TransWestern Publishing first and second lien term loan facilities oversubscribed on launch date

By Sara Rosenberg

New York, Feb. 10 - TransWestern Publishing Co. LLC's first and second lien term loans were both overwhelming successes as the tranches were said to be well oversubscribed by mid-afternoon after launching via a bank meeting on Tuesday morning.

"It's the sector. Everyone loves yellow pages publishers," a source said regarding the deal's warm reception.

Furthermore, the company also has an existing bank group and bond investors, the source added, which also helps the books fill up rather quickly.

The facility consists of a $400 million first lien term loan with price talk of Libor plus 225 to 250 basis points, a $200 million second lien term loan with price talk of Libor plus 375 to 400 basis points and a $65 million revolver.

Goldman Sachs and Wachovia are joint lead arrangers on the deal, with Goldman listed on the left.

Proceeds will be used to finance the tender offer of its $215 million series F 9 5/8% senior subordinated notes, refinance the existing credit facility and help pay a dividend to equity investors.

Last Friday, Standard & Poor's revised its outlook on TransWestern to negative from stable but affirmed the company's BB- senior secured debt and B subordinated debt ratings.

"The outlook change reflects a planned dividend to Thomas H. Lee Partners and all other equity investors of about $200 million, resulting in a meaningful deterioration in the overall financial profile. Pro forma debt to EBITDA is in the 7x area," S&P explained.

Ratings reflect the company's substantial pro forma debt levels due to the planned dividend, its initial capitalization and subsequent growth through acquisitions, and competitive business conditions. Offsetting these factors is the company's historically stable revenue and cash flow throughout the advertising revenue cycle, geographic diversity, a large and diversified customer base of small- to medium-size businesses and favorable growth prospects, S&P said.

TransWestern's debt to EBITDA measure is expected to decline sharply in 2004 as a result of the combination of lower debt and higher EBITDA levels. In addition, the company is expected to use most, if not all, of its free operating cash flow for debt reduction in the intermediate term.

However, the company's pro forma financial profile is weak. Ratings may be lowered if the company does not focus on debt reduction and/or if its EBITDA does not recover as expected in the intermediate term, S&P added.

TransWestern is a San Diego telephone directory publisher.

MultiPlan plans launch

A bank meeting has been scheduled for Thursday in New York for MultiPlan Inc.'s proposed $200 million senior secured credit facility, according to a market source. Previously, it was known that the deal would launch sometime in mid-February but specific timing had not been nailed down.

The facility consists of a $180 million five-year term loan and a $20 million five-year revolver.

UBS will be acting as sole lead arranger and bookrunner on the deal.

Proceeds will be used to help fund the acquisition of U.S. Health Business, a subsidiary of BCE Emergis Inc., for $213 million in cash. The acquisition, which was announced in early January, is subject to BCE Emergis shareholder and regulatory approval. Shareholders of BCE Emergis will be asked to vote on the transaction at a special meeting on Feb. 26. BCE Inc., which holds about 64% of the common shares of BCE Emergis, has irrevocably committed to vote in favor of the transaction. The transaction is expected to close in early March 2004.

On a pro forma basis, revenues are expected to be about $175 million and EBITDA is expected to be about $73 million. Closing leverage is anticipated to be in the 2.5x range, the source said.

MultiPlan is a New York healthcare network.

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