DirecTV $800 million B loan sees over a billion in demand after general syndication launch

By Sara Rosenberg

New York, Feb. 13 - DirecTV Holdings LLC's bank meeting was a huge success with the $800 million term loan B attracting $1 billion-plus in demand from investors, according to a syndicate source. The facility received a lot of attention prior to it actually hitting the market with the B loan reported as being close to filled on Wednesday evening.

The $1.55 billion credit facility consists of a $250 million five-year revolver with an interest rate of Libor plus 350 basis points, a $500 million five-year term loan A with an interest rate of Libor plus 350 basis points and an $800 million seven-year term loan B with price talk of Libor plus 375 basis points.

Deutsche Bank, Bank of America, Salomon Smith Barney; Credit Suisse First Boston and Goldman Sachs are the lead banks on the deal.

"It's an attractive sector, attractive business model, steady cash flows and there are rumors that it may be bought by an investment-grade company," a market professional previously said in explanation of why the deal is receiving so much positive investor attention.

Security for the loan is substantially all of DirecTV's assets.

DirecTV will use the proceeds from the sale of $1.4 billion senior unsecured notes due 2013 and the term loans to repay outstanding indebtedness under parent Hughes' existing credit facilities, to fund Hughes' business plan through projected cash flow breakeven and for Hughes' other corporate purposes, the release said. Hughes' existing $1.8 billion senior secured credit facilities will terminate upon the repayment.

DirecTV is an El Segundo, Calif. digital satellite television service provider.

Crown Cork & Seal's $1.05 billion credit facility is oversubscribed in all of its tranches, according to a syndicate source and the deal is now being labeled as "basically done".

The loan consists of a $550 million first lien revolver with an interest rate of Libor plus 400 basis points and a $500 million first lien term loan B with an interest rate of Libor plus 425 basis points.

The credit facility, which is being led by Deutsche Bank and Salomon Smith Barney, is part of a comprehensive refinancing plan that originally included $1.75 billion in senior secured second and third lien notes and the receipt of gross proceeds from the issuance of convertible notes and debt for equity exchanges in an aggregate of $325 million.

However, the company subsequently opted to upsize and restructure its junk bond deal to $2.05 billion while canceling its $250 million convertible note offering.

At pricing on Tuesday the bond offering reached $2.1 billion in size, made up of $1.085 billion of senior secured second lien notes due 2011, €285 million of senior secured second lien notes due 2011 and $725 million of senior secured third lien notes due 2013.

Proceeds from the refinancing plan will be used to refinance the company's existing revolver that was scheduled to mature on December 8, and approximately $900 million of senior notes, including all of the notes scheduled to mature in 2003 and approximately $300 million of the notes due in 2004 and 2005.

Crown Cork & Seal is a Philadelphia supplier of packaging products to consumer marketing companies.

Books on Silgan Holdings Inc.'s recently upsized deal will be closing "shortly", a syndicate source told Prospect News on Thursday. The add-on term loan had a built-in option to upsize, which was utilized due to a pretty substantial oversubscription during the syndication process.

The $150 million add-on term loan (increased from an initial size of $100 million) has an interest rate of Libor plus 200 basis points.

Deutsche Bank is the lead bank on the deal that will be used to help fund the acquisition of the remaining 65% percent interest in White Cap joint venture from Amcor White Cap Inc.

Silgan is a Stamford, Conn. manufacturer of consumer goods packaging products.

Last in the primary, Veritas DGC Inc.'s $250 million credit facility is scheduled to close on Friday. Deutsche Bank is the lead bank on the refinancing deal.

The loan underwent some minor changes in size since its initial launch. The facility consists of a $55 million three-year revolver (down from an original size of $60 million) with an interest rate that can range from Libor plus 350 to 400 basis points, a $30 million three-year term loan A (down from an original size of $40 million) with an interest rate that can range from Libor plus 350 to 400 basis points, a $125 million four-year term loan B with an interest rate of Libor plus 500 basis points and a $40 million five-year term loan C with an interest rate of Libor plus 750 basis points.

Veritas is a Houston provider of geophysical services to oil and gas industry.

In the secondary, AES Corp.'s bank debt was up by about a quarter of a point across the board on Thursday on what was viewed as positive earnings results with the term loan B and term loan C quoted around 95 to 95½ and the term loan A quoted around 97 to 971/2, according to a trader.

Net income from recurring operations for 2002 was $421 million before certain charges. Diluted earnings per share from recurring operations were $0.78 for the year. The net loss for the year after all charges was $3.509 billion and the diluted loss $6.51 per share. For the year, revenues increased 13% to $8.6 billion, a news release said.

For the fourth quarter, net income and diluted earnings per share from recurring operations were $15 million and $0.03 per share, respectively. Net loss and diluted loss per share for the quarter, after all charges, were $2.766 billion and $5.08 per share, respectively. Parent operating cash flow for 2002 was $1.095 billion.

"With our continued emphasis on performance improvements and cash flow, we achieved POCF of $1.095 billion for 2002. Combined with our successful corporate refinancing at the end of 2002 and proceeds from our asset sales program, we now have liquidity exceeding $500 million and a flexible amortization schedule for continuing to reduce debt at the parent company level over the next several years. Looking forward to 2003, we expect consolidated net cash from our subsidiary operating activities of approximately $2.2 billion - which will enable cash distributions to the parent as POCF to continue at an estimated $1.0 billion during 2003, further supporting our continued progress toward a stronger balance sheet," said Barry Sharp, chief financial officer, in the release.

In December, the Arlington, Va. power company refinanced its credit facility with a new $1.6 billion loan consisting of a $350 million revolver, three tranches of term loans totaling approximately $1.2 billion and a reimbursement agreement associated with a £52.5 million letter of credit, all due July 15, 2005 with an interest rate of Libor plus 650 basis points. Citibank was the lead bank on the credit facility.

Earlier this month, the bank paper was reported as trading actively due to the completion of AES' sale of its Cilcorp Inc. unit, a utility holding company, to Ameren Corp. for $1.4 billion. Of the $500 million in net equity proceeds that AES received, about $250 million was slated for the reduction of parent debt.

Qwest Communications International Inc.'s revolver continued its downward slide, moving lower by about a quarter of a point to a 92¼ bid and a 92¾ offer, according to a trader. The debt began heading south after the company announced that it discovered additional restatement entries to the 2001 and 2000 financial statements regarding revenue and expense recognition and cost accrual issues.

Currently, the company expects revenues in 2001 to be reduced to $18.37 billion, down $1.325 billion from the original reported number of $19.695 billion. For 2000, revenues as restated are $15.721 billion, down $889 million from the original number of $16.61 billion.

Adjusted EBITDA as restated for 2001 is $6.036 billion, down $1.317 billion from the original number of $7.353 billion. As restated for 2000, adjusted EBITDA is $6.075 billion, down $842 million from the previously reported $6.917 billion.

The restated financial statements are subject to audit by KPMG.

Qwest is a Denver provider of local telecommunications and related services, wireless services and directory services.

Western Wireless Corp.'s bank debt was reported as trading fairly actively at unchanged levels around 80 ahead of the company's earnings release late in the day.

The company's results included EBITDA for domestic operations rising to a record $97.1 million for the quarter, an increase of 32% from the fourth quarter of 2001. Free cash flow from domestic operations for 2002 exceeded $206 million, more than doubling free cash flow from the $83 million reported for 2001.

"2002 was a year of dramatically improved financial results for Western Wireless. Despite a challenging economic environment, the company increased domestic cash flow by 6.6% and substantially more than doubled free cash flow," said John W. Stanton, chairman and chief executive officer, in a news release. "Below the surface, the company strengthened its economic model substantially during the year by reducing the costs of serving customers, signing long term roaming agreements with the three largest operators in the industry and strengthening the management team."

Western Wireless is a Bellevue, Wash. provider of wireless communications services.

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