ACS breaks; Lear rises on new loan; GM jumps on refi buzz; Goodyear up as probe ends

By Sara Rosenberg

New York, March 29 - Affiliated Computer Services Inc. (ACS) allocated its credit facility on Wednesday, with the term loan freeing for trading wrapped around the 101-type context.

Also, in trading, Lear Corp.'s bank debt headed higher as news surfaced that the company would be refinancing its existing term loan B and increasing pricing on its revolver, General Motors Corp. saw a major spike in revolver levels as refinancing hopes started to circulate for that deal as well, and The Goodyear Tire & Rubber Co.'s second-lien loan inched up as the Securities and Exchange Commission accounting probe was put to rest.

As for primary happenings, National Renal Institutes Inc. made a round of changes to its credit facility, including upsizing both its revolver and term loan B and reducing pricing on the term loan B.

Affiliated Computer's credit facility broke for trading on Wednesday, with the $800 million seven-year term loan B quoted at par 7/8 bid, 101¼ offered throughout the session, according to a market source.

The term loan is priced with an interest rate of Libor plus 150 basis points. During syndication, the tranche was downsized from $4 billion to meet the amount of tendered common stock in the company's Dutch auction, and pricing was reverse flexed from original price talk at launch of Libor plus 200 basis points.

The company successfully tendered for only 7.4 million shares of its class A common stock at a purchase price of $63 per share for a total cost of about $465 million.

Under the Dutch auction tender, the company had originally offered to buy up to 55.5 million shares of its class A common stock at a minimum price per share of $56 and a maximum price of $63, for a total value of about $3.5 billion.

Affiliated Computer's $1.8 billion credit facility (Ba2) - down from $5 billion - also contains a $1 billion six-revolver with an initial interest rate of Libor plus 200 basis points.

In addition to funding the tender offer, proceeds from the facility were used to refinance the company's existing credit facility, including repaying about $288 million in outstanding debt under its existing revolver.

At close, which was announced on March 20, there was about $93 million drawn under the new $1 billion revolver. Future borrowings under the revolver are available for working capital and to finance permitted acquisitions.

Citigroup acted as the lead arranger and administrative agent on the deal, and Bear Stearns, Wells Fargo, Bank of America, SunTrust, Wachovia, Morgan Stanley and Bank of Tokyo Mitsubishi all signed on in various agent roles.

The credit facility contains a $750 million accordion feature under which the company can add one or more incremental term loan facilities to the capital structure and/or increase the revolver size.

The facility also includes an additional uncommitted accordion feature of up to approximately $3 billion allowing for future incremental borrowings under the term loan to fund purchases of the company's equity and debt securities.

Affiliated Computer Services is a Dallas-based provider of business process and information technology outsourcing solutions to commercial and government clients.

Lear stronger on refi plans

Lear's bank debt was stronger across the board following the company's announcement that it plans on replacing its existing term loan B with new term loan debt and that its existing revolver will be amended and restated to, among other things, increase interest rates, according to a trader.

The company's existing term loan B closed the day quoted at 99¾ bid, par ¼ offered, up from previous levels of 98¾ bid, 99¼ offered as investors anticipate being taken out at par when the new term loan deal is completed, the trader said.

In addition, the company's existing revolver closed the day at 98 bid, 99 offered, up from previous levels of 97¼ bid, 98 offered, as investors are anticipating juicier spreads, the trader added.

Lear is scheduled to hold a bank meeting on Tuesday to launch its proposed $800 million of new secured term loan debt that will consist of a $600 million first-lien term loan B talked at Libor plus 300 basis points and a $200 million second-lien term loan talked in the range of Libor plus the 450 to 475 basis points.

In connection with the new term loan facilities, Lear said that its primary credit facility will be amended and restated to increase revolver interest rates, provide additional collateral for both its existing revolver and new term loans, and provide additional flexibility under existing financial covenants through 2007.

On top of paying down the existing $400 million term loan scheduled to mature in February 2007, proceeds from the new debt will be used to fund the retirement of the company's outstanding convertible senior notes and for general corporate purposes.

JPMorgan Chase Bank, Bank of America, Citibank and Deutsche Bank are the lead banks on the deal.

Lear is a Southfield, Mich., supplier of automotive interior systems and components.

GM skyrockets on refi hopes

General Motors' revolving credit facility saw a massive jump in levels as talk began circulating that a refinancing of the $5.6 billion unsecured line of credit could be in the works, according to traders.

The revolver ended the day quoted at 92½ bid, 94 offered, according to one trader, and at 93 bid, 94 offered, according to a second trader - either way up about 10 points from previous levels of 83 bid, 84 offered.

In a 10-K filed with the SEC late Tuesday, the company revealed that it is exploring the possibility of amending or replacing its existing revolver with new terms since it is unsure as to whether lenders would allow any borrowings under the facility due to the recent restatement of prior financial statements.

The company needed to restate financial results for its financing arm, General Motors Acceptance Corp., from 2003 through the third quarter of 2005 as a result of improper classification and presentation of cash flows for certain mortgage loans.

"GM has not previously drawn on this credit facility or its predecessor facilities and believes that it has sufficient liquidity over the short and medium term without drawing on this facility. GM believes that this matter is unlikely to be tested because GM has no current need or intention to draw on the existing facility," the filing added.

One trader remarked that the relative vagueness of the refinancing remarks in the 10-K was an expected cause for such a big run-up in levels.

"Some people use it as a hedge so with bonds going lower, I guess the bank debt is going higher," the trader added.

Goodyear rises

Goodyear's second-lien loan headed higher on Wednesday as news came out that the SEC has terminated its investigation into accounting matters included in the company's restatement of financial results, which was announced in October 2003, and in subsequent public filings.

The Akron, Ohio-based tire company's second-lien loan closed the day quoted at 101½ bid, 102 offered, up an eighth from previous levels of 101 3/8 bid, 101 7/8 offered, according to a trader.

In connection with the completion of the probe, the SEC notified Goodyear that it will not recommend enforcement action against the company.

Furthermore, the SEC has also terminated its investigation and will not recommend enforcement action against the company's former chief financial officer and former chief accounting officer.

National Renal reworks deal

National Renal tweaked its credit facility, increasing both the revolver and the term loan B tranche sizes, decreasing pricing on the term loan B and adding soft call protection to the term loan B, according to a market source.

With the changes, the company's revolver is now sized at $50 million compared to an original size of $40 million, however pricing was left unchanged at Libor plus 300 basis points with a 50 basis point commitment fee, the source said.

Meanwhile, the term loan B was upsized to $250 million from an original size of $218 million, pricing was reverse flexed to Libor plus 225 basis points from original price talk at launch of Libor plus 300 basis points and 101 soft call protection was added to the tranche, the source added.

Proceeds will be used to help fund the acquisition of dialysis clinics from Fresenius Medical Care Holdings Inc. and Renal Care Group. The increase in the term loan B size is a result of the company acquiring more dialysis centers than was originally expected.

RBC Capital Markets, Royal Bank of Scotland and Aries Management (which has agreed to provide the mezzanine financing and therefore was awarded a role in the loan) are the lead banks on the now $300 million credit facility, with RBC the left lead.

National Renal Institutes is a wholly owned subsidiary of Nashville, Tenn.-based DSI Holding Co. Inc., which is being invested in by equity firm Centre Partners.

Sybron closes

Sybron Dental Specialties Inc. closed on its new $250 million five-year revolving credit facility with an initial interest rate of Libor plus 62.5 basis points and a 15 basis point commitment fee, according to a company news release.

Credit Suisse and Bank of America acted as joint lead arrangers and joint bookrunners on the deal. Credit Suisse is the administrative agent, and Bank of America, The Bank of Tokyo-Mitsubishi, Calyon and LaSalle Bank are co-documentation agents.

The revolver, which was completed on March 23, contains a $400 million accordion feature.

Proceeds were used to replace the company's previous $150 million revolver that carried an interest rate of Libor plus 175 basis points and had more restrictive covenants.

Sybron is an Orange, Calif., manufacturer of high technology dental, dental implant and infection prevention products.

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