Star Tribune softens on numbers; TXU, Alltel trade up; LCDX seesaws; Mylan getting good feedback

By Sara Rosenberg

New York, Nov. 30 - Star Tribune Co.'s first-lien term loan B inched its way lower on Friday after the company held a conference call to update lenders on the latest monthly financial results.

Also, in the secondary, Texas Competitive Electric Holdings Co. LLC (TXU) and Alltel Communications Inc. were both stronger on the day as the overall market rallied in the morning, and LCDX bounced around, moving considerably higher and then coming back in to basically unchanged levels.

Moving to the primary, Mylan Inc.'s credit facility has received an early positive response from the market since launching just a few days ago to U.S. investors, giving the indication that the deal could go well.

Star Tribune's first-lien term loan B lost some ground during the trading session on the heels of a private lender call that was held to discuss October numbers, according to a trader.

The first-lien term loan B ended the day at 79 bid, 81 offered, down from 80 bid, 82 offered, the trader said.

"The numbers themselves were no surprise. They were in line with how the industry is trending and if anything they're starting to stabilize a bit. Still [the numbers are] declining year over year but not at as steep a rate," the trader said.

"People were somewhat happy to see the stabilization but to see it stabilizing and still declining is still not great. No one's hearing anything to make them feel more positive than last month's call," the trader added.

Star Tribune is a Minneapolis-based information provider and includes the Star Tribune newspaper, StarTribune.com and other print and digital products and services.

TXU, Alltel head higher

Texas Competitive and Alltel both saw a good amount of flow at better levels as the market in general had a positive tone to it, especially early on in the session, according to a trader.

Texas Competitive, a Dallas-based energy company, saw its term loan B-2 end the day at 98 3/16 bid, 98 7/16 offered and its term loan B-3 end the day at 98¼ bid, 98½ offered, with both tranches up about half a point, the trader said.

Alltel, a Little Rock, Ark., provider of wireless voice and data communications services, saw its term loan B-3 end the day at 95 7/8 bid, 96 1/8 offered, up from 95¾ bid, 96 offered. And, the bank debt actually traded as high as 96 bid, 96¼ offered before settling in a little during the afternoon, the trader continued.

The trader went on to say that there was no credit specific news pushing the two companies' debt higher on Friday, it was just market technicals.

LCDX on rollercoaster

LCDX 9 also had an exciting day with levels noticeably better in the morning but then coming back in to be quoted relatively unchanged by late afternoon, according to a trader.

The index was seen at 96.80 bid, 97 offered late in the day, compared to Thursday's closing levels of 96.90 bid, 97 offered, the trader said.

However, earlier in the day, the index traded as high as 97.60 bid, 97.90 offered, the trader remarked.

"The market was explosively up this morning following equities. It kind of retreated a bit by the end of the day. LCDX is pretty much unchanged on the day but there was a lot of volatility," the trader added.

Mylan meets with good response

Switching to primary news, Mylan's $4.85 billion senior credit facility (B1/BB) has gotten positive feedback from the market since U.S. syndication kicked off with a bank meeting this past Tuesday, leaving some optimistic about the deal's success.

"People are still doing their credit work but early signs are that it's going pretty well," one source told Prospect News on Friday. "People are familiar with the company. There's not a lot of competition for it out there in the market. [And, there's] modest leverage."

Senior debt to pro forma EBITDA opens at 3.8 times, and total debt to pro forma EBITDA opens at 4.1 times, the source added.

The credit facility consists of a $750 million six-year multicurrency revolver, a $500 million six-year amortizing U.S.- and euro-denominated term loan A and a $3.6 billion seven-year U.S.- and euro-denominated term loan B.

The revolver is being talked at Libor/Euribor plus 275 bps, with a 50 bps commitment fee, and the term loan A and the term loan B are being talked at Libor/Euribor plus 325 bps.

The term loan B is being offered to investors at an original issue discount in the 98 to 98½ area.

Banks are being offered two tickets on the pro rata tranches - as managing agents, they are asked to commit $20 million to the revolver and $30 million to the term loan A for a 75 bps upfront fee, and as co-managing agents, they are asked to commit $10 million to the revolver and $15 million to the term loan A for 50 bps upfront.

In addition to the New York bank meeting, the facility was launched to European investors with a bank meeting in London that took place on Nov. 19.

The size of the euro-denominated component within the term loan A and the term loan B is to be determined based on demand.

There are minimum consolidated interest coverage and maximum consolidated senior leverage covenants contained in the credit agreement.

Commitments from banks and funds in Europe and the United States are due on Dec. 7.

Merrill Lynch and Citigroup are the joint bookrunners and joint lead arrangers on the deal, with Merrill the left lead, and JPMorgan is the administrative agent.

Proceeds from the facility, which actually funded in early October, were used to help fund the acquisition of Merck KGaA's generics business, to refinance Mylan's existing credit facility and to purchase the company's 5¾% senior notes due 2010 and 6 3/8% senior notes due 2015 under a tender offer.

At the close, the term loan B had been divided into a $2 billion U.S. tranche and a €1.13 billion euro tranche.

Mylan is a Canonsburg, Pa., pharmaceutical company.

TECO readies allocations

TECO Transport Corp. is expected to allocate its $340 million credit facility early on in the week of Dec. 3, according to a market source.

The facility consists of a $35 million revolver priced at Libor plus 375 bps, a $205 million first-lien term loan priced at Libor plus 375 bps and a $100 million second-lien term loan priced at Libor plus 750 bps.

The term loans were sold to investors at par.

The first-lien term loan carries 101 soft call protection for one year, and the second-lien term loan carries call protection of 102 in year one and 101 in year two.

Jefferies is the lead arranger and bookrunner on the deal, with Wells Fargo Foothill acting as syndication agent.

Proceeds will be used to help fund Greenstreet Equity Partners LP's buyout of the company from TECO Energy for $405 million in cash.

TECO Transport is a Tampa, Fla., water transportation company.

Key Energy closes

Key Energy Services, Inc. closed on its new $400 million five-year senior secured revolver, according to a company news release.

Bank of America and Wells Fargo acted as the joint lead arrangers on the deal.

Security is substantially all of the company's assets.

Proceeds were used to refinance the company's existing credit facility and will be available for acquisitions, share repurchases, letters of credit and general corporate purposes.

Covenants include total leverage and interest coverage requirements.

In addition, the company will be allowed to repurchase its common stock; however, share repurchases in excess of $200 million can be made only if its debt to capitalization ratio is below 50%.

Key Energy is a Houston-based rig-based well service company.

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