Palm, Dex Media set talk; ServiceMaster wraps sell down; USIS oversubscribed; LCDX series 9 nears par

By Sara Rosenberg

New York, Oct. 3 - Palm Inc. and Dex Media East LLC came out with price talk on their credit facilities as both deals were launched to investors during Wednesday's market hours.

Also in the primary, ServiceMaster Co. completed the sell down of a portion of its term loan and USIS' term loan has attracted a good amount of attention since it was formally launched just one day ago, enough so to oversubscribe the deal.

Meanwhile, in secondary news, LCDX series 9 traded close to par in its first day of trading, while LCDX series 8 was basically unchanged as investors unwind their positions.

Palm held a bank meeting on Wednesday to kick off syndication on its proposed $430 million credit facility (Ba3/B+), and in connection with the launch, price talk emerged, according to a buyside source.

Both the $30 million five-year revolver and the $400 million 61/2-year term loan are being talked at Libor plus 350 basis points, the source said.

The term loan is being offered at an original issue discount in the mid-90 area and carries soft call protection of 103 in year one, 102 in year two and 101 in year three, another source added.

Under the original financing plans, the revolver was expected to be sized at $40 million and pricing on the term loan was estimated by the company to be around Libor plus 225 bps to 275 bps, depending on ratings and market conditions.

JPMorgan and Morgan Stanley are the joint bookrunners on the deal.

Pro forma for the transaction, net debt to adjusted EBITDA will be around 0.3 times and total debt to adjusted EBITDA will be around 3.4 times.

Proceeds will be used to help fund a recapitalization, under which Elevation Partners will invest $325 million in Palm through the purchase of a new series of convertible preferred stock with a conversion price of $8.50 per share.

As part of the recapitalization, shareholders will receive a cash distribution of $9.00 per share that will be funded by the term loan, existing cash and the Elevation investment. The amount of total proceeds to be distributed to shareholders is estimated to be about $940 million.

Upon completion of the transaction, Elevation will own about 25% of Palm's outstanding common stock on an as-converted and diluted basis.

Palm is a Sunnyvale, Calif., mobile computing devices company.

Dex Media spread guidance

Also on the price talk front, Dex Media East launched its $1.2 billion credit facility (Ba1) with price talk of Libor plus 200 bps on all tranches, according to a market source.

The deal consists of a $350 million seven-year term loan B, a $100 million revolver and a $750 million six-year term loan A.

JPMorgan and Wachovia are the lead banks on the deal, which was launched with a conference call Wednesday.

Proceeds will be used to refinance the company's existing credit facility.

Dex Media is a publisher of Yellow Pages and White Pages directories.

ServiceMaster completes sell down

ServiceMaster closed the books on Wednesday on the sell down of a portion of its covenant-light term loan B debt, with the final result being that $750 million of the loan was successfully syndicated at a discount of 95, according to a market source.

The banks had been targeting to sell anywhere from $750 million to $1 billion of the debt.

Allocations will be going out on Thursday, the source added.

The debt that was 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.

USIS overfills

USIS' $725 million term loan was oversubscribed by Wednesday morning on the heels of a Tuesday morning conference call that was held to formally launch the transaction, according to a market source.

The term loan is priced at Libor plus 300 bps and is being offered with an original issue discount of 97, the source said.

The commitment deadline on the deal is Thursday at 5 p.m. ET, and it is expected to allocate shortly after that.

USIS' term loan had been in soft launch mode for the past couple of weeks with early discount guidance set at 96½ to 97.

During that time, some orders were being worked, but late last week, the banks decided to go ahead with a more formal launch.

Because the site for the deal has been up for a while and people have seen this transaction before, the timeframe for commitments was left relatively short following the formal conference call, the source explained.

Lehman Brothers and Bank of America are the lead banks on the deal.

The term loan includes a secured leverage covenant.

Proceeds from the loan, which already funded, were used to help fund Providence Equity Partners Inc.'s acquisition of the company from Welsh, Carson, Anderson & Stowe and the Carlyle Group for $1.5 billion.

The company's credit facility (B1/B+) also includes a $90 million revolver.

USIS is a Falls Church, Va., provider of pre-employment screening services and security investigations for the federal government and a supplier of cleared personnel supporting critical federal programs.

Archstone stays open

Archstone-Smith Trust is still accepting commitments on its revolver and term loan A tranches despite the fact that the book was scheduled to close on Tuesday, according to a market source.

The $750 million four-year revolver and the $2.4 billion four-year term loan A, which are seeing "some good traction" in terms of orders, are both priced at Libor plus 300 bps, the source said.

The revolver carries a 200 bps upfront fee and a 50 bps unused fee.

The term loan A is being offered to investors with an original issue discount of 99.

There is mandatory amortization on the term loan A of $300 million in year one, $250 million in year two, $250 million in year three and the remaining amount in year four.

Archstone-Smith's $5.131 billion senior secured credit facility (BB-) also includes a $1.981 billion five-year term loan B that is priced at Libor plus 325 bps. The term loan is not being syndicated right now.

Financial covenants include minimum debt service coverage, a maximum leverage ratio and tangible net worth.

Lehman Brothers, Bank of America and Barclays are the lead banks on the deal.

Proceeds will be used to help fund the buyout of the company by Tishman Speyer and Lehman Brothers for $60.75 per unit in cash. The transaction is valued at $22.2 billion, including the assumption and refinancing of Archstone-Smith's outstanding debt and excluding transaction costs.

Archstone-Smith is an Englewood, Colo.-based real estate investment trust. Tishman Speyer is a New York-based owner, developer, operator and fund manager of real estate.

LCDX series 9 trades in high 99s

Switching to secondary happenings, LCDX series 9 was active at levels that were in the high 99 context during its first day of trading, according to trader.

The series 9 index went out around 99.70 bid, 99.75 offered, the trader said. It opened around 99.75 bid, 99.85 offered, traded as low as 99.25 bid, 99.30 offered and traded as high as 99.80 bid, 99.85 offered.

"No one really wanted to be the first one to make a market in it but once one person did, everybody jumped on," the trader remarked.

As for LCDX series 8, that went out around 97.25 bid, 97.40 offered, basically unchanged from Tuesday's levels of 97.30 bid, 97.50 offered.

"It won't go away until maturity, but people will want to unwind and it will become illiquid," the trader said about the series 8. "Only real activity in it is these rolls."

The reason why the series 9 is more than two points higher than the series 8 is because of the coupon. The series 9 coupon is Libor plus 225 bps, while the series 8 coupon is Libor plus 120 bps, the trader added.

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