GenTek, Language Line break; Level 3, Ashland dip; Busch launches; Universal Orlando overfills

By Sara Rosenberg

New York, Oct. 28 - GenTek Inc. and Language Line Holdings Inc. both freed up for trading during Wednesday's session, with levels on the companies term loans seen above the original issue discount at which they were sold while in syndication.

Also in the secondary market, Level 3 Communications Inc. and Ashland Inc. both saw their term loan Bs move lower after quarterly results were announced.

In more loan happenings, Busch Entertainment Corp.'s credit facility was presented to a select audience and it's possible that the company may forgo a general syndication launch if this round goes as well as expected.

Furthermore, Universal Orlando's credit facility is oversubscribed and Michaels Stores Inc.'s amend and extend proposal has been receiving some interest from lenders since a revision to the pricing of the extended term loan B debt was recently announced.

GenTek frees to trade

GenTek's credit facility hit the secondary market during trading hours, with the term loan B quoted at par 3/8 bid, par 7/8 offered on the break and then moving up to par ½ bid, 101 offered, according to a trader.

The $325 million five-year term loan B is priced at Libor plus 475 basis points with a 2.25% Libor floor and was sold to investors at an original issue discount of 98.

During syndication, the term loan B was upsized from $300 million, the Libor floor was reduced from 2.5% and the discount firmed at the tight end of initial talk of 97 to 98.

GenTek's $355 million senior secured credit facility also includes a $30 million four-year revolver priced at Libor plus 450 bps with a 75 bps undrawn fee.

As a result of the upsizing, ratings on the credit facility were revised to B1/B+ from Ba3/BB- and corporate ratings were changed to B1/B from B1/B+.

GenTek led by Goldman

Goldman Sachs is the lead arranger and bookrunner on the GenTek credit facility, KeyBank is the syndication agent and GE Capital is the administrative agent.

Proceeds from credit facility will be used to help fund American Securities LLC's acquisition of the company for $38 per share.

The extra $25 million raised through the term loan B upsizing is being used to reduce the sponsor equity contribution.

Financial covenants under the facility include a minimum interest coverage and a maximum total leverage ratio.

GenTek is a Parsippany, N.J.-based provider of specialty inorganic chemical products and valve actuation systems and components for automotive and heavy duty/commercial engines.

Language Line breaks

Language Line's credit facility also freed up for trading, with the term loan quoted at par bid, 101 offered, according to a trader.

The $525 million six-year term loan is priced at Libor plus 350 bps with a 2% Libor floor and was sold at an original issue discount of 99.

The company's $575 million credit facility (Ba3/B+) also includes a $50 million five-year revolver priced at Libor plus 350 bps with a 2% Libor floor.

During syndication, price talk firmed at the high end of the initial Libor plus 325 bps to 350 bps talk and a 50% excess cash flow sweep was added to the structure.

Bank of America, Credit Suisse and Morgan Stanley are the lead banks on the deal that will be used to refinance existing debt.

Language Line is a Monterey, Calif.-based provider of language-based services.

Level 3 slides with numbers

Level 3's term loan B lost some ground on Wednesday following the release of earnings that showed a larger net loss, a decline in revenue and a drop in adjusted EBITDA, according to traders.

The term loan B was quoted by one trader at 87 1/8 bid, 87 7/8 offered, compared to 87 3/8 bid, 88 offered on Tuesday, and by a second trader at 86½ bid, 87¼ offered, down from 87¼ bid, 88¼ offered.

For the third quarter, Level 3 reported a loss of $170 million, or $0.10 per share, compared to a net loss of $129 million, or $0.08 per share, last year. The net loss for the second quarter of 2009 was $134 million, or $0.08 per share.

Consolidated revenue for the quarter was $916 million, compared to consolidated revenue of $1.07 billion for the third quarter of 2008 and $942 million for the second quarter of 2009.

Consolidated adjusted EBITDA was $213 million in the third quarter, compared to $255 million in the prior year, and $229 million in the second quarter of 2009.

Level 3 generates cash

Also on Wednesday, Level 3 revealed that it generated $9 million of consolidated free cash flow during the third quarter versus negative $4 million in the comparable period in 2008. In the second quarter of this year, the company generated $20 million of free cash flow.

Unlevered cash flow in the quarter improved to $152 million, compared to $124 million for the third quarter of 2008 and $146 million in the second quarter of 2009.

As of Sept. 30, the company had cash and cash equivalents of about $532 million, or $806 million pro forma for the $275 million of 7% convertible senior notes due 2015.

In addition, Level 3 reiterated its guidance for the full year, including estimates for consolidated adjusted EBITDA of $900 million to $950 million and being about free cash flow neutral.

Level 3 is a Broomfield, Colo.-based provider of fiber-based communications services.

Ashland softens

Ashland was another company to come out with numbers, and in reaction to the news, the company's term loan B saw some weakening, according to traders.

The term loan B was quoted by one trader 101¾ bid, 102½ offered, down from 102¼ bid, 102¾ offered, and by a second trader at 101¾ bid, 102½ offered, versus 102 bid, 102½ offered.

For the fiscal fourth quarter of 2009 ended Sept. 30, Ashland had net income of $93 million, or $1.22 per share, compared to a net loss of $10 million, or $0.15 per share, last year.

Sales and operating revenues for the quarter were $2.113 billion, compared to $2.216 billion in the 2008 quarter.

Adjusted EBITDA for the quarter was $224 million, a 37% increase from $163 million.

Cash and cash equivalents at Sept. 30 were $352 million versus $886 million at Sept. 30, 2008 and free cash flow was $305 million.

Ashland reduces debt

Ashland went on to say in its earnings release that it reduced debt by 19% since June 30, to $1.6 billion.

"We continued to produce substantial free cash flow, generating $305 million during the quarter. Our strong cash generation was predominantly due to earnings from operations and significant working capital reductions. We have reached our short-term goal of $1.6 billion of gross debt as a result," said James J. O'Brien, chairman and chief executive officer, in the release.

"We will continue our emphasis on generating free cash flow. For the past year, we have used our free cash flow to significantly reduce debt. Now that we have reached our targeted debt level, we will use our excess cash flow to increase liquidity, providing increased financial flexibility," O'Brien added.

Ashland is a Covington, Ky.-based provider of specialty chemical products, services and solutions.

Busch launches to select group

Over in the primary, Busch Entertainment held a meeting on Wednesday to present its $1.125 billion credit facility to a limited group of investors and that may be all that is needed to get the deal done, according to a market source.

"I think they feel confident that [this] group will fully subscribe the deal. Who knows if there will be a general meeting," the source said.

The facility consists of a $1 billion term loan talked at Libor plus 350 bps with a 2.25% Libor floor and an original issue discount of 981/2, and a $125 million revolver.

Originally, the term loan was expected to be sized at $950 million and the revolver was expected at $100 million, but they were both increased prior to the launch.

Busch lead banks

Busch's credit facility is being led by Bank of America Merrill Lynch, Barclays, Deutsche Bank, Goldman Sachs and Mizuho Corporate Bank.

Proceeds will be used to help fund the buyout of the company by the Blackstone Group from Anheuser-Busch InBev for $2.3 billion in cash plus the right to participate in Blackstone's return on its initial investment capped at $400 million.

Other funds for the acquisition will come from equity and $450 million of mezzanine debt provided by Goldman Sachs Mezzanine Partners and funds managed by GSO Capital Partners LP.

As a result of the credit facility upsizing, the equity for the deal was reduced to $975 million.

Closing of the transaction is subject to customary conditions, including regulatory clearance.

Busch Entertainment is an entertainment park operator.

Universal Orlando well received

Universal Orlando's $975 million credit facility (Ba2/B+) is oversubscribed, according to a market source.

The facility is comprised of a $900 million five-year term loan B talked at Libor plus 425 bps with a 2.5% Libor floor and an original issue discount of 98, and a $75 million four-year revolver talked at Libor plus 425 bps with a 2.5% Libor floor.

JPMorgan and Bank of America are the joint lead arrangers and bookrunners, and Barclays, Deutsche Bank, Goldman Sachs and Morgan Stanley are bookrunners as well.

Proceeds from the facility will be used to help fund the redemption of the company's 11¾% senior notes due in 2010, 8 3/8% senior notes due in 2010 and floating-rate senior notes due in 2010.

Other funds for the redemptions will come from a $400 million of senior unsecured notes and $225 million of senior subordinated notes offering.

Universal Orlando is an Orlando, Fla.-based owner and operator of theme parks.

Michaels coming along

In other news, Michaels Stores' amendment and extension of some term loan B borrowings has seen signatures coming in from lenders since a pricing change was announced, according to a market source.

The source said on Wednesday afternoon that it was too early to say definitively whether the amendment was going to pass, but he doesn't expect to see any further changes to the proposal.

On Tuesday, pricing on the proposed extended $1 billion term loan B (B3) was raised to Libor plus 450 bps from original talk of Libor plus 375 bps. Current pricing on the term loan B is Libor plus 225 bps.

Michaels maturity details

Michaels' proposed extended term loan B would mature on July 2016 as opposed to on Oct. 31, 2013. However, if the company does not meet a senior secured leverage test of 3.25 times, the extended term loan B will mature 91 days prior to the maturity of the company's senior notes that are due on Nov. 1, 2014.

As part of the amendment, the extended term loan B will have 25 bps of most-favored-nation protection, and lenders are being offered a 5 bps amendment fee.

Consents were due on Wednesday at 5 p.m. ET. This deadline was moved from noon p.m. ET on Tuesday in connection with the pricing bump.

Deutsche Bank is the lead bank on the amendment for the Irving, Texas-based specialty retailer of arts, crafts, framing, floral, wall décor and seasonal merchandise for the hobbyist and do-it-yourself home decorator.

TNS going well

TNS Inc.'s $400 million credit facility "is progressing nicely with a good mix of existing and new accounts," a market source told Prospect News on Wednesday.

"Early indications are that investors view the integration risk of the April Verisign acquisition as behind them and view favorably the modest leverage profile of just over 2.3 times," the source said.

The facility consists of a $75 million five-year revolver and a $325 million six-year term loan B, with both tranches talked at Libor plus 400 bps with a 2% Libor floor.

Pricing on the term loan B will be able to step down to Libor plus 350 bps if corporate ratings are upgraded to 4-B status and leverage is below 1.5 times.

Original issue discount on the term loan B is talked at 981/2.

TNS refinancing loan

Proceeds from TNS' credit facility will be used to refinance an existing senior credit facility, comprised a $15 million undrawn revolver and $363.5 million in term loan debt.

Included in the existing term loan debt is a $230 million incremental term loan that the company obtained a few months ago at Libor plus 600 bps with a 3.5% Libor floor and 101 soft call protection for one year. Investors were offered the loan at an original issue discount of 90.

"It is clear from commitments to date that investors have a lot more cash than in April," the source added.

SunTrust is the lead bank on the deal and has committed to provide up to $40 million of the new revolver and $15 million of the new term loan.

The credit facility is being done on a best-efforts basis.

TNS is a Reston, Va.-based provider of business-critical, cost-effective data communications services for transaction-oriented applications.

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