First Data unlikely to launch this week; Portfolio auction emerges; TOUSA dips; LCDX rises

By Sara Rosenberg

New York, Sept. 11 - It's now considered doubtful that First Data Corp. will hold the retail bank meeting for its monster credit facility this week as negotiations on the deal's restructuring appear to still be taking place.

In other news, secondary players have their eyes trained on a portfolio of par leveraged loans that was put up for sale on Tuesday, Technical Olympic USA Inc.'s bank debt was softer and LCDX was stronger with equities.

First Data's retail bank meeting for its proposed $16 billion credit facility "doesn't sound like it's going to happen this week" anymore as talks between the bankers on the deal and Kohlberg Kravis Roberts & Co., the buyer of the company, are supposedly still ongoing, according to a market source.

"I would expect that they're still trying to deal with the structure," the source remarked.

The bankers and Kohlberg Kravis Roberts have been engaged in negotiations for weeks now regarding a restructuring of the mega deal that is going to be the first real test of investor appetite for leveraged buyout paper since the primary fell apart during the summer.

Most recently, word around the market has been that a leverage covenant will be added to the originally covenant-light deal, but the change has yet to be officially announced.

Last week there was talk that the facility could carry pricing that is 25 basis points higher than what was previously agreed upon, but some sources have recently said that this particular rumor is one that people should be skeptical about.

Other speculation is that the term loan paper will end up coming at a pretty substantial original issue discount.

First Data's credit facility consists of a $2 billion six-year revolver and a $14 billion seven-year term loan B.

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 bps to 250 bps.

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

Under the buyout agreement, Kohlberg Kravis Roberts is purchasing 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.

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

ECI launches with full covenant package

ECI Telecom Ltd. held a bank meeting on Tuesday to launch its proposed $805 million credit facility, at which time details on the full covenant package and leverage multiples surfaced, according to a buyside source.

The credit facility has a first-lien leverage covenant, an interest coverage ratio and a maximum capital expenditures requirement, the source said.

Based on $134 million in pro forma trailing EBITDA, total debt to EBITDA is 5½ times, the source added.

As was previously reported, ECI's credit facility consists of a $75 million five-year revolver talked at Libor plus 325 bps, with a 50 bps commitment fee, a $100 million 11/2-year asset-based revolver talked at Libor plus 325 bps, a $430 million six-year first-lien term loan talked at Libor plus 325 bps and a $200 million 61/2-year second-lien term loan talked at Libor plus 700 bps.

Credit Suisse is the lead arranger on the deal.

Proceeds will be used to help fund the buyout of the company by Swarth Group and Ashmore Investment Management Ltd. for $10 per share in cash. The transaction is valued at $1.2 billion.

Second-lien players can invest in the equity at a 10 to 1 ratio, the source added.

ECI is a Petach Tikva, Israel, provider of networking infrastructure equipment.

Portfolio auction nabs attention

Moving to the secondary, a $300 million portfolio of par leveraged loans was put up for sale on Tuesday, according to a trader.

Bids on the portfolio auction, which is now called a BWIC, are due from investors on Wednesday, the trader said.

According to the trader, there have been a few portfolio auctions in recent times, causing speculation that people are trying to clear out some room for First Data paper.

TOUSA slides lower

Technical Olympic USA's bank debt was down during Tuesday's trading session on continued concerns over the homebuilding sector in general, according to a trader.

The Hollywood, Fla.-based homebuilder's revolver ended the day at 91 bid, 93 offered, down about a point, the trader said.

The company's first-lien term loan was quoted at 96½ bid, 97½ offered, also down about a point, the trader continued.

The second-lien term loan was quoted at 96¾ bid, 97¾ offered, down about a point as well, the trader added.

LCDX heads up

LCDX was a touch better on Tuesday in light activity as stocks were stronger, according to traders.

The index went out at 95.10 bid, 95.20 offered, up from Monday's closing levels of 94.85 bid, 94.95 offered, traders said.

As for stocks, Nasdaq was up 38.36 points, or 1.50%, Dow Jones Industrial Average was up 180.54 points, or 1.38%, S&P 500 was up 19.79 points, or 1.36%, and NYSE was up 139.97 points, or 1.48%.

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