Valassis, Charter, Level 3 tweak deals, Freeport sets talk; Arizona Chemical, Town Sports break

By Sara Rosenberg

New York, Feb. 27 - Valassis Communications Inc. increased its funded term loan B after a downsizing of its bond deal, and the company firmed up pricing on the funded and delayed-draw term loan tranches at the tight end of revised guidance.

Also, Charter Communications Inc. modified its credit facility, resulting in an overall $300 million increase, and pricing on the first-lien term loan was reverse flexed, Level 3 Financing Inc. upsized its term loan and finalized pricing at the low end of talk, and Freeport-McMoRan Copper & Gold Inc. released official price talk on its newly launched deal.

As for the secondary market, Arizona Chemical and Town Sports International LLC both saw their credit facilities free for trading, and AMC Entertainment Inc. was weaker on repricing news.

Valassis decided on Tuesday to upsize its funded term loan B to $590 million from $540 million after downsizing its bond offering to $540 million from $590 million, according to a market source.

In addition, pricing on the funded term loan B, as well as on the $160 million delayed-draw term loan B, firmed up at Libor plus 175 basis points, the low end of recently revised guidance of Libor plus 175 to 200 bps, and 50 bps lower than original talk at launch of Libor plus 225 bps, the source said.

The ticking fee on the delayed-draw tranche remained at 100 bps for the 15-month delayed-draw period.

Valassis' now $870 million (up from $820 million) credit facility (Ba2/BB-) also includes a $120 million revolver that is priced at Libor plus 225 bps, in line with original guidance.

Bear Stearns and Bank of America are the lead banks on the deal, with Bear Stearns the left lead.

Proceeds from the funded bank debt and the bonds will be used to fund the acquisition of ADVO Inc. for $33 per share in cash, or about $1.2 billion, including about $125 million in existing ADVO long-term debt, which Valassis expects to refinance.

The delayed-draw debt will be used to refinance an existing note.

Valassis is a Livonia, Mich., marketing services company. ADVO is a Windsor, Conn., direct mail media company.

Charter upsizes, trims pricing

Charter Communications increased the size of and lowered pricing on its first-lien term loan (B/B+), changed the second-lien term loan at Charter Communications Operating to a third-lien term loan at CCO Holdings and reduced the size of the third-lien term loan, according to a market source.

The first-lien term loan is now sized at $6.5 billion, up from $6 billion, and pricing was reverse flexed to Libor plus 200 bps from original talk of Libor plus 225 bps, the source said.

Of the total first-lien term loan amount, $1.5 billion is new debt (up from $1 billion) and $5 billion is for refinancing.

Meanwhile, the now third-lien term loan was downsized to $350 million from $550 million, while pricing was left unchanged at Libor plus 250 bps, the source continued.

Both the first-lien term loan and the second-lien term loan carry 101 soft call protection for one year.

Charter's senior secured credit facility also includes a $1.5 billion revolver (B1/B+) at Libor plus 200 bps.

JPMorgan, Bank of America and Citigroup are the lead banks on the now $8.35 billion (up from $8.05 billion) senior secured credit facility.

Proceeds will be used to refinance the company's $6.85 billion senior secured credit facility, to redeem up to $550 million floating-rate notes due 2010 issued by CCO Holdings, LLC and up to $187 million 8 5/8% senior notes due 2009 issued by Charter Communications Holdings, LLC, and for general corporate purposes.

The $300 million of additional term loan funds being raised through the modifications will be used for extra liquidity, the source added.

Charter is a St. Louis-based broadband communications company.

Level 3 revises term loan

Level 3 increased the size of its term loan (B1) to $1.4 billion from $1 billion and firmed up pricing at Libor plus 225 bps - the tight end of original guidance of Libor plus 225 to 250 bps, according to a market source.

Merrill Lynch and Morgan Stanley are the lead banks on the deal, with Credit Suisse, Citigroup and Wachovia involved as co-leads.

Proceeds from the term loan, which is due in 2014, will be used to refinance the company's existing $730 million term loan due 2011, which is priced at Libor plus 300 bps, and to purchase money debt.

The additional $400 million of proceeds being raised through the upsizing will be used to refinance more of Level 3's holdco notes per the company's announced liability management transactions, the source added.

Level 3 is a Broomfield, Colo., communications and information services company.

Freeport price talk

In other primary news, Freeport-McMoRan held a bank meeting on Tuesday to launch its senior secured credit facility, and at that time, it was announced that the $7.5 billion seven-year term loan B (Ba3) is being talked at Libor plus 175 bps as opposed to the Libor plus 200 bps pricing that the company previously outlined in filings with the Securities and Exchange Commission, according to a market source.

The $11.5 billion deal also includes a $2.5 billion five-year term loan A (Ba3) talked at Libor plus 175 bps, a $500 million revolver (Baa3) and a $1 billion five-year revolver (Ba3) talked at Libor plus 175 bps with a 50 bps unused fee. Price talk on these tranches came out in line with where the company said they would be in the SEC filings.

JPMorgan and Merrill Lynch are the lead banks on the deal that will be used, along with $6 billion of senior unsecured notes, to refinance Freeport's existing credit facility and help fund the acquisition of Phelps Dodge Corp. for $25.9 billion in cash and stock.

After giving effect to the transaction, estimated pro forma total debt at Dec. 31 would be $17.6 billion, or about $15 billion net of cash.

For the 12-month period ended Sept. 30, the companies had combined revenues of $16.6 billion, EBITDA of $7 billion and operating cash flows of $5.5 billion. For 2006, the combined company's estimated EBITDA would be $7.9 billion and operating cash flows would be $6.5 billion.

The combined copper, gold and molybdenum mining, exploration and production company will retain the Freeport-McMoRan name and be based in Phoenix.

Titan shifts funds, cuts spreads

Titan Specialties Ltd. moved $5 million out of its second-lien term loan and into its first-lien term loan, reverse flexed pricing on all tranches and added a step down provision to the first-lien debt, according to a market source.

With the changes, the six-year first-lien term loan (B2/B-) is now sized at $135 million, up from $130 million, pricing was reduced to Libor plus 275 bps from original talk of Libor plus 300 bps and a step down to Libor plus 250 bps was added effective when the company's corporate rating is B2/B, the source said.

The second-lien term loan (Caa2/CCC) is now sized at $45 million, down from $50 million, and pricing was reduced to Libor plus 625 bps from original talk of Libor plus 650 bps, the source continued. This tranche carries call protection of 102 in year one and 101 in year two.

Lastly, pricing on the $25 million five-year revolver (B2/B-) - size unchanged - was also reverse flexed to Libor plus 275 bps from original talk of Libor plus 300 bps, with the addition of a step down to Libor plus 250 bps effective when the company's corporate rating is B2/B, the source added.

Credit Suisse is the lead bank on the $205 million deal that is expected to be allocated next week.

Proceeds will be used to help fund the acquisition by Carlyle/Riverstone Global Energy and Power Fund III, LP of a majority of the limited and general partnership interests in the company held by the existing owners, co-founders Bill Berry and Clarence Marak, and chief financial officer Jerry Wilson.

Carlyle/Riverstone will provide $77.5 million of equity toward the transaction, and $12.5 million of subordinated pay-in-kind notes are being provided by the seller.

Titan Specialties is a Pampa, Texas, designer, manufacturer and distributor of perforating gun systems, shaped charges, well-logging instrumentation and other ancillary drilling and completion products for the oilfield services industry.

Arizona Chemical frees to trade

Moving to the secondary market, Arizona Chemical's credit facility broke for trading, with the $150 million first-lien U.S. term loan B (B1/B) opening at par 7/8 bid, 101 1/8 offered, and then coming in slightly on the bid side to par ¾ bid, 101 1/8 offered, where it closed the day, according to a trader.

The company's $100 million first-lien euro-equivalent term loan B (B1/B) was also quoted at par 7/8 bid, 101 1/8 offered on the open before settling in at par ¾ bid, 101¼ offered, where it ended the day, the trader continued.

And, the $125 million second-lien term loan (Caa1/CCC+) opened at 101½ bid, 102 offered, before trading down to 101¼ bid, 101¾ offered, where it closed the day, the trader added.

The U.S. first-lien term loan B is priced at Libor plus 200 bps, the euro-equivalent term loan B is priced at Euribor plus 225 bps and the second-lien term loan is priced at Libor plus 550 bps with 101 call protection for one year.

During syndication, the U.S. first-lien term loan B was upsized from $140 million and pricing was reduced from original talk of Libor plus 250 bps, pricing on the euro first-lien term loan B was lowered from original talk of Euribor plus 250 bps, and the second-lien term loan was downsized from $136 million, pricing was reverse flexed from original talk of Libor plus 600 bps and call protection was changed from 102 in year one and 101 in year two.

Arizona Chemical's $435 million credit facility also includes a $60 million revolver (B1/B) priced at Libor plus 225 bps. This tranche was upsized from $50 million and pricing was cut from original talk of Libor plus 250 bps during syndication.

Goldman Sachs is the lead bank on the deal that will be used to help fund Rhone Capital III LP's buyout of the company from International Paper for about $485 million.

As part of the transaction, International Paper will acquire a minority interest of about 10% in the acquisition vehicle to be formed by Rhone Capital.

Arizona Chemical is a Jacksonville, Fla., supplier of pine chemicals to the adhesives, inks and coatings and oleochemicals markets.

Town Sports trades atop par

Also freeing for trading was Town Sports' credit facility, with its $185 million term loan B quoted at par ¼ bid, par ¾ offered, according to a trader.

The term loan B is priced at Libor plus 175 bps. During syndication, pricing was first lowered from original talk of Libor plus 225 bps to Libor plus 200 bps with a step down to Libor plus 175 bps when senior secured leverage is 1.5 times, and then lowered again to just Libor plus 175 bps.

Town Sports' $260 million senior credit facility (Ba2/B+) also includes a $75 million revolver that is priced at Libor plus 225 bps, in line with original talk.

Deutsche Bank acted as the lead bank on the facility that was used to fund a tender offer for the company's $169.9 million of 9 5/8% senior notes due 2011.

Town Sports is a New York-based owner and operator of fitness clubs.

AMC softens with repricing

AMC Entertainment's term loan came in a little bit in trading after the company launched a repricing of the debt that would take the spread down to Libor plus 175 bps from Libor plus 200 bps, according to a trader.

The term loan ended the day at par 7/8 bid, 101 1/8 offered, down about an eighth of a point from prior levels, the trader said.

In addition to the term loan repricing, the company is looking to reduce the commitment fee on its revolver to 25 bps from 37.5 bps. Currently, the commitment fee is set at 25 bps based on the grid, so essentially this amendment would take the ability for it to be 37.5 bps out of the credit agreement.

Citigroup is the left lead bank on the Kansas City, Mo., theatrical exhibition company's deal.

Autos down with market

Auto names, such as General Motors Corp., Ford Motor Co. and Visteon Corp., were lower on Tuesday by about 3/8 of a point across the board as the market in general felt softer, affected by the big drop in the Shanghai Composite, according to a trader.

General Motors, a Detroit-based automaker, saw its term loan close the day at par ¾ bid, 101 offered, the trader said.

Ford, a Dearborn, Mich.-based automaker, saw its term loan close the day at par 7/8 bid, 101 1/8 offered, the trader continued.

And, Visteon, a Van Buren Township, Mich., automotive parts supplier, saw its term loan close the day at 101 bid, 101½ offered.

"It's just because everything is down. News coming out of China is driving the global markets weaker," the trader added in explanation of the autos' performances.

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