Thin trading ahead of long weekend; IPC sets meeting, speculation about Sungard

By Paul A. Harris

St. Louis, July 1 - Activity in Friday's leveraged loan market was characterized as extremely light by sources. Moreover the session ended early because of the three-day Independence Day holiday weekend in the United States.

In primary news, a July 12 bank meeting date was heard for IPC Acquisition Corp.'s $485 million senior credit facility, according to a market source.

Meanwhile the market continued to buzz with speculation - and a modicum of incredulity - about Sungard Data Systems' rumored launch, with several sources expecting the financing to get underway this coming week.

The $4 billion 7.5-year term loan, according to those sources, is expected to launch during the July 4 week.

One source said that JP Morgan has already begun one-on-one meetings with accounts, and added that "it seems strange that they're going to put one of the biggest bank loans in the history of the world out on the July 4 week."

In any case, the source continued, the bank loan market is "very strong" right now, and the financial brains at the company may have adopted a "sooner is better than later" mentality.

"If you are going to bring a fairly high quality deal like Sungard, with just about every name-brand sponsor around the world doing it - at Libor plus 250 [bps] because it's big - it will probably get done," the source said.

"A large percentage of the demand right now is from CLOs, and a huge deal does not do a lot of good for CLOs because they need lots of small deals to create diversification and create their structures.

"So when a large percentage of the market doesn't need a lot more of a loan, that tends to leave an overhang.

"Will the mutual funds and the separate accounts step and take relatively large pieces of a deal like this?" the source wondered.

"When Kerr-McGee came in the middle of the downturn the answer seemed to be 'I'm not so sure.'

"When DaVita finally priced at the end of the downturn it did really well.

"Sungard is really big. And they are pricing it to do really well. But they still need pretty much the entire market onboard."

This source added that the market has known about the Sungard deal for months - a fact that could lend a sense of urgency.

"The delay could have been caused by the state of the market, which was probably part of it. Or it could be the complications involved with a deal of this size.

"Now that everybody knows the company is ready it would not wise for them to sit on their hands. That doesn't make anybody happy.

"That may be why they want to do it."

The Sungard LBO deal involves an up to $5 billion total credit facility. In addition to the term loan, there is a $1 billion six-year revolver talked at Libor plus 250 basis points, which decreases to $750 million if holding company notes are issued.

JPMorgan and Citigroup are joint lead arrangers. JPMorgan, Citigroup and Deutsche Bank are joint bookrunners and JPMorgan is the administrative agent. Deutsche Bank and Citigroup are co-syndication agents.

The sponsors of the LBO are Silver Lake Partners, Bain Capital, The Blackstone Group, Goldman Sachs Capital Partners, Kohlberg Kravis Roberts & Co. LP, Providence Equity Partners and Texas

Pacific Group.

IPC bank meeting

Elsewhere Friday a source said that IPC Acquisition Corp. will hold a bank meeting on July 12 for its $485 million senior credit facility via Goldman Sachs.

The deal is comprised of a $50 million revolver due Dec. 31, 2010 (B2/B+) talked at Libor plus 275 basis points, a $285 million six-year first-lien term loan (B2/B+) at Libor plus 275 basis points and a $150 million seven-year second-lien term loan (B3) at Libor plus 650 basis points.

Expected to break this week

Activity in the secondary market was extremely light Friday, a trader told Prospect News.

However, the source added, the week ahead figures to see at least four deals break for trading. They include:

* Boart Longyear Co.'s $500 million credit facility via UBS. The deal includes a $75 million revolver (B1/B+) talked at Libor plus 275 basis points, a $300 million first-lien term loan (B1/B+) talked at Libor plus 275 basis points and a $125 million second-lien term loan (B3/B-) talked at Libor plus 700 basis points;

* Doubleclick Inc.'s $455 million loan via Bear Stearns and Credit Suisse First Boston. Included are a $290 million seven-year senior secured first-lien term B (B2/B) at Libor plus 400 basis points, a $115 million eight-year senior secured second-lien term loan (Caa1/CCC+) at Libor plus 775 basis points and a $50 million five-year revolver (B2/B) at Libor plus 400 basis points.

* Mylan Laboratories Inc.'s $475 million loan (Ba1/BBB-) via Merrill Lynch. The pieces include a $275 million five-year senior secured term loan at Libor plus 150 basis points and a $200 million five-year revolver; and

* Psychiatric Solutions Inc.'s $475 million credit facility (B1/B+) via Citigroup. The deal involves a $325 million term loan due 2012 at Libor plus 200 basis points, with a step down to Libor plus 175 basis points if leverage is 4.75x, and a $150 million amended and restated revolver due 2009 talked at Libor plus 250 basis points.

The rising rate environment

Finally on Friday a trader said that the Federal Reserve ninth consecutive hike of U.S. short-term interest rates - another 25 basis points, lifting the fed funds target rate to 3¼% - is probably not a bad thing for the bank loan market.

"The issuers out there are going off of 30-day, 60-day and 90-day Libor in a lot of cases," the trader said.

"If you are a CLO with fixed-rate liabilities, and you see floating-rate assets start to grow in price by virtue of the Fed raising rates, it's not a bad thing.

"We don't have to worry about putting Libor floors in deals anymore."

Boyd Gaming closes

Meanwhile Boyd Gaming Corp. said it completed its repricing and upsizing of its credit facility.

The Las Vegas casino company reduced interest rates by 25 basis points, extended the maturity of the revolver by one year and increased the revolver by $250 million.

Interest on the revolver is now Libor plus 125 basis points while the term loan is at Libor plus 150 basis points.

The revolver, increased to $1.35 billion, now matures on June 30, 2010.

Boyd has the option to increase the facility by a further $500 million.

Part of the proceeds will be used to fund the early redemption of the company's $200 million of 9¼% senior notes, a move that will lower borrowing costs.

Bank of America, CIBC and Wells Fargo were lead arrangers with Bank of America as left lead.

"I am pleased that our company is now borrowing under one of the most favorable credit arrangements in the gaming industry today," said chairman and chief executive officer William Boyd in a news release.

Gray completes amendment

Gray Television Inc. said it completed the amendment of its $400 million senior secured credit facility (Ba1/BB-).

The Atlanta communications company said the changes are expected to save it $1.4 million a year in interest costs.

Included in the new facility is a $100 million six-year revolver at Libor plus 125 basis points, a $100 million six-year term loan A at Libor plus 125 basis points and a $200 million 71/2-year term loan B at Libor plus 150 basis points. Pricing on the revolver and term loan A is set by a grid that can range from 75 basis points to 150 basis points over Libor.

Gray also amended covenants and other terms.

As of July 1, Gray had $76 million borrowed under the revolver.

Wachovia Bank, NA was the administrative agent, Wachovia Capital Markets, LLC was lead arranger and bookrunner, Bank of America, NA was syndication agent and Deutsche Bank Trust Co. Americas, Allied Irish Banks plc and KeyBank NA were documentation agents.

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