Huntsman International, Ozburn-Hessey set price talk; Integrated Electrical deal in flux

By Sara Rosenberg

New York, July 19 - Huntsman International LLC released price talk on its proposed $2.6 billion credit facility as the deal launched via a very well attended bank meeting on Tuesday. Also coming out with price talk was Ozburn-Hessey Logistics LLC as it too launched into syndication during market hours and was met with a favorable reception.

Meanwhile, talk has it that Integrated Electrical Services Inc.'s in-market deal may be shifting away from the Credit Suisse First Boston loan desk and onto the Bank of America desk, although at this time, the deal's fate is also speculation.

Huntsman International came out with opening price talk of Libor plus 175 basis points on its $600 million five-year revolver and price talk of Libor plus 200 basis points on its $2 billion seven-year term loan B at its Tuesday morning bank meeting, according to a market source.

The term loan B is being offered to investors at par.

As for the bank meeting itself, "it was very well attended with probably 100 people there and another 75 on the phone," the source said. "It should be a blowout but we'll see."

Proceeds from the credit facility will be used to help fund the merger of Huntsman LLC and Huntsman International LLC, two subsidiaries of Huntsman Corp., into one entity with Huntsman International being the surviving entity.

As part of this merger, the existing bank debt at both Huntsman LLC and Huntsman International is being retired. And, being that these two companies have a significant amount of outstanding loan debt there is an existing lender group that is relatively large - a factor that could prove to be favorable in regards to syndicating the new deal.

As of March 31, Huntsman International had a $375 million revolver that was undrawn and $1.178 billion of term loan B debt outstanding, as well as a €45.1 million term loan.

Huntsman LLC had about $715 million of term loan B debt outstanding as of March 31 and $61.3 million drawn under its $350 million revolver.

The purpose of the merger is to simplify Huntsman's financing and SEC reporting structure, facilitate cost reductions for Huntsman's bank credit facilities and other financing arrangements, and provide for other organizational efficiencies.

Deutsche Bank and Citigroup are the lead banks on the Salt Lake City-based chemical company's deal, with Deutsche the left lead.

On Tuesday, Standard & Poor's announced a rating of BB- for the proposed Huntsman International credit facility, a recovery rating of 2 for the deal reflecting the expectation of 80% to 100% recovery of principal in the event of default, and a change in outlook to positive from stable for the company.

"The outlook change recognizes the increasing likelihood that favorable conditions in the chemical industry and management's focus on debt reduction and modest growth will support somewhat higher ratings within the next two years," said S&P credit analyst Kyle Loughlin, in the ratings release.

Ozburn-Hessey price talk

Ozburn-Hessey released opening price talk of Libor plus 300 basis points on both its $40 million five-year revolver and $140 million seven-year term loan B as the deal launched via a seemingly successful bank meeting Tuesday afternoon, according to a market source.

By late day, the syndicate already had $20 million in orders for the revolver and "orders in on the term loan too," the source added.

The term loan is being offered to investors at par, and a $10 million revolver commitment gets an upfront fee of 75 basis points.

Morgan Stanley and Bear Stearns are joint lead arrangers and joint bookrunners on the $180 million credit facility (B2/B+), with Morgan Stanley the left lead.

Proceeds from the term loan will be used to help fund a leveraged buyout of the company by Welsh, Carson, Anderson & Stowe.

The revolver will be undrawn at closing and will be available for general corporate purposes.

Welsh, Carson, Anderson & Stowe is putting in 63% of the money for the LBO consisting of $80 million of holding company mezzanine debt and $157 million of equity.

Following the transaction, senior leverage will be 31/2x and total leverage through the holding company will be 51/2x.

Ozburn-Hessey is a Nashville-based third-party logistics provider.

Integrated Electrical switching underwriters?

Rumor has it that Integrated Electrical Services' $100 million five-year asset-based revolving credit facility that was launched on July 12 has been pulled by lead bank Credit Suisse First Boston and will re-emerge, potentially in a different form, off of the Bank of America syndicate desk, according to a market source.

Talk also has it that the Bank of America deal, which is expected "to come to life" in two to three weeks will contain an asset-based revolver as well as a small junior piece, the source added.

However, sources close to the deal said that everything is still "in flux." Because of that, the sources declined to comment on the market rumors.

A call to the company was not returned prior to press time.

Proceeds from the new bank debt will be used to refinance existing debt.

Integrated Electrical Services is a Houston-based provider of electrical solutions to the commercial and industrial, residential and service markets.

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