Market awaits First Data but launch unlikely during week of Sept. 3; LCDX inches higher

By Sara Rosenberg

New York, Aug. 31 - All eyes are trained towards the First Data Corp. mega credit facility as rumors have been swirling that a bank meeting could take place during the week of Sept. 3, but that timing is now looking pretty doubtful.

In other loan market news, LCDX was a touch stronger in a very quiet pre-holiday trading session on the heels of President Bush addressing the current mortgage crisis.

First Data has attracted a lot of attention recently with talk being that the $16 billion credit facility could launch to retail investors as early as Wednesday and that the deal may see a restructuring ahead of the bank meeting as a result of market conditions.

However, now sources are calling the Wednesday bank meeting "doubtful," although it still appears that the deal will be aiming for an early September kick off.

According to one market source, the syndicate is thinking about launching in Europe during the week of Sept. 3, but a U.S. launch doesn't look likely and the Europe launch doesn't look all that likely either. This source gave the deal about a 5% chance to hold its retail launch during the Sept. 3 week.

As for a possible restructuring, many sources are considering that to be a strong possibility - especially since some guys heard that the banks and the buyer of the company have been holding big meetings to discuss various possibilities - but specifics on what may be changed in the deal have not yet circulated through the market.

"Everybody is looking at this First Data deal but who knows what's going to happen there," another market source remarked.

Speculation on potential changes have included eliminating the covenant-light structure, increasing pricing from the talk that was seen during the senior managing agents round, the addition of a second-lien term loan and reduction in the size of the first-lien term loan B and the addition of hefty original issue discounts.

"Sponsors tend to fight over adding covenants. I'd expect something more like a large OID on this thing. Something Chrysler like," one source added. The Chrysler Financial deal done this summer saw its first- and second-lien term loans sold at a discount of 95.

Currently, First Data's credit facility consists of a $2 billion six-year revolver and a $14 billion seven-year term loan B, with both tranches covenant-light.

When the deal was launched to senior managing agent banks in late May, price talk on the two tranches was set at Libor plus 225 basis points to 250 bps.

Credit Suisse, Citigroup, Deutsche Bank, Goldman Sachs, HSBC, Lehman Brothers and Merrill Lynch are the lead banks on the deal.

Proceeds from the facility will be used to help fund Kohlberg Kravis Roberts & Co.'s leveraged buyout of the company for $34 in cash per share. The total value of the transaction is about $29 billion.

All required domestic and international regulatory approvals have already been obtained for the buyout.

Recently, the company said it is anticipating that the transaction will close by the end of September.

First Data is a Greenwood Village, Colo., provider of electronic commerce and payment services for businesses.

LCDX trades up

In secondary happenings, LCDX was a bit higher on Friday after President Bush made some remarks about the mortgage market problems, according to a trader.

The index went out around 94.90 bid, 95.15 offered, up from Thursday's closing levels of 94.60 bid, 94.70 offered, the trader said.

On Friday, Bush proposed a number of initiatives to help distressed homeowners including having the Federal Housing Authority offer more help, revising tax codes, building a coalition to help homeowners refinance loans and increasing transparency in the market.

"Market's up because people think Bush is going to bail everyone out. Government is going to be there to help the mortgage crisis and that should benefit everybody," the trader added.

Integra closes

Integra Telecom Inc. completed its acquisition of Eschelon Telecom, Inc. for $30 per share or a total purchase price of $710 million, including the repayment of about $144 million in Eschelon debt, according to a news release.

To help fund the transaction, Integra got a new $1.25 billion credit facility consisting of a $50 million revolver (Ba3/CCC+) priced at Libor plus 425 bps, a $595 million first-lien term loan B (Ba3/CCC+) priced at Libor plus 425 bps, a $325 million second-lien term loan (Caa1/CCC) priced at Libor plus 700 bps and a $280 million unsecured PIK term loan (Caa2/CCC) priced at Libor plus 1,000 bps.

Both the first- and second-lien term loans were sold to investors with an original issue discount of 96.

The second-lien term loan carries call protection of 103 in year one, 102 in year two and 101 in year three.

The PIK term loan is non-callable for two years, then at 106 in year three, 104 in year four, 102 in year five and 101 in year six.

During syndication, pricing on the first-lien term loan B and the revolver was flexed up from original talk of Libor plus 325 bps, and the term loan B was downsized from $715 million.

After these changes were made to the revolver and the first-lien term loan B, the lead banks decided to postpone syndication of these tranches to a later date because of market conditions. However, because guys started to show interest again, the syndicate decided to start calling people and the book ended up being about two times oversubscribed.

As for the second-lien term loan, that was upsized from $270 million during syndication, pricing was raised from original talk of Libor plus 600 bps and call protection was changed from just 102 in year one and 101 in year two.

And, the PIK loan was upsized during syndication from $215 million, pricing was increased from original talk of Libor plus 850 bps, a 50 bps step up in pricing after 12 months was removed and call protection was changed from non-callable for one year, then at 106 in year two, 104 in year three and 102 in year four.

At no point during syndication was there talk of postponing the second-lien term loan and the PIK loan.

Deutsche Bank and Morgan Stanley acted as the joint lead arrangers on the deal, and CIBC acted as the documentation agent.

Integra is a Portland, Ore.-based provider of local phone, long-distance phone and internet services for businesses. Eschelon is a Minneapolis-based competitive communications services provider of voice and data services and business telephone systems.

Sabic closes

Saudi Basic Industries Corp. completed its acquisition of General Electric Co.'s plastics business in a deal valued at $11.6 billion in cash plus assumption of liabilities, according to a news release.

To help fund the acquisition, Sabic Innovative Plastics Holding BV got a new $7.645 billion credit facility consisting of a $1 billion asset-based revolver (Ba2/BBB-) priced at Libor plus 150 bps, a $1.5 billion term loan A (Ba2/BB+) priced at Libor/Euribor plus 125 bps and a $5.145 billion term loan B (Ba2/BB+) priced at Libor/Euribor plus 250 bps.

The term loan B was sold to investors with an original issue discount of 991/2.

During syndication, the term loan was upsized from $1.1 billion and the term loan B was upsized from around $4.3 billion as the company's bond offering was downsized to $1.5 billion from around $2.765 billion equivalent.

Citigroup, JPMorgan, HSBC, ABN Amro and GE Capital acted as the lead banks on the deal, with Citi the left lead.

The facility has maintenance covenants.

GE Plastics is a Pittsfield, Mass., supplier of plastic resins. Saudi Basic Industries is a Riyadh, Saudi Arabia, manufacturer of chemicals, fertilizers, plastics and metals.

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