Search results for

Levels for HealthSouth Corp.'s bank debt plummeted roughly 30 points after reports indicated the Securities and Exchange Commission has charged the company and Richard Scrushy, its chairman and ceo, with overstating its earnings by $1.4 billion in order to meet earnings expectations. Immediately following the news, bank debt levels sank from the 85 context alongside the company's bonds to the 45-50 range. By Friday morning, however, the bank debt was quoted at a 10-point premium to the bonds due to net payments from the letters of credit that market players expect the bank debt to receive. No bank debt trades could be confirmed, but the bonds traded in high volumes from 45 to 49-50 and some expected them to climb up after the purging stopped. A company spokesman said he could not comment.

Neptune's $220 million refinancing credit oversubscribed last week. Lead bank UBS Warburg pitched a seven-year, $190 million "B" loan priced around LIBOR plus 41/4% and a five-year, $30 million revolver priced in the LIBOR plus 31/2% range. The credit refinances the Tallassee, Ala.-based company's $190 million credit that backed Investcorp's buyout of Neptune from Schlumberger in 2001. This deal included a $125 million "B" piece priced at LIBOR plus 31/2%.

J.P. Morgan, Citibank and UBS Warburg threw an eleventh-hour wrinkle into Constellation Brands' $1.6 billion acquisition credit, revamping the security and pricing terms with an inventive twist. A springing lien, to be triggered by rating downgrades, was changed to permanently fall away if the company raises $450 million in equity to take out a bridge piece or if its leverage falls below four times, explained Thomas Roberts, treasurer of Constellation. The lien applies to receivables, inventory and trademarks. Some investors griped about the changes--and a few walked away--but the deal still closed 100% oversubscribed.

Isle of Capri Black Hawk completed an oversubscribed $210 million acquisition facility and Rex Yeisley, senior v.p. and cfo, attributed the credit's success more to the strength of the company than to hot market timing. "I'm not sure the timing's the best in the world. I think it has to do with the strength of the story," he said. Isle of Capri Black Hawk tapped lead bank CIBC World Markets for the facility, which launched last month, to partly back its $84 million acquisition of Colorado Central Station Casino and Colorado Grande Casino from International Game Technology. He said the casino company's performance made the deal "almost a no brainer." The company's leverage ratio should be under four times, post-acquisition.

LIN TV switched the pricing on its new $175 million "B" tranche from a set spread over LIBOR to a grid-based scheme in order to take advantage of reduced leverage figures. Lead banks J.P. Morgan and Deutsche Bank originally hit the market with LIBOR plus 21/4% pricing. But after the deal oversubscribed the structure was altered to pricing on a leverage-based grid ranging from LIBOR plus 2-21/4%. LIN TV's debt-to-EBITDA multiples of five times sets the current rate at LIBOR plus 2%, said Deborah Jacobson, LIN TV's v.p. of corporate development and treasurer.

Stericycle, a medical waste management company, has amended its credit facility so that $51 million outstanding on its revolver has been reclassified as a part of the company's "A" term loan. By converting revolving debt to term debt and keeping the size of the revolver the same, the company increases availability under the revolver, said Frank ten Brink, Stericycle's executive v.p. and cfo. He explained that Stericycle had increased the usage of its revolver because of acquisitions, most recently, Scherer Healthcare for $41.5 million in cash in January.

Gaylord Entertainment's $225 million credit was fully committed and scheduled for allocation last Friday. A banker familiar with the deal said it includes a three-year, $150 million "B" loan and a $25 million revolver priced at LIBOR plus 31/2%, as well as a $50 million mezzanine tranche with a spread of 8% over LIBOR.

Charter Communications bank debt held its ground last week even as Ralph Kelly, the company's treasurer, resigned. Traders said the company's bank debt traded in the 85 1/2-86 1/2 context, where the paper had been moving the week before. The bank debt held its ground because of the benign circumstances of Kelly's departure, noted one buysider, explaining that the official left to pursue other interests.

Eric Coombs, former executive director in the loan products group at Morgan Stanley, left the securities firm for UBS Warburg last week. Officials familiar with the situation said that Coombs would begin working at UBS next month as a senior loan director in the bank's loan syndications group. At Morgan Stanley, Coombs reported to Michael Hart, managing director. He will now report to David Juge, head of loan syndications at UBS. This is the second addition to UBS' loan group in as many weeks. Kevin Latimer left Deutsche Bank's loan sales group two weeks ago also to join the Swiss bank (LMW, 3/17).

Janet Wolff has resigned from Bank of New York to go to Dresdner Bank, where she will begin work on April 1 as a v.p. of sales and trading. She will report to Craig Meisner, managing director and the firm's head of loan syndications for North America, and Bill Fish, global head of loan syndications. Meisner confirmed the move. Repeated calls to officials and spokepeople at Bank of New York were not returned by press time and Wolff could not be reached.

Fleming Companies bank debt has recovered slightly since the company hosted a bank call a week last Friday. A piece of the term loan traded in the 92 context up from the 85-90 range, where it fell two weeks ago. Market players said the call helped to calm lenders by assuring them that Fleming's liquidity situation is not as dire as some expected and that management was still pursuing steps to delever via asset sales. Moreover, rumors suggest that there is still an asset-based lender, possibly General Electric Capital Corp., on the periphery that will step up with some new money. Calls to GECC were not returned by press time.

Brown Jordan International's $165 million senior secured term loan and $60 million senior secured revolver have been downgraded by Moody's Investors Service from B3 to B1, with the ratings on review for further possible downgrade. A recently missed interest payment as well as continued concerns regarding sustainable cash flow and borrowing availability resulted in the lowered ratings. Standard & Poor's meanwhile has lowered the rating on the company's senior secured bank loan to CC from B. "These actions reflect Brown Jordan's default on its subordinated debt interest payment due Feb. 15, 2003, on notes that mature 2007," said S&P credit analyst Martin Kounitz. Brown Jordan is currently in discussions with its bank group to amend its senior credit facility.