Allocations on oversubscribed SBA facility expected later this week

By Sara Rosenberg

New York, Jan. 26 - SBA Senior Finance Inc.'s recently upsized and reverse flexed $400 million senior secured credit facility (B2/CCC+) is anticipated to allocate and break for trading later this week, according to a source close to the deal.

The "massively oversubscribed" facility consists of a $75 million revolver due July 2008 with an interest rate of Libor plus 350 basis points, a $275 million term loan B due October 2008 with an interest rate of Libor plus 350 basis points and a $50 million delayed draw term loan B due October 2008 with an interest rate of Libor plus 350 basis points, the source said.

Originally the deal was launched with the revolver priced at Libor plus 375 basis points and the institutional tranches priced at Libor plus 400 basis points, however pricing was decreased around mid-last week. Also, at that time, the term loan B was upsized by $50 million to $275 million.

"[The company opted] to take the money while it's available at an attractive price," the source said regarding the decision to increase the size of the facility.

Lehman and Deutsche Bank are the lead banks on the facility.

Security is a pledge of all the assets of SBA and its subsidiaries.

Proceeds will be used to repay borrowings under SBA's existing $195 million senior secured credit facility and for general corporate purposes, including calling the remaining $65.7 million of the company's 12% senior discount notes on March 1.

CenterPoint/Reliant unfazed

CenterPoint Energy Inc.'s bank debt stayed strong at 102 bid, 103 offered, unchanged from previous levels, a trader said, despite Reliant Resources Inc.'s announcement after the market closed Friday that it would not exercise its option to acquire CenterPoint's 81% interest in Texas Genco Holdings Inc.

In response to this news, CenterPoint put out its own release stating that it "intends to pursue alternatives to monetize its interest in Texas Genco that include seeking another purchaser and has engaged a financial advisor to assist in this effort."

CenterPoint is a Houston-based domestic energy delivery company.

And, Reliant Resources' bank debt was also seen as pretty much unchanged on the news, with the paper said to be around the 98½ area, according to a trader.

On Friday, the paper was seen trading at both 98 5/8 and 98¾ levels and was reported to be relatively active on the potential sale of its New York state power plants and a rumored bond deal.

Reliant is a Houston-based electricity and energy services company.

Communications & Power closes

The Cypress Group completed its acquisition of Communications & Power Industries Inc. in a transaction valued at about $300 million, according to a Cypress news release on Monday.

In connection with this acquisition, Communications & Power obtained a $130 million credit facility (B1/B+) consisting of a $90 million 61/2-year term loan B with an interest rate of Libor plus 300 basis points and a $40 million six-year revolver with an interest rate of Libor plus 300 basis points.

Originally, the term loan B was launched with price talk of Libor plus 350 basis points, but the tranche was flexed down during syndication due to overwhelming demand. In fact, on the day of the bank meeting the deal was said to be oversubscribed by multiple times.

Many reasons were given for the deal's ability to draw investor attention including the company's overall positive performance and simple business to understand. However, one other thing that might have played in the company's favor was the lack of new deals that hit the market at the time that this deal launched in early January.

UBS Securities and Bear Stearns were the joint lead arrangers on the deal, with UBS listed on the left. Wachovia acted as the documentation agent.

The company also sold $125 million of high-yield bonds to support the leveraged buyout.

Communications & Power is a Palo Alto, Calif., manufacturer of components for systems used for microwave and radio frequency signals.

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