Alltel offers B-3 instead of B-2; URS breaks; Tousa second-lien slides; Realogy dips; LCDX falls

By Sara Rosenberg

New York, Nov. 15 - Alltel Communications Inc. has decided to syndicate its term loan B-3 instead of its term loan B-2, with the main differences between the two tranches being the call protection and size.

In other news, URS Corp.'s credit facility broke for trading on Thursday, with the term loan B quoted above its original issue discount price, Tousa Inc.'s second-lien term loan was lower on poor earnings, Realogy Corp.'s term loan continued to fall on financial results and LCDX weakened with stocks.

Alltel pulled its term loan B-2 from syndication and instead is now syndicating its term loan B-3, according to a market source, who said that commitments were due from lenders at the end of the day Thursday and allocations are targeted for Friday.

The $4 billion 71/2-year term loan B-3 is priced at Libor plus 275 basis points, is being offered with an original issue discount in the 96 to 96½ context and is non-callable for three years.

Of the total B-3 amount, only $3.2 billion is being offered because Barclays, one of the lead banks on the deal, has opted to hold on to its piece rather than sell it at the discount level.

As for the $6 billion 71/2-year term loan B-2 that was pulled from syndication, it is also priced at Libor plus 275 bps, but it only carries soft call protection of 103 in year one, 102 in year two and 101 in year three.

Of the total B-2 amount, only $4.8 billion was being offered to investors because Barclays wanted to hold on to its piece of the debt.

At launch, the term loan B-2 paper was being offered in the 97 to 97½ area, but on Wednesday that offer price was changed to the 96 to 96½ area. At the time of the change, it was said by market sources that there was over $3 billion in the book at the revised discount range and that the anticipation was that there would be $5 billion to $6 billion in total orders by the commitment deadline.

The decision to offer the term loan B-3 instead of the term loan B-2 was a result of "market feedback," a second source told Prospect News.

The term loan B-2 is now expected to be marketed at some later date, the first source added.

Alltel's term loan B-3 and term loan B-2 are part of a $16.25 billion senior secured credit facility (Ba3/BB-/BB) that includes a $1.5 billion six-year revolver, a $4 billion 71/2-year term loan B-1 and a $750 million one-year delayed-draw term loan, with 71/2-year final maturity, with all of these tranches priced at Libor plus 275 bps as well.

The revolver, term loan B-1 and delayed-draw term loan are also not being syndicated at this time.

Goldman Sachs, Citigroup, Barclays and RBS Securities are the joint bookrunners on the credit facility, with Goldman and Citi the joint lead arrangers.

The facility has a consolidated net senior secured debt to consolidated EBITDA covenant beginning June 30, 2008 based on consolidated EBITDA for the relevant rolling four-quarter measurement period ended as of such date.

Proceeds from the credit facility will be used to help fund the leveraged buyout of the company by TPG Capital and GS Capital Partners for $71.50 per share in cash. The transaction is valued at $27.5 billion.

Other financing will come from $4.6 billion in equity and $5.2 billion in senior unsecured cash-pay notes and $2.5 billion in senior unsecured payment-in-kind option debt - all or a portion of which may take the form of a senior unsecured PIK option bridge loan.

The bonds/bridge loans were revised from their original structure, which called for $4.7 billion in senior unsecured cash-pay notes and $3 billion senior unsecured PIK notes.

The delayed-draw term loan will be available to purchase or otherwise acquire licenses and rights in the 700 MHz auction to be conducted by the Federal Communications Commission.

Pro forma for the transaction, Alltel Communications' senior secured debt to adjusted EBITDA will be 4.6 times and net debt to adjusted EBITDA will be 7.0 times. Total consolidated Alltel Corp. (the holding company) net debt to adjusted EBITDA will be 7.7 times and adjusted EBITDA to Alltel Corp. consolidated cash interest expense will be 1.5 times.

Alltel is a Little Rock, Ark., provider of wireless voice and data communications services.

Education Media adds second-lien OID

Education Media & Publishing added an original issue discount of 98 to its $1.7 billion seven-year second-lien mezzanine loan (Caa2/CCC) that was originally being offered at par, according to a syndicate document.

The second-lien loan is still talked at Libor plus 850 bps and is non-callable for 18 months, then at 104 for a year, at 102 for a year and at par after that.

Education Media's $7.15 billion credit facility also includes a $500 million six-year revolver (B1/B) talked at Libor plus 375 bps, with a 50 bps commitment fee, and a $4.95 billion 61/2-year first-lien term loan (B1/B) talked at Libor plus 375 bps.

The first-lien term loan is being offered with an original issue discount in the 99 area and carries call protection of 103 in year one, 102 in year two and 101 in year three.

Credit Suisse, Lehman Brothers and Citigroup are the lead banks on the deal.

Proceeds will be used to help fund Houghton Mifflin Co.'s acquisition of the Harcourt Education, Harcourt Trade and Greenwood-Heinemann divisions of Reed Elsevier for $4 billion, consisting of $3.7 billion in cash and $300 million of common stock of Houghton Mifflin Riverdeep Group plc, Houghton's parent company.

Existing investors, including J&E Davy, have committed to provide $235 million of new equity financing to support the transaction.

In connection with the acquisition, Boston-based Houghton Mifflin will be renamed Education Media & Publishing.

Brand Energy firms OIDs

Brand Energy & Infrastructure Services Inc. finalized the original issue discounts on its first- and second-lien term loan add-ons, according to a market source.

The $175 million first-lien term loan add-on (B1/B) discount firmed at 981/2, compared with initial guidance that was in the 98½ to 99 range, the source said. Pricing on the paper is Libor plus 325 bps.

The $75 million second-lien term loan add-on (Caa1/CCC+) discount firmed at 97, compared with initial guidance that was in the 98½ to 99 range, the source continued. Pricing on the tranche is Libor plus 700 bps.

Morgan Stanley and Credit Suisse are the lead banks on the $250 million deal, which will be used to help fund the acquisitions of Industrial Specialists LLC and Protherm Services Group LLC.

As of Sept. 30, the company had total long-term debt of $935.1 million. Pro forma for the proposed expansion of the credit facility and the repayment of $57.1 million currently drawn under its revolver, total debt is expected to be $1.13 billion.

For the 12 months ended Sept. 30, Brand expects to report pro forma consolidated revenues of $1.44 billion, pro forma gross profit of $421.7 million and pro forma adjusted EBITDA of $220.8 million.

Brand Energy & Infrastructure Services is a Kennesaw, Ga., provider of scaffolding, industrial coatings, insulation, refractory, forming and shoring services, and other related soft crafts.

Automotive Glass ups OID

Automotive Glass & Services Inc. increased the original issue discounts on its first- and second-lien term loans to 98, according to a market source.

The $225 million first-lien term loan (BB) was originally being offered at 99, and the $125 million second-lien term loan (B) was originally offered at 981/2.

Price talk on the first-lien term loan is Libor plus 400 bps to 450 bps, and price talk on the second-lien term loan is Libor plus 800 bps.

The first-lien term loan carries call protection of 102 in year one and 101 in year two, and the second-lien term loan carries call protection of 104 in years one and two and 102 in years three and four.

Automotive Glass' $425 million credit facility also includes a $75 million ABL revolver (BB) that's already been placed.

Goldman Sachs is the lead bank on the deal.

Proceeds will be used to help fund Platinum Equity's acquisition of PPG Industries' automotive original equipment manufacture glass and automotive replacement glass and services businesses for approximately $500 million before minority interest.

Automotive Glass is a supplier of windshields, rear and side windows, sunroofs and assemblies for auto and truck manufacturers, a supplier and distributor of replacement automotive glass products for use in the aftermarket and a provider of insurance claim services, glass management software and e-business solutions.

URS frees to trade

Moving to secondary happenings, URS' credit facility broke for trading during market hours, with the $300 million term loan B quoted at 99 5/8 bid, par 1/8 offered, according to a trader.

The term loan B is priced at Libor plus 275 bps and was sold at an original issue discount of 991/2.

Pricing on the term loan B can step down to Libor plus 250 bps if leverage is between 2 and 2½ times and to Libor plus 225 bps if leverage is less than 2 times. This pricing grid was added to the tranche during syndication.

URS' $2.1 billion credit facility (Ba1/BB+) also includes a $700 million revolver and a $1.1 billion term loan A, with both of these tranches priced at Libor plus 200 bps.

Levels on the term loan A and the revolver were quoted at 99½ bid, par offered, the trader added.

Under the company's original financing plans, the term loan A was going to carry a size of $300 million and the term loan B was going to carry a size of $1.1 billion, but the sizes shifted prior to launch due to market conditions.

Morgan Stanley and Wells Fargo acted as the lead banks on the deal.

The facility has a maximum leverage ratio and a minimum interest coverage ratio.

Proceeds were used to help fund the acquisition of Washington Group International, Inc., which was completed Thursday, in a cash and stock transaction valued at approximately $3.2 billion, or $97.89 per Washington Group share.

URS is a San Francisco-based engineering design services company. Washington Group is a Boise, Idaho-based provider of engineering, construction and management services for businesses and governments.

Tousa softer on numbers

Tousa's second-lien term loan was weaker in little volume during Thursday's session on the heels of the company's release of disappointing third-quarter numbers and bankruptcy buzz, according to traders.

The second-lien term loan ended the day at 85 bid, 87 offered, down about half a point from previous levels, one trader said.

That same trader placed the company's first-lien term loan at unchanged levels of 96 bid, 97 offered, explaining that the second-lien was down because it has less protection than the first-lien.

However, a different trader was quoting the first-lien term loan down a point on the day at 95 bid, 96 offered.

For the third quarter, the company reported a net loss of $619.7 million, or $10.42 per diluted share, compared with net loss of $80 million, or $1.34 per diluted share, last year.

The results included a $40.7 million increase in the pre-tax loss contingency relating to the Transeastern Joint Venture settlement and $530.6 million of pre-tax charges resulting from goodwill impairments and the write-down of assets including inventory impairments, impairments of investments in unconsolidated joint ventures and write-off of deposits and abandonment costs.

Excluding the impact of the Transeastern settlement and the pre-tax charges, the company's net loss would have been $25.6 million, or $0.43 per diluted share.

Also in the quarter, homebuilding revenues decreased 15% to $492.9 million from $576.8 million last year, EBITDA was $32.3 million compared with $101.2 million in the third quarter of 2006 and consolidated net sales orders were 892 compared with 1,330 last year.

For the nine months ended Sept. 30, the company reported a net loss of $817.7 million, or $13.76 per diluted share, compared with net income of $42.6 million, or $0.70 per diluted share, for the same period last year.

The results for the nine months include a $151.6 million increase in the estimated loss contingency related to the settlement of the Transeastern litigation, $657.3 million in inventory impairments, impairments of investments in unconsolidated joint ventures and write-offs of land deposits and related abandonment costs and $40.9 million of goodwill impairments.

Excluding the impact of the pre-tax charges, net income for the nine months would have been $7.9 million, or $0.13 per diluted share.

Also for the nine months ended Sept. 30, homebuilding revenues decreased 9% to $1.62 billion from $1.78 billion for the same period last year and EBITDA was $144 million compared with $341.7 million for the first nine months of 2006.

Tousa went on to say in its earnings release that based on stockholders equity being $48.3 million at Sept. 30, it believes there is substantial doubt about its ability to continue as a going concern.

The Hollywood, Fla.-based homebuilder said it is considering all available in-court and out-of-court restructuring and reorganization alternatives, including a possible Chapter 11 filing.

Realogy loses more ground

Realogy's term loan continued to head lower in trading as investors were still reacting to poor quarterly results, as well as because the market in general was down, according to a trader.

The term loan ended the day at 89½ bid, 90½ offered, down from previous levels of 90½ bid, 91½ offered, the trader said.

The company had privately released financial results for the quarter ended Sept. 30 to its noteholders and credit facility lenders after the close of business on Wednesday.

Realogy is a Parsippany, N.J.-based real estate franchisor.

LCDX lower with equities

LCDX 9 was softer during market hours in sympathy with stocks, and the cash market was down by about an eighth as well, according to a trader.

The index went out around 96.15 bid, 96.30 offered, down from 96.60 bid, 96.70 offered, the trader said.

"There were pretty light flows today. Seemed like people were taking a step back after the recent volatility," the trader remarked.

As for stocks, Nasdaq closed down 25.81 points, or 0.98%, Dow Jones Industrial Average closed down 120.96 points, 0.91%, S&P 500 closed down 19.43 points, or 1.32%, and NYSE closed down 156.63 points, or 1.60%.

Symmetry closes

Symmetry Holdings Inc. closed on its $175 million five-year senior secured asset-based revolving credit facility, according to a company news release.

The revolver is priced at Libor plus 150 bps.

JPMorgan, CIBC and CIT acted as the lead banks on the deal.

Proceeds were used to help fund the acquisition of Novamerican Steel, Inc., a steel service center, processor and tubing manufacturer, for $56.00 in cash per share, or $585.2 million in cash in the aggregate.

At close, $68 million was drawn under the revolver.

Symmetry is a New York-based company formed for the specific purpose of acquiring businesses that are in the basic industries sector. Novamerican is a Montreal-based steel and aluminum company.

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