CDW pulls deal; Landmark struggling; Goodman extends deadline; LCDX up with stock, cash down

By Sara Rosenberg

New York, Jan. 29 - CDW Corp. pulled its institutional term loan from market on Tuesday as a result of weak primary conditions.

In other news, Landmark FBO LLC's credit facility is heard to be having a hard time catching investor interest, creating the expectation that changes will be necessary if syndication is to be successful.

Also, the books on Goodman Global Inc. stayed open past Tuesday's commitment deadline as changes to the deal are being discussed.

Meanwhile, in trading news, LCDX 9 was stronger with equities, but the cash market in general felt softer.

Banks leading CDW's $2.2 billion institutional term loan (B2/BB-) decided to pull the deal from syndication because of unfavorable market conditions, according to an informed source.

The term loan, which already funded back in October, is priced at Libor plus 300 basis points.

At launch, investors were being offered an original issue discount on the paper in the 96 context. However, during syndication, it was said that this discount would have to widen in order for the deal to get done.

Lehman Brothers, JPMorgan, Deutsche Bank and Morgan Stanley were acting as the lead banks on the term loan, with Lehman the left lead.

Proceeds from the deal were used to help back the leveraged buyout of the company by Madison Dearborn Partners LLC and Providence Equity Partners Inc. for $87.75 in cash per share. The transaction was valued at $7.3 billion.

In connection with the LBO, the company also got an $800 million ABL revolving credit facility that was syndicated late last year at pricing of Libor plus 150 bps.

Other financing for the LBO came from bridge loans that are expected to eventually be taken out with bonds. The contemplated high-yield offering totals $1.94 billion, consisting of $890 million senior unsecured cash-pay notes, $300 million senior unsecured PIK toggle notes and $750 million senior subordinated notes.

CDW is a Vernon Hills, Ill., provider of technology products and services to business, government and education customers.

Landmark sees little momentum

Landmark FBO's credit facility has yet to fill out, even though the deal was launched more than two weeks ago, and talk is that without beefing up pricing and discounts, syndication could be in trouble, according to a buyside source.

"I think that one was due last week and I hear that they don't have a lot of traction," the source said.

He went on to say that speculation is that everything on that deal - meaning pricing and original issue discount - will have to change in order for it to get done.

"If people aren't interested in it as is, don't you think they'll have to change everything?" the source added.

Landmark FBO's $338 million credit facility consists of a $30 million revolver (B1/BB-), a $188 million first-lien term loan (B1/BB-) and a $120 million second-lien term loan (Caa2/B-).

The revolver and first-lien term loan were launched with price talk of Libor plus 375 bps, and the second-lien term loan was launched with talk of Libor plus 725 bps.

Also at launch, investors were told that the first-lien term loan is being offered at a discount of 98½ and the second-lien term loan is being offered at a discount of 98.

Barclays Capital is the lead bank on the deal.

Proceeds will be used to help fund GTCR Golder Rauner LLC and Encore FBO, LLC's acquisition of the fixed base operator business, including the related charter, aircraft sales and maintenance parts assets, of Landmark Aviation from Dubai Aerospace Enterprise.

Landmark Aviation is a Tempe, Ariz., provider of aftermarket services to the business aviation industry.

Goodman books stay open

Goodman Global extended the commitment deadline on its credit facility to an undetermined date to give the underwriters and the company time to discuss modifications to the term loan B that would hopefully fill the book out, according to a market source.

The underwriters on the deal were expected to "be talking" on Tuesday afternoon to decide where to flex pricing on the term loan B, and conversations between the banks and the company are expected to take place on Wednesday, the source said.

The $800 million term loan B (Ba3/BB) was launched with price talk of Libor plus 375 bps and an original issue discount of 981/2.

However, accounts have been informed that revisions could be made to the spread and/or to the original issue discount.

"[They] will probably announce change in pricing and new deadline all at once," the source remarked.

The term loan B had about $200 million in commitments in place since syndication first began. Talk is that now there are close to $500 million in orders, but at different pricing levels.

As for Goodman's $300 million ABL revolver that is talked at Libor plus 200 bps, that tranche is already filled out, the source added.

Barclays Capital, Calyon and GE Capital are the lead banks on the $1.1 billion senior secured deal, with Barclays the left lead on the term loan B and GE the left lead on the revolver.

Proceeds will be used to help fund the buyout of the company by Hellman & Friedman LLC for $25.60 in cash per share. The transaction is valued at $2.65 billion.

Other financing will come from $500 million of senior subordinated financing from vehicles managed by GSO Capital Partners and Farallon Capital Management, LLC, according to filings with the Securities and Exchange Commission.

On a gross basis, senior leverage is 3.4 times and total leverage is 5.2 times.

Goodman Global is a Houston-based manufacturer of residential and light commercial heating, ventilation and air-conditioning equipment.

LCDX stronger, cash weaker

Switching to secondary happenings, LCDX 9 gained some ground on Tuesday in sympathy with stocks but cash felt heavy, according to a trader.

The index went out around 94.05 bid, 94.25 offered, up from 93.65 bid, 93.85 offered, the trader said.

Cash, on the other hand, was down about a quarter of a point with "pretty light volume," the trader added.

Nasdaq ended the day up 8.15 points, or 0.35%, Dow Jones Industrial Average ended the day up 96.82 points, or 0.78%, S&P 500 ended the day up 8.34 points, or 0.62%, and NYSE ended the day up 67.61 points, or 0.75%.

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