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Rentech Secures Additional Loan Commitment of up to $63 Million from Blackstone’s GSO Capital Partners


Rentech, Inc. (RTK) announced today that GSO Capital Partners LP (GSO), the credit investment arm of Blackstone, has increased its credit facility for Rentech by up to $63 million. The majority of the proceeds from this new facility are expected to fund completion of Rentech’s Canadian wood pellet projects through positive cash flow. Rentech now estimates the cost to complete the construction of its Canadian wood pellet projects to be $125 to $130 million.

“We appreciate the support GSO Capital Partners continues to provide us, this time in the form of additional term loans,” said Keith Forman, President and CEO of Rentech. “The task at hand remains clear–to complete the construction and commissioning of, and to place into service, our new pellet facilities in Canada. This will be done in as timely and safe a manner as possible to preserve profitability for our investors. At the same time, we will continue our focus on operating our fertilizer assets profitably, safely and efficiently. We will work to simplify our capital structure and add to our liquidity in the future. Our focus on cost containment is an ongoing process and will continue to evolve, as indeed our company will evolve, over the next year.”

GSO Term Loan

The new lending commitment, in the form of a two-tranche delayed draw term loan, will be available for up to one year. One tranche of the term loan allows Rentech to borrow up to $45 million, of which Rentech has initially borrowed $25 million. The company expects the $45 million tranche to fund construction, working capital and other costs of the Atikokan and Wawa pellet projects until they generate positive cash flow. Rentech may utilize the remaining commitment, of up to $18 million, in the event of certain unplanned downtime at the East Dubuque facility, or unfavorable changes in commodity prices that affect cash distributions from Rentech Nitrogen Partners.

The term loans mature on April 9, 2019. The loans are secured by, among other things, a fixed number of units of Rentech Nitrogen owned by Rentech as well as certain other assets of Rentech and its subsidiaries. The new loan has an interest rate of LIBOR plus 900 basis points per annum, with a LIBOR floor of 1.00%. Rentech also increased the collateral securing its obligations under the preferred stock holders’ existing put option right agreements. Additional details about the terms of the financing will be provided in a Form 8-K that Rentech will file with the Securities and Exchange Commission.

Canadian Wood Pellet Projects Update

Rentech expects that the new term loan, together with its other cash resources, will be sufficient to fund its Atikokan and Wawa pellet projects until they have been commissioned and begin to generate positive cash flow. Rentech currently estimates that the cost to acquire and construct the two plants will be $125 to $130 million, up from $105 million. The majority of the increase is due to delays in construction and higher labor costs for installation of electrical and mechanical components. Rentech expects that working capital and the cost to commission the plants will add approximately $6 to $10 million to the estimated total project cost. Rentech does not expect the plants to generate positive EBITDA or cash flow for the year 2015. Annual stabilized EBITDA projected for both plants remains in line with previous guidance of C$17 to C$20 million.

The Atikokan facility is currently in the commissioning phase and is producing and selling pellets to Ontario Power Generation. Rentech expects the Atikokan facility to be operating at full capacity in six to 12 months.

The Wawa facility is nearing completion of construction. Rentech expects the facility to begin startup and commissioning in the second quarter of 2015 and to operate at full capacity within one year from the start of commissioning.

Expense Reduction Plan

Under the supervision of the Finance Committee, the company engaged an independent consulting firm to assess its cost structure. The company has taken actions to reduce its projected consolidated cash operating costs and expenses in 2015 by approximately $15 million compared to 2014. Cash selling, general and administrative (SG&A) expenses in 2015 for Rentech (excluding Rentech Nitrogen) are expected to be approximately $10 million lower than in 2014, which includes cost savings due to discontinuing energy technologies. Rentech Nitrogen expects 2015 cash operating costs and expenses to be approximately $5 million lower than in 2014, due to, among other things, cost savings from the restructuring of the Pasadena facility. The projection for 2015 reflects $3 million of nonrecurring SG&A expense due to the delayed startup of the Atikokan and Wawa plants. Rentech expects to further discuss its outlook for 2015 on March 17 when it reports results for 2014.

About Rentech, Inc.

Rentech, Inc. (RTK) owns and operates wood fibre processing, wood pellet production and nitrogen fertilizer manufacturing businesses. Rentech offers a full range of integrated wood fibre services for commercial and industrial customers around the world, including wood chipping services, operations, marketing, trading and vessel loading, through its subsidiary, Fulghum Fibres. The Company’s New England Wood Pellet subsidiary is a leading producer of bagged wood pellets for the U.S. heating market. Rentech manufactures and sells nitrogen fertilizer through its publicly-traded subsidiary, Rentech Nitrogen Partners, L.P. (RNF). Please visit and for more information.

Forward Looking Statements

This news release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995 about matters such as: the estimated cost of acquiring and constructing the Atikokan and Wawa plants; working capital and startup costs of the two plants; cash flow and EBITDA projections for the plants; timelines associated with various phases of the plants, including operating at full capacity; and anticipated cost savings in 2015. These statements are based on management’s current expectations and actual results may differ materially as a result of various risks and uncertainties. Factors that could cause actual results to differ from those reflected in the forward-looking statements are set forth in Rentech’s press releases and periodic reports filed with the Securities and Exchange Commission, which are available via Rentech’s website at The forward-looking statements in this news release are made as of the date of this release and Rentech does not undertake to revise or update these forward-looking statements, except to the extent that it is required to do so under applicable law.

ConglomeratesFinanceRentech Contact: Rentech, Inc.

Julie Dawoodjee Cafarella

Vice president of Investor Relations and Communications

310-571-9800 […]

Venezuela eyes double-digit yield on Citgo debt sale

By Davide Scigliuzzo

NEW YORK, Jan 23 (IFR) – Venezuela’s US oil-refining unit Citgo will probably have to pay double-digit yields to lure investors into a US$2.5bn financing package aimed at pumping new cash into its state-owned parent PDVSA.

With some US$10bn in debt payments due this year, cash-strapped Venezuela is pledging some of its most valuable assets abroad to raise new cash, as it fends off default worries amid a steep slide in crude oil prices.

A US$1.5bn high-yield bond issue and a US$1bn senior secured five-year term loan will be sold through Citgo Holding Inc and secured by US$750m in midstream assets and a 49% pledge on the equity of Citgo Petroleum Corp, the operating entity.

Citgo has set price talk of 800bp over Libor on the five-year senior secured first-lien Term Loan B, officials from sole lead manager Deutsche Bank said on Thursday during a presentation to investors in New York.

The non-call one loan will have a Libor floor of 1% – meaning that the interest paid on the principal would be at least 9% – and will be issued at an original discount of 96-97 for an all-in yield of about 10%.

As an additional safeguard for investors, the company will be required to keep a debt service reserve account worth six months’ of interest and principal payments, and use 75% of excess cashflow to pay down debt.


At a 10% yield, the loan – which will rank pari passu with the upcoming bonds – appears to offer a 275bp pick-up over Citgo Petroleum Corp’s 6.25% 2022s notes, which were spotted trading at a yield of around 7.25% on Thursday.

Those notes had been quoted at a much lower 5.5% yield earlier in the week, but tanked by as much as eight points in cash terms after news of the financing package dashed hopes that Venezuela would sell the Citgo unit altogether.

At first glance, the premium appears close to the 200-250bp spread normally seen between debt issued by holding and operating companies in the high-yield market, but given Venezuela’s desperate need for cash, potential buyers might have the upper hand.

An investor who attended the presentation, for example, argued that fair value for the deal should be in the high 10% to 11% range, given the default risks associated with the sovereign and the company’s aggressive policy of borrowing to pay a dividend to PDVSA.

“From whispers in the room, I think this might get done at 10%,” he said. “But some of the bargaining power might be in the hands of the investor community.”

While the company is yet to announce maturity and price talk on the bond portion of the deal, the investor said the yield on offer was expected to be in line with that of the loan.

“I imagine (the bond) will have similar terms and similar price talk area. They may try to do a longer deal, but they could do a five-year as well,” said the investor, who argued that splitting the financing between a bond issue and a loan would not yield significant savings for the company, but simply allow it to tap a broader pool of investors.


If successful, the deal is expected to provide some support to the short end of Venezuela’s and PDVSA’s bond curves, easing concerns about this year’s maturities.

“Although it is less than optimal to use Citgo to carry the debt of PDVSA, this makes us very comfortable that Venezuela will fully meet its debt payments this year,” said Daniel Freifeld, founder of Washington-based Callaway Capital Management, which owns both Venezuela and PDVSA bonds.

Freifeld argued that as a credit, PDVSA continued to offer a better risk-reward ratio compared with Citgo.

“There is lower default risk in Citgo than in PDVSA, but the difference is not enough to justify taking a yield of 10% when PDVSA’s October 2015s offer an annualised yield of around 24%,” he said.

PDVSA’s 2015s outperformed other Venezuelan bonds this week over optimism that the Citgo deal will help the company meet most of its US$3.5bn debt maturities, plus interest, due this year.

“If you believe there is an interest from the government to maintain PDVSA as a working entity, then this should be particularly beneficial for PDVSA bonds,” said Marco Santamaria, a portfolio manager at AllianceBernstein.

“But all money is fungible, so you never know if they redirect this money to other purposes.”


Responding to questions from investors, Citgo management confirmed that PDVSA had abandoned earlier plans to sell Citgo, in spite of receiving strong interest from bidders.

“PDVSA has confirmed to us that Citgo is not for sale,” a company official said. “It was a very robust process. A large number of bidders expressed interest. But PDVSA made a strategic decision not to sell.”

The US$750m of assets pledged as collateral for the financing package include Citgo’s terminals of East Chicago, Linden, Albany, Toledo and Dayton, as well as the company’s ownership interest in four pipelines.

While only 49% of the operating company could be pledged as collateral without triggering change of control clauses in some of its existing debt, the holding company will be the beneficiary of 100% of future distributions from Citgo Petroleum, including dividends as well as asset or equity sales.

The commitment deadline for the loan portion of the deal has been set for February 4, while details of the new bond issue are expected to be announced in the mid-part of next week.

Citgo Holding’s financing package is expected to be rated Caa1 by Moody’s and B- by S&P.

(Reporting by Davide Scigliuzzo; Editing by Paul Kilby and Sudip Roy)

FinanceInvestment & Company InformationVenezuelaCitgoPDVSA […]

Level 3 secures $2B loan to finance cash portion of tw telecom acquisition

Level 3 has gotten commitments from its lenders to increase its borrowing power under its secured credit facility through a new $2 billion Tranche B 2022 Term Loan, part of which will finance the cash portion of its acquisition of tw telecom.

In connection with the closing of that acquisition, parts of the loan will be used to refinance certain existing indebtedness of tw telecom, including fees and premiums.

The service provider’s Level 3 Financing Inc. subsidiary will amend and restate its existing senior secured credit facility to include the new Tranche B 2022 Term Loan, which will mature on Jan. 31, 2022.

Level 3 Financing said that interest on the Tranche B 2022 Term Loan will be equal to LIBOR plus 3.5 percent with LIBOR set at a minimum of 1.0 percent. The Tranche B 2022 Term Loan was priced at 99.25 percent of par.

After meeting customary closing conditions, Level 3 Financing expects the closing of the Tranche B 2022 Term Loan will take place with the closing of the pending acquisition of tw telecom.

Sunit Patel, executive vice president and CFO of Level 3, said that in addition to securing the new loan it “has received all necessary approvals from the various U.S. state public utility commissions for the completion of the tw telecom transaction and related borrowings.”

Merrill Lynch, Pierce, Fenner & Smith Incorporated, Citigroup Global Markets Inc., Morgan Stanley Senior Funding Inc., Barclays Bank PLC, Goldman Sachs Bank USA, Jefferies Finance LLC and JP Morgan Securities LLC are acting as Joint Lead Arrangers and Joint Bookrunning Managers for the Tranche B 2022 Term Loan.

For more:
– see the release

Related articles:
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Cairn tanks on $1.25-b loan to Sesa arm

July 24, 2014:

The Cairn India stock was marked down nearly 7 per cent in today’s trade. This is more a reflection of the market’s disappointment over the surprise revelation of a big-ticket loan given by the company to a related party, and less about Cairn’s weak show in the June quarter.

Cairn, in the June quarter, entered into an arrangement to lend $1.25 billion to a subsidiary of Sesa Sterlite – also a part of the Vedanta Group. Of this, $800 million has already been lent by Cairn for two years and the balance $450 million will be given in the coming quarters. The company’s stand that the interest rate on the loan – LIBOR plus 3 percentage points – will give the funds a better return than the 2 – 2.5 per cent they earn currently did not quite wash with the market.

One, lending the funds is a departure from the company’s earlier position that it will retain its formidable cash reserves for significant capital expenditures (about $3 billion) planned over the next few years to increase output from its mainstay Rajasthan asset. As of March 2014, Cairn had Rs 13,707 crore in rupee funds and $1.53 billion in dollar funds. The $1.25-billion loan facility is more than 80 per cent of the company’s dollar funds of March. Two, since Vedanta’s takeover of Cairn India in 2010-11, a section of the market has been worried that Cairn’s cash may be used to bail out weaker companies in the Vedanta Group. The loan facility to a subsidiary of Sesa Sterlite, which has not been in the best of health, seems to vindicate these concerns.

Sure, there’s a corporate guarantee given by Vedanta Resources Plc for this loan, but this is in the nature of a parent level guarantee and is not asset-backed. Also, it did not help that this major related-party loan transaction came as a surprise during Cairn’s June results conference call and was not disclosed by the company as and when it happened. The name of Sesa Sterlite’s subsidiary which gets the loan and the end use of these funds has also not been disclosed yet. Finally, if the $1.25 billion was surplus cash with Cairn, it would have earned higher returns if converted and deployed into rupee deposits. The 1-year LIBOR for dollar denominated loans is currently around 0.5 per cent per annum; so Cairn India will get a return of about 3.5 per cent on its loan to Sesa Sterlite’s subsidiary. Rupee deposits with Indian banks would have yielded the company a much better 9-10 per cent. Better still, the company could have returned the cash to shareholders through healthy dividends and buybacks. Last year, Cairn gave a dividend payout of about 22.5 per cent of its profits; this could have been raised. Also, in the share buyback programme which closed on Tuesday, Cairn acquired only 21.4 per cent of its planned purchase; after the sharp fall today, the stock, at Rs 323, trades lower than the maximum buyback price of Rs 335.

The management’s optimism about a big increase in Cairn’s oil and gas resource base in Rajasthan, and its roadmap to increase production sharply in the coming years did little to assuage market sentiment. Of course, it also did not help that the company’s June quarter performance was nothing to write home about, with profit down 65 per cent from the year-ago period. Even excluding the impact of the change in depreciation calculation which accounted for much of the profit decline, Cairn’s June quarter profit is down 13 per cent from the same period last year. Higher costs, including tax and Government outgo, along with lower foreign exchange gains more than offset the increase in overall output and better price realisation. Also, output at the Rajasthan block was 4 per cent lower compared with the preceding March quarter due to an unplanned outage.

(This article was published on July 24, 2014)



Out with it

Cairn India profit dives 65% in Q1 on new accounting rules

Cairn India to spend $3 bn on capex


Companies | Cairn India Limited | economy, business and finance | stocks and shares |What’s this?What’s this? […]

Extended Stay America Announces Pricing of $375 Million Senior Secured Term Loan


Extended Stay America, Inc. (STAY) (the “Company”) today announced that its subsidiary, ESH Hospitality, Inc., priced a $375 million Senior Secured Term Loan (the “Term Loan”) at LIBOR plus 4.25%, with a minimum LIBOR of 0.75%, with a five year term, and offered at 99.5. The financing is expected to close on June 23, 2014, subject to the execution of definitive documentation and customary closing conditions. The proceeds of the Term Loan will be used to refinance the existing outstanding $365 million of 9.4% mezzanine debt and pay related transaction fees and expenses.

“The new Term Loan allows us to reduce our cash interest expense by approximately $16 million annually, lowers our average cost of debt to under 4%, and, with a one year non-call period, provides us our desired flexibility to deleverage over time” stated Peter Crage, Chief Financial Officer.

The Term Loan was arranged by Goldman Sachs Bank USA, Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and J.P. Morgan Securities LLC.

Forward Looking Statements

This press release contains forward-looking statements within the meaning of the federal securities laws. Statements related to, among other things, the consummation of the Term Loan and potential changes in market conditions constitute forward-looking statements. For a description of factors that may cause the Company’s actual results, performance or expectations to differ from any forward-looking statements, please review the information under the heading “Risk Factors” included in the Company’s combined annual report on Form 10-K filed with the SEC on March 20, 2014 and other documents of the Company on file with or furnished to the SEC. Any forward-looking statements made in this press release are qualified by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by the Company will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, the Company or its business or operations. Except as required by law, the Company undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future developments or otherwise. We caution you that actual outcomes and results may differ materially from what is expressed, implied or forecasted by the Company’s forward-looking statements.

About Extended Stay America

Extended Stay America, Inc., the largest owner/operator of company-branded hotels in North America, owns and operates 684 hotels in the U.S. and Canada comprising approximately 76,200 rooms and employs approximately 10,000 employees in its hotel properties and headquarters. The Company owns and operates hotels under the core brand Extended Stay America®, which serves the mid-priced extended stay segment, and other brands. Visit for more information about the Company and its services.

FinanceInvestment & Company InformationExtended Stay America Contact: Investors:

Extended Stay America, Inc.

Kay Sharpton, 980-345-1546 […]

UAE telco du agrees terms on $720 million loan financing: sources

By David French

DUBAI (Reuters) – UAE telecom firm du has agreed terms on a $720 million loan which will be used to replace two existing debt facilities and lower the company’s funding costs, two banking sources said on Sunday.

The five-year loan will be provided by Abu Dhabi Commercial Bank, National Bank of Abu Dhabi and Saudi Arabia’s Samba Financial Group, the sources who both have knowledge of the matter said. They spoke on condition of anonymity as the information is not public.

Du declined to comment when contacted by Reuters.

The interest rate which du will pay for the new loan will be 140 basis points over the London interbank offered rate (Libor), the sources said.

Bankers not involved in the deal remarked that the pricing which du ultimately got from the three lenders was extremely cheap, especially as it had managed to negotiate a loan with a five-year lifespan.

“There have been talks for maybe 3-4 months between the company and banks but while they wanted five years, the most that banks were prepared to offer was three years – especially at the pricing levels they wanted,” said one of the bankers not involved in the transaction.

By comparison, Commercial Bank of Qatar, the Gulf Arab state’s second-largest lender by assets, is currently marketing a $600 million loan, split between a two- and three-year portion, which pays 120 and 140 bps respectively when the margin is combined with the fees a bank will earn.

Du’s new loan will replace two existing debt facilities.

The first is a $220 million three-year loan which expires in June. That transaction paid a margin of 145 bps over Libor and was provided by Dubai lenders Emirates NBD and Mashreq as well as NBAD and Samba, according to Thomson Reuters data.

It will also replace a $500 million facility raised in late-2012, which is due to run until 2017 and pays a margin of 175 bps over Libor. The banks who funded that deal were ADCB, Mashreq, NBAD and Samba.

Du joins other companies which are currently raising cash to refinance existing debt, even if those facilities still have a substantial amount of time to run.

Emirates Steel is seeking $1.3 billion from banks to replace debt and fund the purchase of assets from its parent firm, even though the original deal has more than three years to run.

(Additional reporting by Matt Smith; Editing by Anthony Barker)

FinanceMergers, Acquisitions & TakeoversAbu Dhabi Commercial BankSamba Financial GroupNational Bank of Abu Dhabi […]

Mets get good news with loan, which means good news with payroll


View gallery.

Saul Katz and Fred Wilpon. (Getty)

The New York Mets biggest victory of 2014 has come long before opening day and happened nowhere near a Major League Baseball diamond. It has to do with a $250 million loan that owners Fred Wilpon and Saul Katz have hanging over them. The loan is going to be refinanced, which includes removal of restrictions on how much the team can add to payroll.

They finally can see light at the end of the tunnel and it’s not the No. 7 train.

Mets partners were among a long list victimized by Bernie Madoff’s ponzie scheme. Cash flow has been a problem ever since — with stopgap loans being required and many favors cashed in, putting current ownership in peril of losing the team. As a result, the team’s payroll, about $140 million in 2010, is going to be about $93 million in 2014 — which would rank 24th out of 30 teams.

The New York Post published details Thursday night about the loan refinancing that includes phrases one should never read in a baseball story. They include: “This will be oversubscribed,” and “The rate will likely end up at Libor, plus 300 basis points.”

So Libor is one of the guys competing for the starting shortstop job, or?

The Post writes:

Until recently, it wasn’t certain investors weren’t going to insist the team owners pay down some of the loan to get the refinancing done.

Wilpon and Katz will not be asked for any cash paydown, sources said.

Plus, interest payments are expected to stay about the same, a source with direct knowledge of the situation said.

The rate will likely end up at Libor, plus 300 basis points, or a shade under 4 percent, a source said.

The seven-year re-fi will give Wilpon and Katz much- desired financial breathing room, sources said.

For the longtime friends and team owners, it is perhaps the best outcome they could have hoped for.

For Mets fans hoping for new ownership to breathe new life — along with some power and pitching — into the line-up, perhaps the news is less thrilling.

So cynical, one paragraph at a time! Without the refinancing, a big cash payment on the principal — perhaps an “insurmountable” one — was coming in the spring. This gets Wilpon and Katz off the hook for that. It buys them more time to own the team and make it competitive again. That’s good news, unless you wanted them to have to sell the team. Are there people out there who want the Wilpons to sell the team?

– – – – – – –

David Brown


Big League Stew

on Yahoo Sports. Have a tip? Email him at

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Sports & RecreationNew York MetsFred WilponSaul KatzMajor League Baseball […]

Gun Maker Remington Eyes Leveraged Loan Deal Enabling Cerberus Partners To Cash Out


Remington Outdoor Company yesterday morning approached its secured lenders seeking approval to add new holdco debt to its capital structure under a plan that allows some of sponsor Cerberus Capital Management’s limited partners to cash out of their interest in the firearms company, sources said.

Under the plan unveiled yesterday, the Cerberus-led investor group is selling a minority interest in the business, formerly known as Freedom Group. The sponsor last December said it would sell the company after the mass shooting at Sandy Hook Elementary School in Newtown, Conn. The company makes the Bushmaster AR-15 rifle, the gun that was used in the massacre.

In the absence of an outright sale the issuer is offering a recapitalization deal that values Remington at roughly $1.2 billion, including cash on hand.

An as-yet-unidentified investor will contribute $25 million of new equity, while the issuer will privately place a $200 million issue of seven-year cash-pay holdco debt, which is priced at the greater of 13.1%, or L+1,100 (effectively providing a 2% LIBOR floor), sources noted. Pro forma for the transaction leverage will be 1.6x through the first-lien debt and 3.5x total.

Lenders are asked to amend to allow for the holdco debt and the ability to upstream cash to pay the estimated $27 million of interest, subject to a 3x net-secured-leverage test, sources explained.

The lender group is offered a 25 bps fee to amend, along with six months of 101 soft call protection, sources said. Bank of America Bank of America Merrill Lynch is arranging the amendment.

Remington’s B term loan has recently been quoted in a 101/101.5 context, amid strong recent performance, sources.

The issuer’s B term loan due 2019 is priced at L+425 with a 1.25% LIBOR floor. The covenant-lite TLB, originally $330 million, was placed in April 2012 as part of a refinancing package. Bank of America Merrill Lynch, Deutsche Bank Deutsche Bank, and RBC Capital Markets arranged the loan, which was issued at 99.

The issuer later layered in an additional $75 million to redeem preferred equity held by Cerberus, to repay revolver borrowings, and for general corporate purposes.

Corporate ratings are currently B+/B1. – Kerry Kantin


Alliance HealthCare Services Announces Receipt of Commitments for Incremental Term Loan and Amendment of Its Existing …


Alliance HealthCare Services, Inc. (AIQ), a leading national provider of outpatient diagnostic imaging and radiation therapy services, announced that it has obtained commitments from lenders with respect to a $70 million incremental term loan under its existing senior secured credit agreement (the “Credit Agreement”). The Company intends to use the net proceeds from the borrowings under the incremental term loan facility, together with proceeds from borrowings under its revolving credit facility and cash on hand, to redeem all of its outstanding 8% Senior Notes due 2016 (the “Notes”) in December 2013.

Howard Aihara, executive vice president and chief financial officer, stated, “Our ability to raise $70 million of incremental borrowings under our existing senior secured term loan highlights the ongoing improvement in our business performance and the strength of our balance sheet. The redemption of our 8% Senior Notes will save us approximately $5 million annually and will provide additional flexibility and cash flow to execute upon our strategic initiatives, including ongoing reduction of our debt.”

Key Terms of Incremental Term Loan

Redemption of the Notes, net of the interest expense of the incremental borrowings, will save the Company approximately $5 million in cash interest expense annually Interest rate on the incremental term loan will be the same as the existing term loan at LIBOR plus 3.25% with 1.00% LIBOR floor All other terms, including maturity, of the incremental term loan will match the terms of the existing term loans The incremental term loan will be funded at 99.0% of the principal amount

Incremental Term Loan

Alliance’s new $70 million incremental term loan will be funded at 99.0% of principal amount and will mature on the same date as the existing term loan in June 2019. The incremental term loan will be converted to match all the terms of existing term loans upon funding in December. Interest on the incremental term loan will be calculated, at Alliance’s option, at a base rate plus a 2.25% margin or LIBOR plus a 3.25% margin, subject to a 1.00% LIBOR floor. After completing the transaction including redemption of the Notes, Alliance expects to save approximately $5 million in cash interest on an annualized basis. Closing of the incremental term loan under the existing senior secured credit agreement is subject to completion of satisfactory documentation and satisfaction of other closing conditions.

Alliance expects to use revolver proceeds plus cash on hand to pay fees and expenses related to the incremental term loans and to pay the call premium related to the redemption of the 8% Senior Notes. Alliance’s incremental term loan is expected to close on or about October 11, 2013. The redemption will be effected pursuant to the terms of the indenture governing the 8% Senior Notes, and Alliance intends to initiate the redemption on or around the date of closing of the incremental term loan.

Under the terms of the Credit Agreement, the incurrence by the Company of incremental term loans to redeem the Notes is subject to the requirement that the ratio of total debt to last twelve months Adjusted EBITDA (as defined in the Credit Agreement) be not more than 3.25 to 1.00. The Company amended the Credit Agreement in connection with this transaction to waive compliance with this requirement.

About Alliance HealthCare Services

Alliance HealthCare Services is a leading national provider of advanced outpatient diagnostic imaging and radiation therapy services based upon annual revenue and number of systems deployed. Alliance focuses on MRI, PET/CT and CT through its Imaging division and radiation therapy through its Oncology division. With approximately 1,800 team members committed to providing exceptional patient care and exceeding customer expectations, Alliance provides quality clinical services for over 1,000 hospitals and other healthcare partners in 44 states. Alliance operates 482 diagnostic imaging and radiation therapy systems. The Company is the nation’s largest provider of advanced diagnostic mobile imaging services and one of the leading operators of fixed-site imaging centers, with 130 locations across the country. Alliance also operates 28 radiation therapy centers, including 17 dedicated stereotactic radiosurgery facilities, many of which are operated in conjunction with local community hospital partners, providing treatment and care for cancer patients. With 17 stereotactic radiosurgery facilities in operation, Alliance is among the leading providers of stereotactic radiosurgery nationwide.

Forward-Looking Statements

This press release contains forward-looking statements relating to future events, including statements related to the terms of the incremental term loan under the senior secured credit agreement, the closing of the incremental term loan and the anticipated use of the proceeds therefrom, including the proposed redemption of the remaining balance of the 8% Senior Notes.

In this context, forward-looking statements often address the Company’s expected future business and financial results and often contain words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks” or “will.” Forward-looking statements by their nature address matters that are uncertain and subject to risks. Such uncertainties and risks include: changes in financial results and guidance in the event of a restatement or review of the Company’s financial statements; the nature, timing and amount of any such restatement or other adjustments; the Company’s ability to make timely filings of its required periodic reports under the Securities Exchange Act of 1934; issues relating to the Company’s ability to maintain effective internal control over financial reporting and disclosure controls and procedures; the Company’s high degree of leverage and its ability to service its debt; factors affecting the Company’s leverage, including interest rates; the risk that the counterparties to the Company’s interest rate swap agreements fail to satisfy their obligations under these agreements; the Company’s ability to obtain financing; the effect of operating and financial restrictions in the Company’s debt instruments; the accuracy of the Company’s estimates regarding its capital requirements; the effect of intense levels of competition in the Company’s industry; changes in the methods of third party reimbursements for diagnostic imaging and radiation oncology services; fluctuations or unpredictability of the Company’s revenues, including as a result of seasonality; changes in the healthcare regulatory environment; the Company’s ability to keep pace with technological developments within its industry; the growth or lack thereof in the market for imaging, radiation oncology and other services; the disruptive effect of hurricanes and other natural disasters; adverse changes in general domestic and worldwide economic conditions and instability and disruption of credit markets; difficulties the Company may face in connection with recent, pending or future acquisitions, including unexpected costs or liabilities resulting from the acquisitions, diversion of management’s attention from the operation of the Company’s business, and risks associated with integration of the acquisitions; and other risks and uncertainties identified in the Risk Factors section of the Company’s Form 10-K for the year ended December 31, 2012, filed with the Securities and Exchange Commission (the “SEC”), as may be modified or supplemented by our subsequent filings with the SEC. These uncertainties may cause actual future results or outcomes to differ materially from those expressed in the Company’s forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company does not undertake to update its forward-looking statements except as required under the federal securities laws.


Alliance HealthCare Services
Howard Aihara
Executive Vice President
Chief Financial Officer


Dell updates terms on increased $7.2 billion LBO loan

By Natalie Wright

NEW YORK (Reuters) – Computer maker Dell Inc updated facility sizes on its new approximately $7.2 billion loan that will back the company’s $25 billion buyout by founder and CEO Michael Dell and private equity firm Silver Lake Partners, sources told Thomson Reuters LPC.

Tranching now includes a $1.5-1.55 billion, five-year term loan C, a $4.625-4.675 billion, 6.5-year term loan B, and a 650-700 million euro (roughly $877-945 million), euro-denominated term loan B. The term loans are expected to be covenant-lite.

The TLC is now guided at LIB+275, with a 1 percent Libor floor, and a 99.5 original issue discount (OID). Previously, the TLC was guided at LIB+275-300.

Price talk on the U.S. dollar TLB is now LIB+350, with a 1 percent Libor floor and a 99 OID. Previously, the U.S. dollar TLB was guided at LIB+375.

The euro TLB is now guided at EUR+375, with a 1 percent floor and a 99 OID. Previously the euro TLB was guided at EUR+400.

The Libor floors and OIDs are unchanged. The TLC will include 101 soft call protection for six months. The U.S. dollar/euro TLB will include 101 soft call protection for one year, versus six months previously.

Dell’s leveraged buyout (LBO) loan, the second-largest institutional LBO loan this year behind Heinz’s $9.5 billion institutional issuance backing its buyout by Berkshire Hathaway and 3G Capital, has been a major focus of leveraged investors since its launch September 11. The books were reportedly strong for both the bonds and loans during syndication.

“While the company definitely faces some headwinds, I think Dell will be able to generate a large amount of free cash flow to repay its debt,” said one portfolio manager.

“It will get done,” said one trader last week, adding that recent announcements from the Fed that it will hold off on tapering its asset purchases ease the macro backdrop as potential lenders look closely at the company.

Initially, Dell planned a $1.5 billion, five-year term loan C and a $4 billion, 6.5-year term loan B, all dollar-denominated. These loans were expected to run alongside a $2 billion, five-year asset-based revolving credit facility (about $750 million expected to be drawn at close), $2 billion in first-lien, seven-year secured notes and $1.25 billion in second-lien eight-year secured notes.

The $2 billion first-lien note issuance has been reduced to $1.5 billion, and the $1.25 billion second-lien note issuance has been eliminated, as Dell has shifted funding to less expensive first-lien loans.

An additional $150 million in cash from the balance sheet will now be used for the transaction, sources added.

Additionally, the MFN sunset provision on the loan’s incremental facility has been removed.

Recommitments from U.S. lenders are due at 5:30 p.m. EST today, while recommitments from European lenders are due at 12 p.m. GMT September 24.

The TLC will amortize at 10 percent, 17.5 percent, 22.5 percent, 25 percent and 25 percent. The U.S. dollar/euro TLB will amortize at the standard 1 percent.

Bank of America Merrill Lynch, RBC, Barclays, Credit Suisse, and UBS are lead arrangers on the term loans and the ABL revolver.

Corporate family ratings are Ba3/BB-/BB-, and first-lien facility ratings are Ba2/BB+/BB+.

In addition to the new debt, equity from Michael Dell and certain related parties and new cash equity from Silver Lake, Michael Dell, and MSD Capital will finance the transaction.

MSD Capital is an investment firm created to manage the capital of Michael Dell and his family.

The financing package also will include an up to $2 billion 7.25 percent 10-year subordinated note issuance from Microsoft, and roughly $7.8 billion in existing cash on Dell’s balance sheet. The Microsoft note could be reduced by up to $500 million at closing, and up to 3.50 percent of annual interest may be paid as PIK (payable-in-kind), sources note.

(Editing By Jon Methven)

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