trading with both deals' institutional paper quoted over par

By Sara Rosenberg

New York, Aug. 24 - Nortek Holdings Inc.'s $800 million credit facility (B1/B+) allocated and broke for trading late in the day, with the institutional term loan quoted at plus par levels and trading around pretty well. Also hitting the secondary at plus par levels on Tuesday was Cinram International Inc.'s term loan D.

Nortek's $700 million seven-year term loan was quoted at par ½ bid, 101 on the break, soon after levels tightened up as the bid moved higher to par 5/8 and the offer side moved a touch lower to par ¾ and then levels shifted again this time to par ¾ bid, par 7/8 offered, according to a trader.

"A lot of guys are not around but it's definitely trading. Everybody was okay with allocations. Lots of people scaled back on the [reverse flex]. It's trading well so guys seem to be okay with the spread," the trader said.

The term loan is priced with an interest rate of Libor plus 250 basis points with a step down in pricing to Libor plus 225 basis points if leverage falls below 4.5x. Originally, the tranche was talked at Libor plus 275 basis points but it was reverse flexed and the step down was added on oversubscription.

Nortek's credit facility also contains a $100 million six-year revolver with an interest rate of Libor plus 225 basis points and a 50 basis point commitment fee. This tranche was also reverse flexed during syndication, moving down from initial price talk of Libor plus 250 basis points.

UBS and Credit Suisse First Boston are the lead banks on the, with UBS listed on the left.

Proceeds, combined with proceeds from an already priced bond offering, will be used to help fund Thomas H. Lee Partners', in partnership with management, approximately $1.75 billion acquisition of Nortek.

Both the credit facility and the bonds are expected to close on Aug. 27.

Nortek, a Providence, R.I., designer, manufacturer and marketer of residential and commercial building products, is owned by some members of management and Kelso and Co. LP.

Cinram par ¼ bid

Cinram's $668 million term loan D was quoted at par ¼ bid, according to a market source. The tranche is priced with an interest rate of Libor plus 300 basis points and was obtained to combine the company's existing term loan B and term loan C into one term loan with a lower rate.

Citigroup was the lead bank on the deal.

Cinram is a Toronto, Ont., provider of pre-recorded multimedia products and logistic services.

Calpine higher

Calpine Corp.'s second-lien bank debt moved up by about half a point to a point on Tuesday to be quoted at 83½ bid, 84½ offered by one trader and 83¾ bid, 84¾ offered by a second trader.

The first trader explained that the strengthening is probably related to the company's bonds moving up by about 1¼ point since the end of last week. While, the second trader simply said, "the market in general was better bid today."

On Friday afternoon, the San Jose, Calif., power company announced that it has entered into two agreements to sell its Rocky Mountain natural gas reserves in the Colorado Piceance Basin and New Mexico San Juan Basin for about $223 million. And, with the Canadian gas reserves sale that was also recently announced, the company will generate about $850 million in asset sale proceeds.

Proceeds from both of these sales will be used to repay the amount outstanding under Calpine's existing $500 million first-lien debt. Although, the paydown is good news, investors last week were upset over the company's plans to issue up to approximately $700 million of new first-lien debt after the repayment is completed and therefore, levels had been pushed down to the 82½ bid, 83½ offered before slowly climbing their way back over the course of the last couple of days.

Telecoms active

A number of telecom names were active primarily in the morning hours on Tuesday including Centennial Communications Corp. (previously known as Centennial Cellular), Dobson Communications Corp. and Western Wireless Corp.

Wall, N.J.-based Centennial Cellular was quoted at par bid, par 3/8 offered, up a quarter of a point on the day. Okalahoma City-based Dobson was quoted at 99½ bid, par offered, up about an eighth on the day. And, Bellevue, Wash.-based Western Wireless was quoted at 101 3/8 bid, 101 5/8 offered, unchanged on the day, according to a trader.

"The only news I've seen is Western Wireless' stock offering but that will be used for working capital not debt paydown so I don't know why telecoms are moving around," the trader added.

On Tuesday, Western Wireless announced plans to sell class A common stock that would generate about $200 million in proceeds. These proceeds will be used for general corporate purposes, to fund working capital requirements, for making capital expenditures and for potential acquisitions, according to a company news release.

AM General changes rumored

Market speculation is that AM General will increase pricing on its first- and second-lien term loans, as well as add an original issue discount and call protection, according to sources.

The rumor, according to sources, is that the $400 million seven-year first-lien term loan will be flexed up to Libor plus 450 basis points from Libor plus 300 basis points and the $165 million second-lien term loan C will be flexed up to the mid-to-high 600 basis points context from Libor plus 525 basis points. It is also rumored that both tranches will be offered at 99 and will carry call protection of 105 in year one, 103 in year two and 101 in year three, sources said.

And, with these modifications being talked about, some potential investors have said that they would commit at the contemplated levels, one source revealed.

However, that being said, no official changes have been made to the deal as of yet, the source added.

The $615 million credit facility also contains a $50 million five-year revolver with an interest rate of Libor plus 300 basis points.

Citigroup is the sole lead bank on the deal.

Currently, AM General is owned by Renco Group Inc., but a new holding company is being formed through a contribution partnership with MacAndrews & Forbes and Renco. Under the partnership, MacAndrews would have a majority stake of the company and Renco would have a minority stake. A portion of the proceeds from this credit facility will go toward the new holding company and a portion will go toward debt repayment.

AM General is a South Bend, Ind., military and special purpose vehicles company.

Cox likely September business

Cox Enterprises Inc.'s $10 billion senior unsecured credit facility is expected to launch sometime in September, according to a market source. Prior to now, approximate timing was unavailable.

Citigroup and Lehman Brothers are the joint lead arrangers and joint bookrunners on the deal, with left lead still to be determined.

The two banks each agreed to provide 50% of the $10 billion commitment amount.

Cox Enterprises and Cox Communications Inc. will be borrowers under this commitment in amounts and with revolving credit, term loan tranches and maturities to be determined.

Proceeds will be used to help fund Cox Enterprises' proposed acquisition of the outstanding publicly held minority interest in Cox Communications in a transaction valued at about $7.9 billion. The facility would replace Cox Enterprises' existing $1.1 billion revolver and Cox Communications' existing $1.25 billion revolver, fund the tender offer for Cox Communications' class A common shares, and provide for working capital.

Cox Enterprises is an Atlanta media company. Cox Communications is an Atlanta cable company.

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