MSCI sets talk; ServiceMaster selling term debt; BA Energy retranches; U.S. Xpress nabs orders with OID

By Sara Rosenberg

New York, Oct. 2 - MSCI Inc. released price talk and tranching details on its credit facility as the deal was launched with a bank meeting during the Tuesday session, and ServiceMaster Co. is selling down some of its term loan debt at a pretty juicy discount.

In other primary news, BA Energy Inc. is carving an institutional term loan out of its previously all pro rata project financing facility as a result of investor interest in the deal, and U.S. Xpress Enterprises Inc.'s (Mountain Lake Acquisition Co.) term loan B has been seeing some positive momentum since adding an original issue discount to the tranche.

Moving to the secondary, LCDX was stronger as people are getting ready for the series 9 index to start trading on Wednesday.

MSCI held a bank meeting on Tuesday to kick off syndication on its $450 million senior secured credit facility (Ba2/BB+), at which time price talk and term loan sizes emerged, according to buyside sources.

The $50 million revolver and $150 million term loan A are both being talked at Libor plus 250 basis points, and the $250 million term loan B is being talked at Libor plus 300 bps, sources said.

Previously, it was known that there would be $400 million in term loan debt comprised of term loan A and term loan B tranches, but the exact split was unavailable.

Morgan Stanley and Bank of America are the lead banks on the deal.

The facility is being done in connection with an initial public offering of common stock.

Proceeds will be used to repay intercompany debt owed to Morgan Stanley.

MSCI is a New York-based provider of investment decision support tools to investment institutions.

ServiceMaster syndicating some term debt

ServiceMaster is selling down some of its covenant-light term loan B debt, with the targeted amount being in the range of $750 million to $1 billion, according to a market source.

This term B debt is being offered to investors with an original issue discount of 95, the source said.

"That's pretty much wrapped up. I think they're looking to close on that tomorrow," the source added.

The debt being sold is part of a $2.65 billion term loan B that was obtained this summer to fund the buyout of the company by Clayton, Dubilier & Rice, Inc.

The term loan is priced at Libor plus 275 bps, with a step up to Libor plus 300 bps based on leverage.

Citigroup, JPMorgan, Bank of America, Goldman Sachs and Morgan Stanley acted as the lead banks on the deal.

When the term loan B was first being marketed this summer, it was talked at Libor plus 225 bps. Then, before being pulled, it was flexed up to Libor plus 300 bps, with a step up to Libor plus 325 bps, and an original issue discount of 98 was added.

ServiceMaster is a Downers Grove, Ill., provider of services to residential and commercial customers, including lawn care and landscape maintenance, termite and pest control, home warranties, disaster response and reconstruction, cleaning and disaster restoration, house cleaning, furniture repair and home inspection.

BA Energy carves out institutional loan

BA Energy is adding an institutional term loan tranche to its project financing credit facility and reducing the size of the pro rata tranche, according to a market source.

Previously, the entire $500 million facility was being marketed as an all pro rata tranche. Now about $100 million to $150 million of that total amount will be in the form of an institutional term loan, with the remaining $350 million to $400 million staying pro rata.

"Before institutional guys were looking at it, but the structure wasn't quite working for them so now they're creating a tranche for them," the source explained.

Terms, such as price talk, on the new institutional term loan are still to be determined, the source added.

The pro rata tranche is being talked at Libor plus 400 bps, with a 150 bps upfront fee.

TD Securities and Lehman Brothers are the lead banks on the deal.

Proceeds will be used to help fund the company's Heartland Upgrader project.

BA Energy is a Calgary, Alta.-based company involved in the business of upgrading bitumen and heavy oil feedstock into high-quality crude oils.

U.S. Xpress snares investors with OID

U.S. Xpress' $185 million term loan B is seeing "significant interest" from lenders since an original issue discount of 96 was added in the middle of last week, and more interest is expected to "evidence itself over the next few days," according to a market source.

Price talk on the term loan is unchanged from launch at Libor plus 400 bps.

U.S. Xpress' $235 million senior secured credit facility (B1/B+) also includes a $50 million five-year revolver.

Pricing on the revolver will be tied to a leverage grid, with the initial rate expected to be in the Libor plus 300 bps range. There is a 50 bps commitment fee on the tranche.

SunTrust is the lead bank on the deal.

Leverage at close will be around 4.2 times.

The facility has a full covenant package that includes a total leverage test, an interest coverage test and asset coverage.

Additional liquidity, predominately for letters of credit, will be provided to the company by a $140 million asset securitization facility led by SunTrust.

Proceeds will be used to help fund a tender offer by Mountain Lake Acquisition Co. to acquire all the outstanding shares of class A common stock of U.S. Xpress for $20.10 per share, an increase from the originally proposed price of $20.00 per share.

The financing for this acquisition had been revised from initial plans due to changes in the leveraged finance market since the original June 22 announcement date.

Under the initial commitment letter, the company was going to get a $432 million credit facility via SunTrust, consisting of a $50 million five-year revolver expected at Libor plus 275 bps, a $92 million seven-year synthetic letter-of-credit facility expected at Libor plus 275 bps, a $40 million seven-year delayed-draw synthetic letter-of-credit facility expected at Libor plus 275 bps, a $190 million seven-year term loan B expected at Libor plus 275 bps and an up to $60 million eight-year second-lien term loan expected at Libor plus 625 bps.

U.S. Xpress is a Chattanooga, Tenn., truckload carrier. Mountain Lake is a company formed by Patrick E. Quinn and Max L. Fuller for this acquisition.

Telesat price talk surfaces

Telesat came out with price talk of Libor plus 300 bps on its in-market $1.44 billion seven-year term loan B and $150 million delayed-draw term loan B, and the tranches are being sold with an original issue discount that is talked in the 97½ to 98 range, according to a market source.

The company's $2.209 billion credit facility, which launched last week, also includes a $150 million five-year Canadian dollar-equivalent revolver and a $469 million five-year Canadian dollar equivalent term loan A.

There are maintenance covenants under the facility.

Morgan Stanley, UBS and JPMorgan are the lead arrangers and bookrunners on the deal, with Morgan Stanley and UBS as senior lead arrangers and Morgan Stanley on the left. Morgan Stanley is administrative agent on the credit facility, UBS is syndication agent and Bank of Nova Scotia, JPMorgan and Citigroup are joint documentation agents.

Proceeds from the credit facility, along with $910 million of high-yield senior notes and $761 million of equity, will be used to help fund the acquisition of Telesat Canada by a joint venture company formed by Loral Space & Communications Inc. and the Public Sector Pension Investment Board.

The newly formed joint venture is buying Telesat Canada from BCE Inc. for about $2.8 billion, plus the assumption of $148 million of debt.

In connection with this transaction, Loral will transfer the fixed satellite services and network services assets of Loral Skynet to the joint venture, which will be known as Telesat and be based in Ottawa.

This new company will be one of the world's largest operators of telecommunications satellites.

Flextronics downsizes

Flextronics International Ltd. downsized its senior unsecured term loan B-2 to $1.259 billion from $2 billion, according to a market source.

The senior unsecured term loan B-1 remained sized at $500 million.

The downsizing was done after the cash payment for the recently completed Solectron Corp. acquisition was determined. Solectron stockholders were entitled to elect to receive either 0.345 of a Flextronics ordinary share or $3.89 in cash for each share of Solectron common stock, subject to proration due to minimum and maximum limits on the amount of stock consideration and cash consideration. Based on preliminary election results, Flextronics expects to pay about $1.07 billion in cash and issue roughly 221.8 million ordinary shares.

Pricing on the now $1.759 billion (down from $2.5 billion) of term loan debt (Ba1/BB+/BB+) is Libor plus 225 bps.

The term loan B-1 has an original issue discount of 99¼ and carries no call protection, and the term loan B-2 has an original discount of 99, with 101 soft call protection for one year.

Citigroup is the lead bank on the deal.

Flextronics is a Singapore-based electronics manufacturing services provider. Solectron is a Milpitas, Calif.-based provider of complete product lifecycle services.

LCDX heads up

Switching to secondary happenings, LCDX traded higher on Tuesday as investors are getting ready for the series 9 to begin trading on Wednesday, according to traders.

The index went out at 97.30 bid, 97.40 offered, up from 97.00 bid, 97.15 offered, traders said.

"I think a lot of people are trying to wind down positions to get ready for the new tranche of the index," one trader added.

A second trader explained that with trading on this new tranche being imminent, more attention and more activity were brought to LCDX, pushing it up.

Names being added to the series 9 include First Data Corp., Biomet, Inc., Claire's Stores, Inc., Community Health Systems, Inc., DaimlerChrysler Financial Services Americas LLC, Kinder Morgan, Inc., Nielsen Finance LLC, Realogy Corp., Swift Transportation Co., Inc. and Tribune Co.

Names being removed include Advanced Micro Devices Inc., Altivity Packaging LLC, Boise Cascade, LLC, Chiquita Brands LLC, Emmis Operating Co., HLI Operating Co., Inc., Huntsman International LLC, Movie Gallery, Inc., Mueller Group, LLC and Reynolds American Inc.

The coupon for the LCDX series 9 has been set at Libor plus 225 bps, with a five-year tenor.

As for the cash market, that felt stronger too, with names up about an eighth of a point overall, traders said.

"Everything felt pretty firm all day. Liquidity is back," one trader added.

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