Dresser, Emmis set talk; Armstrong trims B loan spread; Time Warner Telecom breaks; Hexion stronger

By Sara Rosenberg

New York, Oct. 12 - Dresser Inc. released price talk on its credit facility as the deal was launched with a bank meeting Thursday. And, Emmis Communications Corp. price talk surfaced now that the deal is in-market and ratings have come out.

In other primary news, Armstrong World Industries Inc. reverse flexed pricing on its term loan B tranche by 25 basis points but added a step up provision based on ratings.

Meanwhile, in secondary happenings, Time Warner Telecom Inc.'s credit facility freed for trading, and Hexion Specialty Chemicals, Inc.'s institutional bank debt headed higher on news of plans for a replacement deal.

Dresser officially kicked off syndication on its proposed $935 million senior secured credit facility with the holding of a bank meeting on Thursday, and at that time opening price talk was revealed on the transaction, according to a market source.

The company launched its $785 million term loan B and $50 million synthetic letter-of-credit facility with price talk of Libor plus 300 bps, and its $100 million revolver with price talk of Libor plus 250 bps, the source said.

Morgan Stanley and Credit Suisse are the lead banks on the deal.

Proceeds from the term loan will be used to refinance the company's existing senior secured credit facility in the principal amount of $70 million, senior unsecured term loan in the principal amount of $125 million and senior subordinated notes in the principal amount of $550 million.

The revolver will be available for general corporate purposes.

Dresser is a Dallas-based designer, manufacturer and marketer of highly engineered equipment and services sold primarily to customers in the flow control, measurement systems, and compression and power systems segments of the energy industry.

Emmis spread guidance

Opening pricing emerged on Emmis' $450 million seven-year term loan B, with the paper talked at Libor plus 225 bps, according to a market source.

The term loan B, along with a $150 million six-year revolver, had been launched to investors with a bank meeting on Wednesday, but ratings weren't announced until Thursday.

Bank of America and Deutsche Bank are the lead banks on the $600 million credit facility (B1/B).

Proceeds will be used to help fund the company's offer to purchase all of its $339.6 million of 6 7/8% senior subordinated notes due 2012 and proposed special cash dividend of $4.00 per share payable pro rata to all holders of its common stock.

The bond tender offer is scheduled to expire on Oct. 19. The special cash dividend is expected to be paid, assuming certain conditions are satisfied, before the end of November.

Emmis is an Indianapolis-based diversified media firm.

Armstrong cuts pricing

Armstrong World Industries lowered pricing on its $500 million seven-year term loan B to Libor plus 175 bps from original talk at launch of Libor plus 200 bps, according to a market source.

However, a grid was added to the term loan B under which pricing can step back up to Libor plus 200 bps if the company's corporate credit ratings are downgraded, the source said.

Pricing on the company's $300 million five-year revolver and $300 million five-year term loan A remained at Libor plus 150 bps.

Bank of America and JPMorgan are the lead banks on the $1.1 billion exit financing senior secured credit facility (Ba2/BB), with Bank of America the left lead.

The company emerged from Chapter 11 bankruptcy on Oct. 2 after its fourth amended plan of reorganization took effect, but the credit facility isn't expected to close until Oct. 16.

The reorganization plan includes a comprehensive settlement resolving Armstrong's asbestos liability by establishing and funding a trust to compensate all current and future asbestos personal injury claimants.

Armstrong is a Lancaster, Pa.-based flooring company.

Time Warner Telecom frees to trade

Moving to the secondary, Time Warner Telecom's credit facility broke for trading with the $600 million term loan B quoted at par 5/8 bid, 101 1/8 offered, according to a trader.

The term loan B is priced at Libor plus 225 bps, with a step down to Libor plus 200 bps at less than 2.5 times total leverage.

The company's $700 million secured credit facility (Ba2/B), which closed earlier in the week, also includes a $100 million revolver at Libor plus 250 bps.

Wachovia was the lead bank for the deal that was obtained at the level of Time Warner Telecom's Time Warner Telecom Holdings Inc. subsidiary.

The revolver, undrawn at closing, replaces the company's previous $110 million revolver.

At closing, the company drew $200 million on the term loan to replace its previous term loan B. It will use further borrowings to redeem its $240 million of second-priority senior secured floating-rate notes, which have a coupon of Libor plus 400 bps.

Remaining borrowings will be used to help fund the acquisition of Xspedius Communications, LLC.

Hexion trades up

In other trading news, Hexion's strip of term loan and synthetic letter-of-credit facility debt moved higher as the company announced plans to replace this debt with a new $2 billion term loan and a new $50 million synthetic letter-of-credit facility, according to a trader.

The strip of institutional loan paper closed the day at 99 7/8 bid, par 1/8 offered, up from prior levels of 99 5/8 bid, 99 7/8 offered, the trader said.

The $2.05 billion of new bank debt (Ba3), being led by Credit Suisse and JPMorgan, is expected to come to market within the next few weeks.

In addition to replacing the company's May 2006 term loan and synthetic letter-of-credit facilities, proceeds from this deal will be used in combination with $825 million of secured bonds to fund a $500 million common stock dividend to shareholders and tender offers for its $300 million second-priority senior secured floating-rate notes due 2010 and $325 million 9% second-priority senior secured notes due 2014.

Hexion is a Columbus, Ohio, thermoset resins company.

Charter stronger

Charter Communications Inc.'s term loan B headed up by a quarter of a point on Thursday on no specific news, according to a trader.

The term loan B closed out the day at 101 bid, 101¼ offered, up from par ¾ bid, 101 offered, the trader said.

Charter is a St. Louis-based broadband communications company.

Transeastern rises with call

Transeastern's term loan reversed its recent momentum by actually gaining a couple of points on Thursday as the company held a private-side call during market hours, according to a trader.

The term loan headed up to 67 bid, 68 offered prior to the actual call taking place and held in at those levels following the call, the trader said. By comparison, on Wednesday, the term loan closed the day at 62 bid, 64 offered.

Details on what took place on the conference call were unavailable being that it is all private information, the trader added.

About two weeks ago the company announced that it couldn't support its existing capital structure due to Florida housing market conditions, and ever since that news hit the market, the term loan has been consistently losing ground - dropping all the way from around a 99 trading context into the 60s.

Transeastern had said at that time that it is exploring various options to fix the liquidity problem, including requesting waivers from its lenders regarding potential defaults and permitting future advances under the revolver, and restructuring land bank obligations.

Transeastern is a joint venture of Technical Olympic USA Inc. and Falcone Group.

AlixPartners closes

The acquisition of AlixPartners LLC by Hellman & Friedman LLC and 81 managing directors, along with the remainder of its more than 500 employees, has been completed, according to a news release.

To help fund the transaction, AlixPartners got a new $435 million credit facility (B1/BB-) consisting of a $50 million revolver priced at Libor plus 250 bps and a $385 million term loan B priced at Libor plus 250 bps with a step down to Libor plus 225 bps at 3.5 times leverage.

The step down in pricing under the term loan B was added during syndication.

Lehman and Deutsche Bank acted as the lead banks on the deal, with Lehman the left lead.

AlixPartners is a Southfield, Mich., provider of operational management, risk evaluation, corporate restructuring, and legal and financial advisory services to underperforming and troubled companies.

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