Univision inches up as panic fades; LCDX dips; Harrah's strengthens; Macrovision sets talk

By Sara Rosenberg

New York, April 9 - Univision Communications Inc.'s strip of institutional bank debt regained some ground and stability on Wednesday as anxiety over the company's bank debt draws appeared to die down.

Also, in trading, LCDX 10 was a touch softer and the cash market was pretty sideways, although on the run names, like Harrah's Operating Co. Inc., continued to trade well.

Meanwhile, in the primary, Macrovision Corp. came out with official price talk on its term loan B as the deal was launched with a bank meeting during the session.

Univision's strip of institutional bank debt moved higher as investors had a day to come to terms with the recent news regarding the company's revolver and delayed-draw term loan draws, according to traders.

The institutional debt ended the day at 76½ bid, 77½ offered, up from Tuesday's closing levels of 76 bid, 77 offered, traders said.

On Tuesday, the company revealed that it drew down $700 million under its $750 million revolver and initiated a draw under its $450 million delayed-draw term loan for the remaining $250 million of funds available under the tranche.

The company may use up to $250 million of the revolver borrowings to pay down its $500 million second-lien asset sale bridge loan that is due on March 29, 2009, and the delayed-draw term loan funds will be used to prepay senior notes that are due in October.

According to the company, there is no immediate need for additional liquidity, but, in light of current financial market conditions, the decision was made to make the revolver draw so as to get greater financial flexibility.

However, market participants found the news to be somewhat disconcerting as it brought up concerns over the credit in general being that it operates in the media sector and is highly levered.

Univision is a Los Angeles-based Spanish-language media company.

LCDX lower, cash steady

LCDX 10 was slightly weaker on Wednesday, while cash was generally unchanged; however, traders have noticed that on the run names have been trading pretty actively at firm levels.

The index was quoted by one trader at 96.75 bid, 96.85 offered and by a second trader at 96.80 bid, 96.90 offered. On Tuesday, the index went out around 96.95 bid, 97.05 offered.

Meanwhile, the cash market in general was described as sideways, but some of the larger, more liquid deals stood out, like Las Vegas-based casino company Harrah's.

Harrah's term loan B-2 was quoted at 93½ bid, 94 offered, up about half a point on the day, one trader remarked.

"On the run names continue to trade very well, certainly on the back of the Citi news," the trader added.

By Citi news, the trader was referring to stories about Citigroup being close to selling $1.2 billion in leveraged loans and bonds to a group of private equity firms that include Apollo Group, Blackstone Group LP and Texas Pacific Group.

Talk is that the debt would be sold at an average price that is slightly below 90.

Macrovision price talk

Switching to primary happenings, Macrovision held a bank meeting on Wednesday morning to kick off syndication on its $500 million five-year term loan B (Ba1/BB-), and in connection with the launch, official price talk was announced, according to buy side sources.

The term loan B was presented to lenders with talk of Libor plus 350 basis points to 375 bps, with a 3.5% Libor floor, and 101 soft call protection for one year, sources said. It is being offered to investors at an original issue discount of 97.

This official price talk is pretty much in line with where unofficial guidance was rumored to be on Tuesday. Prior to the launch, it was heard that the loan would be talked in the Libor plus the mid-to-high 300 bps area, at a discount in the 97 context.

"It does look attractive," one buy side source said about the term loan B, "Three times net leverage on [the] deal. Revenue is recurring - all from long-term patent royalties. Macrovision will sell non strategic assets of Gemstar post close to pay down debt, so would expect reception to be positive.

"Negative, no real assets to business," the buy side source continued. "Potential competition from Google, Microsoft, Yahoo in future plus rapidly evolving technology."

Security for the term loan B is a first-priority lien on all tangible and intangible assets, including IP, IP license agreements, contracts and real estate, and stock of the borrower, its direct and indirect domestic subsidiaries and 66% of the stock of first-tier foreign subsidiaries.

The term loan B has a $75 million accordion feature.

Covenants include a maximum leverage ratio that opens at 4.5 times and gradually moves to 2.25 times at July 1, 2010, and a fixed-charge coverage ratio that opens at 1.3 times, moves to 1.4 times at April 1, 2010 and then to 1.5 times at Oct. 1, 2010.

The company must use 100% of asset sale proceeds or other dispositions and 100% of debt issuance proceeds to repay the term loan B. In addition, there's a 75% excess cash flow sweep when leverage is greater than or equal to 3.5 times, a 50% sweep when leverage is greater than or equal to 2.75 times, and a 25% sweep when leverage is greater than or equal to 2.0 times.

JPMorgan and Merrill Lynch are the joint lead arrangers and joint bookrunners on the deal, with JPMorgan the administrative agent.

In the event the company's leverage ratio is greater than 2.5 to 1.0 and more than $50 million in aggregate principal amount of its 2.625% convertible senior notes due 2011 remain outstanding 180 days prior to their scheduled maturity, the term loan B will become due on that 180th day.

Proceeds will be used to help fund the acquisition of Gemstar-TV Guide International, Inc. in a cash and stock transaction valued at $2.8 billion.

Other financing for the acquisition will come from $150 million in senior unsecured notes, which are backed by a bridge loan commitment, and by about $965 million in cash and cash equivalents.

The roadshow for the high-yield bonds is probably going to kick off around April 21.

Senior secured leverage is 2.5 times and total leverage is 4.3 times.

Commitments towards the credit facility are due on April 23 and closing is targeted for May 2.

Under the acquisition agreement, each share of Gemstar-TV Guide will be converted into the right to receive, at the election of each individual stockholder and subject to proration, $6.35 in cash or 0.2548 of a share of common stock in a new holding company that will own both Gemstar-TV Guide and Macrovision.

Upon completion of the transaction, Macrovision stockholders will own about 53% of the combined company, and Gemstar-TV Guide stockholders will own about 47%.

A special meeting of Macrovision stockholders will be on April 29 regarding the acquisition.

At first, Macrovision planned on getting $800 million of debt for the Gemstar-TV Guide purchase, comprised of a $650 million term loan B and a $150 million bridge loan, but the amount of funds needed was reduced using proceeds from the recently completed roughly $200 million sale of its software business unit to Thoma Cressey Bravo.

Macrovision is a Santa Clara, Calif.-based provider of services that enable businesses to protect, enhance and distribute their digital goods to consumers across multiple channels. Gemstar-TV Guide is a Los Angeles-based media, entertainment and technology company.

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