PanAmSat gets early commitments on term loan; lowers price talk at launch

By Sara Rosenberg

New York, July 15 - PanAmSat Corp.'s retail launch saw "huge attendance" on Thursday with some commitments already in on the massive $1.86 billion seven-year term loan B, according to a market source. And, although there was no word on just how much of the book got filled, the sentiment seems to be that the deal will be a huge success.

"It was fantastic," the source said regarding the bank meeting. "It's a proven management team. People like what they've done to the business."

Furthermore, because "strong ratings" came out on the deal, the syndicate opted to go out with price talk of Libor plus 250 basis points on the B tranche as opposed to originally anticipated talk of Libor plus 275 basis points, the source said.

"S&P came out with BB+. Expect Moody's later today," the source added.

And, Moody's Investors Service did indeed come out with a rating for the credit facility on Thursday, assigning it a Ba3 with a stable outlook.

"The ratings reflect PanAmSat's ability to generate good cash flow, its very strong industry position with a significant global footprint, its strong and diversified customer base, the company's significant operating margins, and a committed contract backlog of almost $5.4 billion, including approximately $670 million of which will be finalized at the closing of the transaction," Moody's said.

"The ratings further take into account credit enhancements and other credit support that were put in place earlier this year, including some significant extensions of service contracts for a number of key customers, guarantees of select contracts by DirecTV Group. Furthermore, the ratings reflect the company's strong liquidity position evidenced by the additional availability of $250 million at the closing of the deal.

"Additionally, the expected debt indenture covenants are an important component of these ratings. The financial covenants allow for a moderate amount of operational flexibility but do not allow any material increase in debt leverage or additional debt. Proposed covenants include a maintenance test of 6.75 times total debt-to-adjusted EBITDA, which adds back sales-type lease principal payments. The company is expected to have a total debt-to-adjusted EBITDA of about 6.4 times at year end 2004," Moody's added.

However, the rating also considers PanAmSat's high leverage, uneven capital requirements to remain competitive in the industry and the risks of managing a satellite fleet, Moody's concluded.

The $2.91 billion credit facility also contains a $250 million five-year revolver talked at Libor plus 250 basis points with a 50 basis points commitment fee, and an $800 million five-year term loan A talked at Libor plus 250 basis points.

The facility already launched to managing agents towards the end of June at which time 10 institutions were invited to participate in the meeting.

"There are already nine SMA's [senior managing agents] committed to the transaction," the market source said, adding that the pro rata portion of the deal is pretty much done.

Citigroup and Credit Suisse First Boston are the joint lead arrangers and joint bookrunners on the deal, with Citigroup listed on the left. Bear Stearns, Lehman Brothers and Bank of America are co-documentation agents.

Proceeds from the credit facility, combined with proceeds from a proposed bond offering, will be used to help fund the leveraged buyout of PanAmSat by affiliates of Kohlberg Kravis Roberts & Co. from The DirecTV Group Inc. in a transaction valued at approximately $4.3 billion, including the assumption of approximately $750 million of net debt.

PanAmSat is a Wilton, Conn. satellite operator.

Venetian expected to blow out

Venetian Casino Resort's proposed $975 million senior secured credit facility (B1/B+) is anticipated to be a blowout "based on the amount of orders that have already come in" once the bank books were posted Thursday afternoon, according to a market source.

"It's B1/B+. It's asset secured. They're a known credit. People love it," the source said.

The facility, which is scheduled to launch via a bank meeting on Monday, consists of a $125 million revolver due in 2009, $90 million 18-month delayed draw term loan A due in 2009, a $105 million six-month delayed draw term loan B due in 2011 and a $655 million term loan B due in 2011.

The delayed draw term loan A has a 150 basis points unused fee and the delayed draw term loan B has a 75 basis points unused fee.

Market speculation has the term loan B talked at Libor plus 275 basis points but no official price talk on any of the tranches has been released as of yet, the source said.

Goldman Sachs is the sole lead arranger and bookrunner on the deal, as well as syndication agent. Bank of Nova Scotia is the administrative agent on the loan.

Proceeds will be used by the Las Vegas hotel and casino to refinance existing debt and to finance construction of the new Palazzo casino resort project.

Closing on the credit facility is expected to take place in August.

Mitchell shuts second lien book

The book on Mitchell International Inc.'s $45 million eight-year second lien term loan had to be shut down on Thursday, just two days after launch, since the tranche was "too oversubscribed," according to a market source.

And, the $95 million seven-year first lien term loan is "oversubscribed also," the source added.

However, despite the success of these tranches, price talk has not been modified with the first lien term loan still talked at Libor plus 300 to 325 basis points (B1/B+) and the second lien term loan still talked in the Libor plus 700 basis points context (B2/B-).

The $155 million credit facility also contains a $15 million five-year first lien revolver with an interest rate of Libor plus 300 basis points (B1/B+).

Goldman Sachs and Wachovia are the lead banks on the deal, with Goldman listed on the left.

Proceeds will be used to finance a cash dividend to existing shareholders, retire existing debt, fund a special employee bonus pool and provide working capital.

Mitchell is a San Diego provider of information products, software and e-business solutions for the auto insurance, collision repair, medical claims, and glass replacement industries.

Progressive Moulded Products trims pricing

Progressive Moulded Products Limited reduced pricing on its U.S. dollar equivalent C$290 million seven-year term loan B to Libor plus 300 basis points from talk of Libor plus 325 to 350 basis points, according to a market source.

The C$50 million five-year revolver with price talk of Libor plus 300 basis points and the U.S. dollar equivalent C$75 million five-year term loan A with price talk of Libor plus 300 basis points, remained unchanged, the source added.

JPMorgan and CIBC are the lead banks on the deal, with JPMorgan listed on the left.

Proceeds will be used to help fund Thomas H. Lee Partners' acquisition of the company from an ownership group led by Oak Hill Capital Partners

Progressive is a supplier of plastic automotive interior subsystems.

M/C Communications well attended

M/C Communications LLC's bank meeting that was held Wednesday afternoon for its proposed $165 million credit facility had a "good audience", according to a market source.

The facility consists of a $15 million five-year revolver with an interest rate of Libor plus 325 basis points and a $150 million 6 1/2-year term loan with an interest rate of Libor plus 350 basis points. The term loan is being offered at par.

A commitment deadline has been set for about two weeks from now.

The deal also comes with a $50 million mezzanine tranche that is not being distributed as part of the syndication, the source added.

Lehman is sole on the deal that will be used to help fund Bain Capital's leveraged buyout of the company.

M/C Communications is a Boston producer of medical conferences.

Wallace Theatres shifts size, pricing

Wallace Theatres reduced the total size of its credit facility to $155 million from $160 million through the addition of $5 million to its term loan A and the reduction of $10 million to its second lien term loan. Furthermore, pricing on all three tranches contained in the deal was lowered.

The five-year term loan A (B2/B) is now sized at $105 million compared to initial sizing of $100 million and pricing was reduced to Libor plus 325 basis points from Libor plus 375 basis points, according to a syndicate document.

The 51/2-year second-lien term loan (B3/CCC+) is now sized at $25 million compared to initial sizing of $35 million and pricing was dropped to Libor plus 700 basis points from Libor plus 750 basis points.

Lastly, the $25 million five-year revolver, size unchanged, was reverse flexed to Libor plus 325 basis points from Libor plus 375 basis points, the document said.

Wachovia is the lead bank on the Portland, Ore., motion picture exhibitor's refinancing deal.

Herald Media size shifts, pricing

Herald Media Inc. also played around with its tranche sizes, increasing the seven-year term loan B to $110 million from $100 million and reducing the 71/2-year second lien term loan to $20 million from $30 million, according to a syndicate document.

Furthermore, pricing on the term loan B was reduced to Libor plus 250 basis points from Libor plus 300 basis points and pricing on the second lien term loan was reduced to Libor plus 550 basis points from Libor plus 600 basis points.

Pricing on the $25 million six-year revolver, size unchanged, was also reverse flexed to Libor plus 250 basis points from Libor plus 300 basis points, the document added.

Wachovia and CIBC are the lead banks on the Boston newspaper publisher's refinancing deal.

Nextel closes

Nextel Finance Co., a wholly-owned subsidiary of Nextel Communications Inc., closed on its new $4 billion five-year revolver (NA/BB+/BBB-), increasing liquidity by $1.4 billion, according to a company news release.

JPMorgan and Citigroup were the lead banks on the deal, with JPMorgan listed on the left.

Pricing on the Reston, Va., wireless company's revolver is Libor plus 112.5 basis points.

At closing, Nextel borrowed $1 billion of the new facility and used $476 million cash on hand to repay the outstanding balance of the existing term loan A - $1.36 billion - and revolving credit facility - $116 million.

Through this transaction, Nextel reduced its borrowing costs by 25 basis points on the "drawn" portion and 60 basis points on the undrawn portion of the revolver, based on current debt ratings.

The new revolver also provides for further reductions in borrowing costs as debt ratings improve, as well as the termination of liens and subsidiary guarantees upon satisfaction of some conditions.

Nextel's existing $2.2 billion secured term loan E that matures in 2010 remains outstanding.

"The closing of our new $4 billion revolver represents another important milestone on our path to investment grade," said Paul Saleh, executive vice president and chief financial officer, in the release. "Nextel's consistently strong financial results, positive credit ratings trajectory, and favorable bank market conditions combined to produce exceptional demand for our new revolving credit facility. We are increasing our liquidity while at the same time reducing our interest rates, extending our maturities and improving our overall credit profile. We have enhanced our financial flexibility and our balance sheet has never been stronger."

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