Lehman Brothers has flexed up its refinancing credit for Regal Cinemas by 25 basis points after trying to get through the market with a LIBOR plus 21/ 2% deal that also attempted to ease covenants. "Lehman went out at 250 over, but had to flex upwards to 275," said an investor, who estimates the market has backed up anywhere from 1/4% to 3/8% in the last two weeks. But Regal still gained a 3/4% interest spread cut, though the intention was for a 1% drop, said a banker, who noted the credit is now fully subscribed.
As well as the lowered spread, the relaxed covenants on Regal disheartened some existing investors. One buysider noted that, though he would not join in the credit for those reasons, there would be plenty that still would.
The mandatory cash sweep covenant is being removed and the tight restrictions on capital expenditures and additional indebtedness have eased, according to a Moody's Investors Service report. The loan consists of a $150 million revolver and a $220 million term loan that takes out an exit financing put in place at the start of the year. Regal still has high leverage, but it has been decreasing this since exit, driven by box office success, the report notes.