Gold Toe cuts pricing; Greenwood sets talk; United Subcontractors pulls deal; Regal down on amendment

By Sara Rosenberg

New York, Oct. 20 - Gold Toe Investment Corp. lowered pricing on its first- and second-lien credit facility and added a step down to the first-lien term loan on strong oversubscription.

Also in the primary, Greenwood Racing Inc. set price talk on its term loan as the deal was launched to investors with a bank meeting on Friday, and United Subcontractors Inc. decided to pull its deal due to market conditions.

Meanwhile, in secondary happenings, Regal Cinemas Corp. was softer as lender consents were due on a proposed amendment that would extend maturities, and names like Georgia-Pacific Corp. and Charter Communications Inc. softened on profit taking.

Gold Toe made some changes to its credit facility on Friday, including cutting first- and second-lien pricing and adding a leverage-based step down to the first-lien tranche, according to a market source.

With the modifications, pricing on the $225 million first-lien term loan (B1/B) was reverse flexed to Libor plus 275 basis points from original talk at launch of Libor plus 300 bps, and the spread now has the ability to step down to Libor plus 250 bps when total leverage is 4.5 times or lower, the source said.

In addition, pricing on the $50 million revolver (B1/B) was reverse flexed to Libor plus 275 bps from original talk at launch of Libor plus 300 bps, the source continued.

Lastly, pricing on the $105 million second-lien term loan (Caa1/CCC+) was reverse flexed to Libor plus 600 bps, down from original talk at launch of Libor plus 650 bps, the source added.

Allocations on the transaction are expected to go out during the week of Oct. 23.

Bear Stearns is the lead bank on the $380 million deal that will be used to help fund the leveraged buyout of Gold Toe by The Blackstone Group and simultaneous merger with Moretz Inc.

The LBO/merger transaction is valued at about $400 million.

Total leverage will be around six times on an 8.3 times valuation. Adjusted EBITDA is around $55 million, and interest coverage is around two times.

In connection with the deal, the outstanding debt and preferred stock of Gold Toe's wholly owned subsidiary, Gold Toe Corp., will be refinanced, including its 10 1/8% senior subordinated notes due 2008 and 12½% senior exchangeable preferred stock due 2010.

As a result of its investment, Blackstone will be the majority owner of the company, John Moretz, chief executive officer, will be the second-largest shareholder and an affiliate of Vestar Capital Partners, the current majority owner of Gold Toe, will retain a minority stake.

Gold Toe is a New York-based hosiery company. Moretz is a Newton, N.C.-based sockwear manufacturer and private labeler for the sporting goods market and retailers.

Greenwood price talk

Greenwood Racing came out with price talk of Libor plus 250 to 275 bps on its proposed $265 million first-lien senior secured term loan (B2/B+), as syndication on the transaction officially kicked off with a bank meeting during the Friday session, according to a market source.

The term loan has a $200 million accordion feature.

Starting in 2008, the loan will be subject to a 3.5 times leverage test, dropping down to 3.0 times by the end of 2008.

There also will be an EBITDA to interest coverage test of 2.5 times staring in 2008, the source said.

Bear Stearns is the lead bank on the deal that will be used to repay existing debt, fund renovation costs, purchase slot machines, furniture, fixtures and other equipment and provide initial liquidity.

Greenwood Racing is Bensalem, Pa., owner and operator of racetracks and wagering facilities.

United Subcontractors pulls loan

United Subcontractors opted to take its proposed $500 million credit facility out of the market as the company was unenthusiastic about the revised terms at which the deal might have gotten done, according to a market source.

When the transaction was first launched in September, it was sized at $550 million consisting of a $35 million revolver (B2/B) talked at Libor plus 275 bps, a $300 million first-lien term loan (B2/B) and $15 million synthetic letter-of-credit facility (B2/B) talked at Libor plus 275 to 300 bps, and a $200 million second-lien term loan (Caa1/CCC+) talked at Libor plus 750 to 800 bps.

Then the syndicate downsized the first-lien term loan to $275 million and the second-lien term loan to $175 million, increased pricing on the first-lien term loan and synthetic letter-of-credit facility to Libor plus 350 bps, increased pricing on the second-lien to Libor plus 900 bps, added call premiums of 102 in year one and 101 in year two and an original issue discount of 99 to the first-lien term loan and synthetic letter-of-credit facility, sweetened the second-lien call premiums to non-callable for two years, then at 104 in year three, 102 in year four and par thereafter, and added an original issue discount of 99 to the second-lien loan.

It was then said that call premiums on the first-lien term loan and synthetic letter-of-credit facility were sweetened to non-callable for two years, then 102 in year three and 101 in year four, while call premiums on the second-lien were sweetened to non-callable for two years, then at 107 in year three, 105 in year four and 103 in year five.

Furthermore during syndication the amortization on the first-lien term loan was increased to 5% per year, the cash flow sweep was beefed up to 100% and the acquisition basket was changed to zero.

Proceeds from the $500 million credit facility were going to be used to fund a dividend payment to Wind Point Partners and to refinance existing debt. With the term loan downsizings, the dividend payment was reduced by $50 million to $75 million.

Goldman Sachs was the lead bank on the deal.

United Subcontractors is a Salt Lake City-based installer of residential and commercial insulation systems and provider of related products and services.

Nusil adds step downs

Nusil Technology added a leverage-based pricing grid to both its $125 million term loan B and its $10 million revolver while leaving pricing on both oversubscribed tranches unchanged at Libor plus 275 bps, according to a market source.

Under the new grid, pricing on the revolver and the term loan can step down to Libor plus 250 bps when total leverage is less than 3.75 times and can step down even further to Libor plus 225 bps when total leverage is less than 3.00 times, the source said.

RBS Securities is the lead bank on the deal that will be used to refinance existing debt and fund a small dividend to existing shareholders.

Nusil is a Carpinteria, Calif., silicone compounds manufacturer.

Regal off with amendment

Switching to the secondary, Regal Cinemas' term loan B was off by about an eighth of a point as lender consents were due on an amendment that would extend maturities, according to a trader.

Under the proposed amendment, the term loan B maturity would be extended by three years and the revolver maturity would be extended by two years.

"The shorter the paper, the lower the risk. So essentially, when you push maturities out, you take on more risk," the trader said in explanation of why the term loan B bank debt was lower.

At close, the B loan was quoted at par bid, par ¼ offered, down from Thursday's levels of par 1/8 bid, par 3/8 offered, the trader added.

Regal is a Centennial, Colo.-based theaters circuit.

Georgia-Pacific, Charter weaken

In other trading news Georgia-Pacific's term loan B and Charter's term loan B were two examples of on-the-run names that softened up in Friday's session as investors took some profits, according to a trader.

"People are just taking advantage of the run ups that all these names had over the past few weeks," the trader said.

Georgia-Pacific's term loan B closed the day at par 5/8 bid, par 7/8 offered, down from previous levels of par ¾ bid, 101 offered.

And, Charter's term loan closed the day at par ¾ bid, 101 offered, down from previous levels of par 7/8 bid, 101 1/8 offered, the trader added.

Georgia-Pacific is an Atlanta-based manufacturer and marketer of tissue, packaging, paper, building products and related chemicals

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

Connacher closes

Connacher Oil and Gas Ltd. closed on its new $195 million credit facility (B1/BB-) consisting of a $180 million seven-year term loan B at Connacher Finance Corp. and a $15 million five-year revolver at Montana Refining Co., according to a company news release.

The term loan carries an interest rate of Libor plus 325 bps, and the revolver carries an interest rate of Libor plus 300 bps.

BNP Paribas acted as lead arranger, bookrunner and syndication agent on the deal.

Proceeds from the term loan are being used to discharge short-term debt of $51 million incurred in the acquisition of the Montana refining assets in March 2006 and fund construction of its first Steam Assisted Gravity Drainage oil sands project in Northern Alberta.

Connacher is a Calgary, Alta., oil and natural gas exploration and production company.

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