AutoNation, dj Ortho tweak deals; MEG breaks; Charter softer on refi, GM bid up on GMAC deal

By Sara Rosenberg

New York, April 3 - In primary happenings Monday, AutoNation Inc. increased the size of its term loan tranche while downsizing the size of its proposed bond offering, and dj Orthopedics Inc. downsized its term loan while lowering pricing.

As for the secondary, MEG Energy Corp. freed for trading, Charter Communications Inc.'s bank debt headed closer to par as news of a refinancing hit the market, General Motors Corp.'s revolver bid rose as a GMAC sale deal was finally announced and R.H. Donnelley Corp.'s bids weakened with repricing expectations.

AutoNation has decided to upsize its in-market term loan to $600 million from an original size of $300 million due to the amount of lender commitments received for the deal, according to a company news release.

On the flip side, the company downsized its senior unsecured fixed- and floating-rate notes offering to $600 million from an original size of $800 million.

The term loan is talked at Libor plus 125 basis points.

AutoNation is also in-market with a $600 million revolver that is talked at Libor plus 100 basis points.

JPMorgan is the lead bank on the $1.2 billion credit facility (Ba2/NA/BB+).

Proceeds from the term loan, the bonds, approximately $125 million of revolver borrowings and about $200 million of cash on hand, will be used to finance the purchase of 50 million shares of the company's common stock at a price per share of $23 pursuant to a common stock tender offer and up to $323.5 million of its 9% senior notes due 2008 pursuant to a debt tender offer and consent solicitation.

The tender offers are scheduled to expire at 10 a.m. ET on April 12.

AutoNation is a Fort Lauderdale, Fla., automotive retailer.

dj Orthopedics downsizes, cuts spread

dj Orthopedics made some changes to its credit facility on Monday as well, including reducing both the size and pricing on its term loan tranche, according to a market source.

The seven-year term loan is now sized at $350 million, down from $360 million, and pricing has been reverse flexed to Libor plus 150 basis points from original price talk at launch of Libor plus 175 basis points, the source said.

The downsizing of the term loan was attributed to the company generating strong cash flow, the source added.

dj Orthopedics' $410 million credit facility (Ba3/BB-) also contains a $50 million revolver.

Wachovia is the lead bank on the deal that will be used to fund the approximately $290 million cash purchase price for Aircast Inc. from Tailwind Capital and to repay dj Orthopedics' existing bank debt.

The revolver is expected to be undrawn at closing.

Leverage at closing will be just under 4x trailing last-12-month EBITDA, but the company plans on rapidly repaying the debt using excess cash flow.

dj Orthopedics is a Vista, Calif., medical device company specializing in rehabilitation and regeneration products for the non-operative orthopedic and spine markets. Aircast is a Summit, N.J., designer and manufacturer of orthopedic devices, including ankle bracing products and vascular systems.

Pine Prairie sets talk

Price talk on Pine Prairie Energy Center LLC's $320 million credit facility (B+) has surfaced, with the $270 million term loan B due December 2013 being marketed to investors at Libor plus 275 basis points and the $50 million five-year revolver being marketed to investors at Libor plus 250 basis points, according to a market source.

SunTrust is the lead bank on the deal.

Proceeds will be used to fund the construction of the new salt cavern natural gas storage project in Evangeline Parish, La.

Pine Prairie is a joint venture between Plains All American Pipeline LP and Vulcan Capital.

MEG frees to trade

Switching to the secondary, MEG Energy's credit facility broke for trading, with the $350 million funded seven-year term loan B trading in the 101 area, the $350 million delayed-draw term loan B trading in the par area, and the strip of delayed-draw and funded term loan B quoted at par 3/8 bid, par ¾ offered, according to various sources.

The funded and the delayed-draw term loan B are priced with an interest rate of Libor plus 200 basis points. During syndication, pricing on the tranches came down from original price talk at launch of Libor plus 225 basis points.

The delayed-draw term loan B, which is available for two years with a seven-year final maturity, carries a ticking fee of 100 basis points for the first year, 125 basis points for the six months thereafter and 150 basis points for the following six months. During syndication, this ticking fee was raised from 75 basis points for the first year, 100 basis points for the six months thereafter and 125 basis points for the following six months.

MEG Energy's $750 million credit facility (Ba3/BB) also contains a $50 million three-year revolver with an initial interest rate of Libor plus 225 basis points and a 50 basis point undrawn fee. Pricing on this tranche was left unchanged throughout syndication.

Lehman and Credit Suisse are the lead banks on the credit facility, with Lehman the left lead.

Proceeds will be used to develop a steam assisted gravity drainage (SAGD) project. SAGD involves drilling pairs of horizontal wells. The upper wells are the steam injection wells and the lower wells are equipped as the bitumen production wells. Steam is continuously injected through the upper well bores to create steam chambers, which heat the formation. The heated bitumen, under the influence of gravity, then drains to the lower horizontal wells and is produced to the surface.

MEG Energy is an oil and gas company involved in oil sands development in northeast Alberta, Canada.

Charter lower on refi plans

Charter Communications' term loan B headed down toward the lower-par context as the company announced plans to approach the market with a refinancing transaction that is hoped to close in a couple of weeks, according to a trader.

The term loan B closed the day quoted at par 1/8 bid, par 5/8 offered, down from previous levels of par ¾ bid, 101¼ offered, the trader said.

The St. Louis-based broadband communications company is scheduled to hold a bank meeting this Friday to launch its proposed $6.8 billion credit facility, consisting of a $300 million revolver/term tranche, a $5 billion term loan due 2013 talked at Libor plus 275 basis points and an amended $1.5 billion revolver.

J.P. Morgan Securities Inc., Banc of America Securities LLC and Citigroup Global Markets Inc. are the lead banks on the deal.

GM bid stronger on GMAC news

GM's revolver saw positive momentum on the bid side as the company revealed that after months of trying, it has finally reached a deal to sell its 51% stake in General Motors Acceptance Corp., according to traders.

The Detroit-based automotive company's revolver was quoted at 96 bid, 97 offered, up a point on the bid side from Friday's levels of 95 bid, 97 offered, one trader said. However, according to a second trader, levels actually ended the day at 95½ bid, 96¼ offered, still up on the bid side when compared to prior quotes, but also lower on the offer side, creating a tighter market in the bank debt.

GM has agreed to sell its stake in its financing arm, GMAC, to a consortium of investors led by Cerberus Capital Management LP, and including Citigroup Inc. and Aozora Bank Ltd., for about $14 billion in cash that will be paid out over three years, with an estimated $10 billion paid by closing.

At closing, the consortium will pay about $7.4 billion for GMAC. GM will also receive an estimated $2.7 billion cash distribution from GMAC, while also retaining about $20 billion of GMAC automotive lease and retail assets and associated funding with an estimated net book value of $4 billion that will monetize over three years.

The transaction is subject to a number of U.S. and international regulatory approvals and GMAC having a minimum rating of BB. The companies expect to close the transaction in the fourth quarter.

"This [GMAC sale] provides GM with $10 to $14 billion of liquidity. So they will have ample liquidity for the near term. They may not need to do a refi right now. It's not as imminent. I haven't heard anything about a refi today. GMAC was the focus," the first trader said.

However, once again, the second trader disagreed. "They need to have a facility they can draw on and it's still questionable as to whether they can draw on this. Refi [buzz] is still very much out there."

Last week, GM's revolver had rallied from the mid-80 context to the mid-90 context on rumors that a refinancing of the $5.6 billion unsecured line of credit was soon to come based on remarks in the company's recent 10-K filing.

GM had said in the filing that it is exploring the possibility of amending or replacing its existing revolver with new terms since it is unsure as to whether lenders would allow any borrowings under the facility due to the recent restatement of prior financial statements.

Donnelley off with repricing

R.H. Donnelley's bank debt saw a drop in bid-side levels, creating a widening in quotes, as investors reacted to the possibility of having lower spreads on the paper, according to a trader.

The company's term loan A-2 closed the session at par 1/8 bid, par 5/8 offered, and the company's term loan D closed the session at par 3/8 bid, par 7/8 offered, with both tranches weaker by about a quarter of a point on the bid side only, the trader said.

This softness came on the heels of the company's Friday afternoon announcement that it will seek amendments to reprice portions of the credit facilities of three of its subsidiaries: R.H. Donnelley Inc., Dex Media East LLC and Dex Media West LLC.

The Cary, N.C.-based directory publisher estimated the reduction would result in about $8 million of interest savings annually.

Glatfelter closes

P.H. Glatfelter Co. closed on its new $300 million five-year credit facility, consisting of a $200 million revolver and a $100 million term loan, with both tranches priced at Libor plus 87.5 basis points.

The revolver carries a 17.5 basis point commitment fee.

Credit Suisse and PNC Capital Markets LLC acted as joint lead arrangers and joint bookrunners on the deal.

Proceeds were used to help fund the acquisition of NewPage Corp.' carbonless business operations for about $80 million in cash, to refinance the company's existing revolver and for general corporate purposes.

P.H. Glatfelter is a York, Pa., manufacturer of specialty papers and engineered products.

CDX closes

CDX Gas LLC closed on its new $550 million credit facility consisting of a $150 million conforming borrowing base five-year revolver at Libor plus 150 to 225 basis points based on utilization and a $400 million seven-year second-lien term loan at Libor plus 525 basis points with soft call protection of 102 in year one and 101 in year two.

The company also completed $125 million in eight-year pay-in-kind preferred equity at Libor plus 700 basis points, with soft call protection of 102 in year one and 101 in year two.

During syndication, the revolver was downsized from $250 million, pricing on the second-lien term loan was reverse flexed from original price talk at launch of Libor plus 575 basis points, and the PIK equity was upsized from $50 million with a pricing reduction from Libor plus 750 basis points.

Credit Suisse was the bookrunner on the deal.

Proceeds from the transactions were used to help fund TCW Group Inc.'s acquisition of the Dallas-based independent energy company.

The sponsors contributed $450 million of equity (reduced from $500 million in connection with the preferred upsizing) for the transaction and will provide more than $100 million of cash for its drilling program.

Nortek closes

Nortek Inc. closed on its $100 million revolving credit facility add-on, bringing the total revolver size to $200 million, according to a company news release.

The revolver carries an interest rate ranging from Libor plus 125 to 225 basis points, based on leverage.

UBS acted as the lead bank on the deal.

Nortek is a Providence, R.I., manufacturer and distributor of building products for residential, light commercial and commercial applications.

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