Oreck lowers spreads; Worldspan sets talk; DynCorp fills up; Celanese, Murray Energy, Intelsat break

By Sara Rosenberg

New York, Jan. 27 - Oreck Corp. cut pricing on its in-market $215 million credit facility (B1/B+) and upsized its term loan B by a relatively small amount on Thursday. Also on the primary front, price talk on Worldspan LP's newly launched deal came out prior to the meeting and DynCorp International LLC just about reached subscription with the expectation being that pricing will firm up at the high end of talk.

In the secondary, Celanese Corp., Murray Energy Corp. and Intelsat Ltd. all allocated and broke for trading at strong levels.

As was previously anticipated by the market, Oreck reverse flexed its $20 million six-year revolver and seven-year term loan B to Libor plus 275 basis points from Libor plus 300, according to a market source. The 50 basis point unutilized fee under the revolver was left unchanged.

Furthermore, the company increased its term loan B size to $195 million from $190 million with the additional $5 million in proceeds being used to increase the dividend payment to sponsor American Securities Capital Partners.

The dividend payment to American Securities totals $69.9 million, with the breakdown being $65.5 million from term loan proceeds (up from $60.5 million), $2.5 million from cash on hand and $1.9 million from a loan amortization payment that was made in December but is being reimbursed because of this new deal.

Based on a last-12-months number through December, pro forma for the refinancing senior and total leverage will now be 3.63x compared to 3.58x when the deal first launched due to the term loan upsizing.

"December numbers were really good so net leverage only goes up [minimally]," the source said.

Investors expected the deal to end up with lower than originally anticipated pricing since it has been multiply oversubscribed for the past couple of days, if not longer. As of Thursday, there was more than $600 million in the book for the term loan B, the source said.

The term loan was offered to investors at par and the revolver was offered with 50 basis points upfront for any size commitment.

Recommitments are due Friday, allocations are expected to go out on Tuesday and closing is targeted for around mid-next week.

Royal Bank of Scotland is the lead bank on the New Orleans vacuum company's deal that will be used, in addition to paying a dividend, to refinance the existing credit facility.

Worldspan sets price talk

Worldspan came out with price talk of Libor plus 250 basis points on both its $40 million five-year revolver and $400 million five-year term loan before the deal launched via a bank meeting Thursday afternoon, according to a market source.

JPMorgan and UBS are joint bookrunners on the deal, with JPMorgan the left lead, and Lehman Brothers, Deutsche Bank Securities and Goldman Sachs & Co are all agents as well.

Proceeds from the facility, along with proceeds from a notes offering, will be used to help fund the tender offer for the company's 9 5/8% senior notes, refinance existing bank debt, redeem preferred stock issued by parent company Worldspan Technologies Inc. and prepay and terminate sponsor advisory fees and dividends on Worldspan Technologies class B common stock.

Any remaining proceeds will be used for general corporate purposes.

Worldspan is an Atlanta operator of computerized reservation systems.

DynCorp nearing completion

DynCorp's $345 million term loan B was "pretty close to hitting full subscription range" by Thursday morning, and more commitments are expected to come in prior to Monday's deadline that should push the deal to oversubscription, a buyside source told Prospect News.

"It should be oversubscribed maybe by a half a turn, not three or four times like everything else," the source said.

With the deal not exactly reaching "blow out" status, pricing is expected to firm up at Libor plus 275 basis points, the high end of the Libor plus 250 to 275 basis points talk, the source continued.

"They might have been a little optimistic about getting it at 250," the source added.

DynCorp's $420 million credit facility (B2/B+) also contains a $75 million revolver that was launched with opening price talk of Libor plus 250 basis points.

The term loan B is being offered to investors at par. Upfront fees on the revolver are 125 basis points for a $25 million commitment, 75 basis points for a $15 million commitment and 50 basis points for a $10 million commitment.

Goldman Sachs and Bear Stearns are the lead banks on the deal, with Goldman the left lead.

Proceeds from the credit facility and a bond offering will be used to help fund Veritas Capital's acquisition of DynCorp from Computer Sciences Corp. for $850 million, with $775 million in cash payable at closing plus $75 million of senior preferred stock. The acquisition is expected to be completed in the first quarter of 2005.

The company is a Fort Worth, Texas, provider of mission critical support to its customers, primarily the U.S. government.

Celanese heads higher after break

Celanese's funded and delayed-draw term loan B broke for trading around midday on Thursday and saw quotes move up about a quarter to three eighths of a point from opening levels during the session, according to a trader.

By late day, the funded term loan B was quoted at 101 7/8 bid, 102 1/8 offered, the delayed-draw term loan B was quoted at 101 1/8 bid, 101 3/8 offered and strips of funded and delayed-draw term B debt were quoted at 101¾ bid, 102 offered, the trader said.

The $1.385 billion term loan B add-on, of which $250 million is delayed draw, is priced with an interest rate of Libor plus 250 basis points - in line with existing term B pricing. Pricing can step down to Libor plus 225 basis points after the first quarter depending on leverage.

Celanese is also getting a $220 million add-on to its revolver, which is priced at Libor plus 225 basis points, in line with existing pricing.

The Dallas-based chemical company's term loan was originally sold to investors at par and revolver commitments of $10 million or more got 50 basis points upfront.

Celanese got the additional bank debt (B1/B+) in connection with its IPO of series A common stock and a preferred stock offering. Proceeds from the stock deals are being used to redeem notes and pay a portion of a $952 million dividend to the holders of the company's series B common stock.

Proceeds from the non-delayed-draw term loan B are being used to repay the amounts outstanding under the existing senior credit facilities and the floating-rate term loan, and to pay $582 million of the dividend payment.

Proceeds from the delayed-draw term loan B will be used for the Acetex Corp. and Vinamul Polymers acquisitions.

Deutsche Bank, Morgan Stanley and Bank of America were the lead banks on the deal, with Deutsche the left lead.

Murray Energy breaks

Murray Energy's credit facility opened for trading on Thursday, with the first-lien term loan quoted around 101¾ bid, 102¼ offered by late day after moving up from earlier levels of 101½ bid, 101¾ offered, according to various traders.

Meanwhile, the second-lien term loan was quoted as high as 106 bid, 107 offered but ended the day closer to 105½ bid, 106½ offered, or even quoted a bit tighter at 105¾ bid, 106¼ offered, traders said.

The $150 million first-lien term loan is priced at Libor plus 300 basis points with no call protection provisions.

The $250 million second-lien term loan is priced at Libor plus 775 basis points and is non-callable for three years, callable at 102 in year four and callable at 101 in year five.

Originally, the first-lien term loan was talked at Libor plus 300 to 350 basis points and the second-lien term loan was talked at Libor plus 800 to 850 basis points.

Both term loans were oversubscribed on the day of the bank meeting, with some saying that the investors' attraction to the deal was sparked by it being asset rich in a favorable industry with full pricing.

Murray's $425 million credit facility also contains a $25 million revolver tranche.

Goldman Sachs is the lead bank on the deal that will be used to refinance existing debt.

Intelsat tops 101

Intelsat's term loan B opened for trading late in the session Thursday with the paper quoted at 101 3/8 bid, 101½ offered, according to a trader.

The 61/2-year B tranche is priced at Libor plus 175 basis points. Pricing was reverse flexed from Libor plus 225 basis points at the start of the week once the company's enormous bond offering priced.

The $650 million credit facility (Ba3/BB+/BB) also contain a $300 million six-year revolver priced at Libor plus 200 basis points with a commitment fee of 37.5 basis points.

The term loan was offered to investors at par and a revolver commitment of $15 million got 125 basis points upfront.

Following closing of the deal, the capital structure will have about $350 million of funded bank debt for a senior secured debt to EBITDA ratio of about 0.5. The reason why there's $2.55 billion in bonds and only a $650 million credit facility is that the company wanted to leave its existing bonds in place and those bonds have a carve out as to how much bank debt the company can get.

Proceeds from the bank debt and the bonds will be used to help fund the acquisition of Intelsat by Zeus Holdings Ltd., a company formed by a consortium of funds advised by Apax Partners, Apollo Management, Madison Dearborn Partners and Permira.

Deutsche Bank, Credit Suisse First Boston and Lehman Brothers are the lead banks on the credit facility, with Deutsche listed on the left.

Intelsat is a Pembroke, Bermuda-based satellite communications company.

GGP up, seen as Nextel substitute

General Growth Properties Inc.'s term loan B was up a little bit on the day with levels of par ½ bid, par ¾ offered as funds are looking for a way to replace the approximately $2 billion of Nextel Finance Co. debt that is essentially being taken away, according to a trader.

On Wednesday, the Chicago-based shopping mall owner's paper was quoted at par 1/8 bid, par 3/8 offered.

Earlier this week, Nextel announced that it would be refinancing its $2.2 billion secured term loan E with a new $2.2 billion secured five-year term loan priced at Libor plus 75 basis points. The deal, co-led by Citigroup and JPMorgan, was said to already be spoken for as syndication was done through a club execution.

In fact, the Reston, Va., wireless company plans to close on the new term loan by the end of the month.

And, although the new term loan is good for Nextel, it unfortunately takes a large chunk of leverage paper out of the secondary, making it necessary for loan market players to find a nice alternative to put their money to work.

"It's a good substitute for Nextel paper," the trader said about General Growth. "Libor plus 225 basis points and Ba2 credit."

Del Labs closes

Del Laboratories Inc. closed on its new $250 million senior secured credit facility (B1/B) consisting of a $200 million 61/2-year term loan B priced at Libor plus 225 basis points with a step down to Libor plus 200 basis points, based on leverage, and a $50 million six-year revolver with an initial interest rate of Libor plus 250 basis points.

The term loan B was downsized from $210 million after the company priced a bond deal that was upsized by $25 million and was reverse flexed from Libor plus 275 basis points during syndication.

JPMorgan and Bear Stearns acted as joint lead arrangers and joint bookrunners on the deal. JPMorgan Chase Bank is administrative agent, Bear Stearns Corporate Lending Inc. is syndication agent and Deutsche Bank is documentation agent.

Proceeds from the term loan and the bonds were used to help fund the now completed acquisition of Del Laboratories by DLI Holding Corp., a company owned by affiliates of Kelso & Co.

Proceeds from the revolver will be used to fund continuing operations and other general corporate purposes.

Del Laboratories is a Uniondale, N.Y., manufacturer, marketer and distributor of cosmetics and proprietary over-the-counter pharmaceuticals.

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