CalGen first lien loan strengthens, second lien loan weakens on first day of trading

By Sara Rosenberg

New York, March 15 - Calpine Generating Co. LLC's (CalGen) $2.405 billion refinancing broke for trading on Monday with the first lien term loan/note tranche hitting plus par levels and the second lien term loan/note tranche moving down from its original offer price.

The $835 million five-year first lien term loan/note, which was issued at par, was quoted at par ¼ bid, par ½ offered, according to a trader, while the $740 million six-year second lien floating-rate loan/note, which was issued at 981/2, was quoted at 97 bid, 98 offered.

"Speculation is that Morgan Stanley is holding a lot of paper," the trader added.

When asked why the second lien fell on its first day, while the first lien strengthened, a different trader ventured to say, "Second lien tends to be [traded by] more hedge fund guys so it's more reactionary. If all of a sudden it breaks and they feel like it's heavy, they'll try to get rid of it and then buy it back at cheaper levels. They'll try to trade you."

The first lien paper due April 1, 2009 carries an interest rate of Libor plus 375 basis points, contains three-years of call protection and has a Libor floor of 125 basis points. This tranche was upsized on Friday to $835 million from $800 million.

The second lien paper due April 1, 2010 carries an interest rate of Libor plus 575 basis points, has four years of call protection and contains a Libor floor of 125 basis points. This tranche was downsized during pricing to $740 million from $855 million.

Morgan Stanley was the lead bank on the deal that also included $680 million seven-year third lien floating-rate notes and $150 million seven-year third lien fixed-rate notes.

Proceeds will be used to refinance the $2.5 billion CCFC II credit facility that matures in November 2004.

CalGen is a subsidiary of San Jose, Calif., power generator Calpine Corp.

Cinemark to par on refi

Cinemark Inc.'s bank debt was quoted "near par," down from its previous bid level of 101¼ on news that the company will be undertaking a recapitalization that will include a refinancing of its existing bank debt, according to a trader.

However, the bank paper did not trade at its new levels, the trader remarked.

Late Friday, Cinemark revealed that it signed a definitive merger agreement with affiliates of Madison Dearborn Partners Inc. in a transaction valued at about $1.5 billion. The merger has been approved by the company's board of directors and shareholders and is expected to close in April.

On Monday, Cinemark announced that its subsidiary, Cinemark USA Inc., will amend and restate its credit facility in connection with the recapitalization to provide for a $270 million term loan. Proceeds from the term loan will be used to repay existing term loans and to repurchase or redeem Cinemark USA's 8½% series B senior subordinated notes due 2008.

The Plano, Texas, motion picture exhibitor's new credit facility will be led by Goldman Sachs and Lehman Brothers.

The company's current shareholders include the founder, chairman and chief executive officer Lee Roy Mitchell, and The Cypress Group LLC. As part of the transaction, Mitchell and members of management will retain significant equity stakes in the company.

Lehman Brothers Inc. and Goldman Sachs & Co. served as financial advisers to Cinemark. Akin Gump Strauss Hauer & Feld LLP advised the selling Cinemark shareholders. Allen & Co., Kirkland & Ellis LLP, and Baker & McKenzie advised MDP.

The Pantry closes

The Pantry Inc. closed on its new $415 million senior secured credit facility (B1/B+), consisting of a $70 million six-year revolver with an interest rate of Libor plus 275 basis points and a 75 basis points commitment fee, and a $345 million seven-year term loan with an interest rate of Libor plus 275 basis points.

The term loan was originally priced at Libor plus 300 basis points but was reverse flexed by 25 basis points during syndication due to strong demand.

Furthermore, the deal was anticipated to be sized at $440 million consisting of a $370 million term loan B and a $70 million revolver. But it was later downsized following the pricing of an upsized $250 million offering, from $225 million, of 10-year senior subordinated notes.

Wachovia Capital Markets LLC and Credit Suisse First Boston were co-lead arrangers and joint book managers on the deal.

The new credit facility, combined with the recent private placement of the senior subordinated notes, replace virtually all of the company's previous debt with longer-term obligations at significantly reduced interest rates, providing a capital structure that complements its long-term growth strategy, according to a company news release.

More specifically, the new term loan replaces $379 million of term loans that were scheduled to mature in 2007, and has an average interest rate about 250 basis points lower than the previous term loans. The new revolver, increased in size from the company's previous $56 million revolver, also carries substantially lower interest rates.

"We are very pleased to complete this new bank agreement and the overall restructuring of our long-term debt, which began with our successful bond offering in February. On a pro forma basis for fiscal 2004, these transactions would have reduced our annual interest expense by approximately $12 million, or $0.36 per share. We expect to realize actual savings of approximately half that amount in the second half of our current fiscal year," said Peter J. Sodini, president and chief executive officer, in the release.

"Beyond the benefits to our earnings, the transactions also have significantly increased our working capital line, extended the company's debt maturities, and reduced our required annual principal payments. The combination of lower interest expense and reduced principal payments has substantially increased our projected free cash flow and enhanced our flexibility to pursue our growth strategies."

The Pantry is a Sanford, N.C., convenience store chain.

Amerco facility closes

Amerco closed on its new $550 million exit financing credit facility in conjunction with its emergence from Chapter 11. Wells Fargo Foothill was the lead bank on the deal.

"This is a very positive result for our shareholders and lenders," said Joe Shoen, chairman, in a company news release announcing the Chapter 11 emergence. "When we filed our voluntary petitions nine months ago, we said that our intention was to restructure, on a consensual basis, over $1.2 billion in debt and lease obligations with no dilution to equity holders. We have now achieved that goal and are poised to enhance our leadership position in the moving and storage industry."

Amerco is a Las Vegas company that operates in moving and storage, real estate and insurance.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.