LB Pacific cuts pricing, adds call feature; Madison River communicates lower spreads; Builders breaks

By Sara Rosenberg

New York, Feb. 16 - LB Pacific LP made a round of changes to its in-market term loan B (B1/B-) on Wednesday, increasing the size, decreasing pricing and adding a soft call clause. Meanwhile, Madison River Communications Corp. lowered price talk on its $475 million credit facility as the deal saw quick oversubscription and relatively good ratings.

In the secondary, Builders FirstSource Inc. allocated its credit facility late in the day Wednesday, with the term loan B moving to the upper 101 context.

LB Pacific upsized its seven-year term loan B to $175 million from $170 million with the decision to increase the size of the tranche by $5 million primarily attributed to the company just wanting excess liquidity, a market source said.

Furthermore, pricing on the term loan was reverse flexed to Libor plus 275 basis points from Libor plus 300 basis points and a step down to Libor plus 250 basis points was added that becomes effective when debt to distributable cash flow falls below 41/2x, the source said.

Lastly, the syndicate added 101 soft call protection for one year. However, any loan repayments made with proceeds from the sale of 25% of the company's subordinated shares and any required prepayments made with excess cash flow are excluded from the call protection.

Recommitments from lenders are due on Friday.

"It was over two times oversubscribed. It's a 25 basis points flex but gaining soft call. I would be surprised if a material amount of people dropped," the source said.

Citigroup is the lead arranger and bookrunner on the deal, and Lehman is the syndication agent.

Proceeds from the term loan will be used to help fund LB Pacific's acquisition of The Anschutz Corp.'s 36.7% interest in Pacific Energy Partners LP for about $340 million.

More specifically, LB Pacific, a company newly formed by Lehman Brothers Merchant Banking Group, is getting a 100% ownership interest in Pacific Energy GP Inc. (the general partner), which owns a 2% general partner interest in Pacific Energy Partners and the incentive distribution rights, and 10.465 million Pacific Energy Partners subordinated units representing a 34.7% limited partner interest in Pacific Energy Partners.

About $182 million of equity will also be used to help finance the acquisition.

Pacific Energy Partners is a Long Beach, Calif., gatherer, transporter, storer and distributor of crude oil and other related products.

Madison River reverse flexes

Madison River cut pricing on both its $75 million six-year revolver and a $400 million seven-year term loan B to Libor plus 200 basis points from Libor plus 225 basis points, according to a market source.

The deal, which just launched via a bank meeting on Feb. 10, is already said to be oversubscribed.

On Wednesday, the $475 million credit facility was assigned a BB- rating from Standard & Poor's with a recovery rating of 4, denoting the expectation of a marginal 25% to 50% recovery of principal in the event of a payment default.

"Ratings reflect Madison River's aggressive, shareholder-oriented financial policy with the intention to provide a substantial dividend, as well as low-growth revenue trends due to the maturity of the RLEC industry," said S&P analyst Rosemarie Kalinowski in the rating release. "These factors are tempered by the company's healthy EBITDA margin, its supportive regulatory environment, and the depth of management experience."

Prior to the bank meeting last week, Moody's Investors Service rated the credit facility at B1.

Merrill Lynch and Goldman Sachs are joint lead arrangers and joint bookrunners on the deal, with Merrill the left lead. Lehman Brothers is also a joint bookrunner on the facility.

Madison River will also be getting a term loan C of up to $50 million and a term loan D of up to $5.6 million from Rural Telephone Finance Cooperative, the lender under its existing credit facility.

Technically, the term loan B can be sized at up to $450 million but will be reduced dollar-for-dollar by the size of the RTFC term loan C, which can only carry a maximum size of $50 million, according to an S-1 recently filed with the Securities and Exchange Commission.

The term loan D will be used to finance the required purchase of subordinated capital certificates in connection with the funding of the term loan C and D facilities.

The company is getting the facility in connection with its initial public offering of common stock.

Proceeds from the term loan B and the IPO will be used to refinance existing debt, including existing credit facility debt and existing 13.25% senior notes.

The revolver, which is expected to be undrawn at closing, will be used for working capital and general corporate purposes.

Madison River is a Mebane, N.C., operator of rural local telephone companies.

Builders FirstSource breaks

Builders FirstSource's new deal freed up for trading somewhere around 4 p.m. ET on Wednesday, with the $225 million six-year first-lien term loan B quoted at 101 5/8 bid, 101 7/8 offered in "active" trading, according to a trader.

The tranche, which was downsized by $25 million after the company priced a bond deal that was upsized by $25 million, is priced with an interest rate of Libor plus 250 basis points. Initial price talk on the deal was Libor plus 275 basis points.

The $350 million credit facility (B1/B+) also contains a $110 million five-year revolver with an interest rate of Libor plus 250 basis points and a $15 million six-year prefunded letter-of-credit facility with an interest rate of Libor plus 275 basis points.

UBS and Deutsche Bank were the lead banks on the deal, with UBS the left lead.

Proceeds from the credit facility and the bonds, both of which actually closed on Friday, are being used to pay a $237 million dividend and repay existing debt.

Builders FirstSource is a Dallas supplier of building products to professional, large-scale homebuilders.

Telcordia gets orders

Telcordia Technologies Inc. had already gotten "a number of commitments" in already on its $620 million credit facility (B1/B+) by the end of Wednesday - the day of the bank meeting, according to a market source.

The facility consists of a $100 million revolver and $520 million term loan B, with both tranches talked at Libor plus 250 basis points.

JPMorgan, Bear Stearns, Deutsche Bank and Lehman Brothers are lead banks on the deal, with JPMorgan the left lead.

Proceeds will be used to help fund the leveraged buyout of the company by Providence Equity Partners and Warburg Pincus for $1.35 billion in cash.

Telcordia is a Piscataway, N.J, provider of telecommunications software and services for IP, wireline, wireless and cable.

Cincinnati Bell closes

Cincinnati Bell Inc. closed on its $250 million five-year senior secured revolving credit facility (Ba3/BB-/BB-) on Wednesday, according to a company news release. Bank of America and Credit Suisse First Boston acted as joint lead arrangers, with Bank of America the left lead.

Proceeds from the revolver along with proceeds from $250 million of 7% senior notes due 2015 and $100 million of 8 3/8% senior subordinated notes due 2014 were used to repay all outstanding borrowings under, and terminate, the company's existing credit facilities.

These transactions complete the first stage of the company's previously announced refinancing plan. In the second stage, the company expects to redeem all of its 16% senior subordinated discount notes due 2009 with a combination of cash from operations and borrowings under the new revolver.

Cincinnati Bell is a Cincinnati-based local exchange and wireless provider.

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