Secondary, primary see good activity; next week's pipeline has some worried about saturation

By Sara Rosenberg

New York, Jan. 9 - Overall, the secondary market was very active on Thursday, according to market sources, with a pretty good tone across the board and bank paper generally trading up. The primary has also been relatively active this week and is expected to see even more activity next week. However, next week's full calendar has some people nervous that their may be too many deals at once for investors to digest.

"There's some concern that the market may get backed up next week," a source told Prospect News. "There's large number of new deals. Just look at the number of days and the number of meetings scheduled."

One deal that is scheduled for next week that received some attention on Thursday is Houghton Mifflin's credit facility, which was resized following the company's decision to increase its bond offering.

Houghton Mifflin restructured its credit facility, reducing the term loan B to a size of $250 million from $400 million. Pricing on the term loan B, which was originally anticipated at Libor plus 375 basis points is now "to be determined," a syndicate source told Prospect News.

The revolver remained unchanged with a size of $325 million and an interest rate of Libor plus 325 basis points.

The credit facility is expected to launch on Tuesday morning via CIBC, Goldman Sachs and Deutsche Bank.

Both the credit facility and the high yield offering will be used to help fund Houghton Mifflin's purchase from Vivendi Universal by Thomas H. Lee Partners, Blackstone Group, Bain Capital and Apax Partners.

Houghton Mifflin is a Boston publishing company.

In the primary, PlayPower Inc. held a bank meeting for a new $150 million credit facility, according to a syndicate source. UBS Warburg and The Royal Bank of Scotland are the lead banks on the deal.

The loan consists of a $125 million seven-year term loan and a $25 million five-year revolver, the syndicate source said, adding that pricing on the deal is still being determined.

Proceeds will be used to help fund Investcorp's leveraged buyout of the St. Louis commercial play and recreation equipment manufacturer.

In the secondary, Nextel Communications Inc.'s term loan B and term loan C "locked at 95" on Thursday after moving up about a point to a 94 bid and a 95 offer on Wednesday, according to a trader. The Reston, Va. telecommunications company's paper rallied slightly the other day on optimistic guidelines for 2003, including achieving positive free cash flow.

"All our indications are pointing to achieving positive free cash flow in 2003," said Tim Donahue, president and chief executive officer, in a news release. "We'll do this by maintaining our focus of attracting and keeping the most valuable customers in the wireless industry while at the same time streamlining our cost structure."

Meanwhile, timing on the retail launch of TRW Automotive's credit facility has now been narrowed down to the end of the month, as opposed to being labeled as first quarter business, according to a syndicate source. Currently, lead banks are talking to potential senior management agents.

Details on the size, structure and pricing of the loan are not currently available, the source added.

The company will use high yield bonds and the new credit facility to help pay the cash portion of the company's acquisition by the Blackstone Group from Northrop Grumman Corp.

JPMorgan, Credit Suisse First Boston, Lehman Brothers and Deutsche Bank are providing the necessary financing for the transaction.

Under the acquisition agreement, Northrop will receive $3.757 billion in cash, $600 million in debt securities and an initial $368 million equity interest in TRW Automotive (approximately 42%) for a total amount of $4.725 billion, according to a company news release.

At the close of the transaction, which is expected in the first quarter of 2003, Northrop's equity interest will be approximately 20%, which would increase total cash consideration to between $3.9 billion and $4 billion.

Northrop will use the proceeds from the sale to pay down debt.

TRW Automotive is a Livonia, Mich. diversified supplier of automotive systems, modules and components.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.