Macrovision breaks; Univision rises on settlement hopes, Lear up with numbers; Bright Horizons sets talk

By Sara Rosenberg

New York, April 29 - Macrovision Corp.'s term loan B hit the secondary market on Tuesday, with levels quoted well above the original issue discount price at which the paper was sold.

Also in trading, Univision Communications Inc.'s strip of institutional bank debt headed higher as news emerged that sparked hopes that a lawsuit settlement agreement with Grupo Televisa SA may be coming, and Lear Corp.'s term loan was better on earnings.

Moving to the primary, Bright Horizons Family Solutions, Inc. came out with price talk on its credit facility as the deal was launched with a bank meeting on Tuesday morning, and syndication appears to be moving along smoothly as the term loan B has already more than filled out.

Macrovision's $550 million five-year term loan B (Ba2/B+) freed up for trading during the session, with levels quoted north of the debt's original issue discount price, according to a market source.

The term loan B was quoted at 99 bid, 99¾ offered late in the day, after breaking for trading at around 98¾ bid, 99½ offered, the source said.

The term loan B was sold to investors at a discount of 971/2. Pricing is Libor plus 375 basis points, with a 3.5% Libor floor, and the tranche carries 101 soft call protection for one year.

During syndication, the term loan B was upsized from $500 million, the original issue discount tightened from 97, and pricing firmed at the wide end of original guidance of Libor plus 350 bps to 375 bps.

The $50 million upsizing to the B loan was to help compensate for a $150 million senior unsecured notes offering that was canceled. The remaining $100 million of funds is coming in the form of $100 million subordinated bonds that were privately placed.

Covenants under the term loan B 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.

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

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.

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%.

Originally, 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.

Univision rallies on court delay

Univision's strip of institutional bank debt traded up after news surfaced that the trial regarding the Televisa litigation was postponed to July 1 from Tuesday, creating an assumption that there's some sort of settlement in the works, according to a trader.

The bank debt was quoted at 83½ bid, 84½ offered, up from 81 bid, 82 offered, the trader said.

The legal battle between Univision and Televisa, which focuses on breach of contract issues and royalties, first began in June 2005.

Specifically, Televisa alleges that Univision failed to pay Televisa royalties attributable to revenues from certain programs and from use of unsold time to promote assets Univision edited without permission, certain Televisa programs and related copyright infringement claims; Univision breached a soccer agreement; Univision did not cooperate with various Televisa audit rights and efforts; and Univision has not been properly carrying out a provision of the PLA that gives Televisa the secondary right to use Univision's unsold advertising inventory.

Under the lawsuit, Televisa is seeking a declaration that Univision is in material breach of the PLA and soccer agreement, that Televisa has the right to suspend or terminate its performance under the PLA and that Televisa may, without liability to Univision, transmit or permit others to transmit any television programming into the United States from Mexico over or by means of the internet.

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

Lear gains on earnings

Lear's term loan moved higher during Tuesday's market hours as the company reported first-quarter financial results, according to a trader.

The term loan was quoted at 96¼ bid, 97¼ offered, up from 95¼ bid, 96¼ offered, the trader said.

For the quarter, Lear reported net sales of $3.9 billion and pretax income of $109.5 million, including restructuring costs of $23.6 million, compared with net sales of $4.4 billion and pretax income of $82.3 million for the first quarter of 2007, including restructuring costs of $15.8 million and other special items totaling $10.7 million.

The decline in net sales for the quarter reflects the divestiture of the company's interior business and lower industry production in North America, due in part to the impact of a strike at a major supplier, offset in part by favorable foreign exchange and new business.

Net income for the quarter was $78.2 million, or $1.00 per share, compared with net income of $49.9 million, or $0.64 per share, for the first quarter of 2007.

Income before interest, other expense, income taxes, restructuring costs and other special items was $186.5 million, compared with core operating earnings of $170.2 million in the first quarter of 2007, excluding the divested interior business.

And, free cash flow for the quarter was negative $31.4 million, compared with negative $32.1 million in the first quarter of 2007.

"Although we are facing significant challenges in North America, Lear's underlying operating fundamentals remain strong," said Bob Rossiter, chairman, chief executive officer and president, in a news release.

The Lear team remains very focused on delivering outstanding quality and customer service to our customers. At the same time, we are putting in place a global operating structure for our business units and taking aggressive actions to improve our longer-term competitiveness."

Also on Tuesday, Lear said that it expects 2008 net sales of about $15.5 billion, up from prior guidance of $15 billion.

Lear's 2008 earnings outlook remains unchanged, reflecting favorable operating performance and foreign exchange, offset by lower industry production in North America and increasing commodity costs.

The company anticipates 2008 core operating earnings of $660 million to $700 million. Restructuring costs in 2008 are estimated to be about $100 million.

Lear is a Southfield, Mich.-based supplier of automotive seating systems, electrical distribution systems and related electronic products.

Bright Horizons price talk

Over in primary news, Bright Horizons held a bank meeting on Tuesday to kick off syndication on its $440 million senior secured credit facility (Ba3), and in connection with the launch, price talk was announced, according to a market source.

The $75 million six-year revolver and the $100 million six-year term loan A were both presented with talk of Libor plus 350 bps, and the $265 million seven-year term loan B was presented with talk of Libor plus 400 bps, the source said.

The term loan B has a 3.5% Libor floor and is being offered at an original issue discount that is currently being guided in mid-90s, the source continued.

Syndication on the term loan B is going very well as the tranche was already oversubscribed by late day Tuesday, the source remarked.

"The whole deal's going well. Bank meeting very well attended. Full house and lots of people on the phone," the source added.

Originally, based on filings with the Securities and Exchange Commission, the deal was expected to be comprised of a $75 million revolver and a $365 million term loan B, however, $100 million of the term loan B ended up being carved out to create the term loan A.

Financial covenants include a minimum cash interest coverage ratio and a maximum total leverage ratio.

Goldman Sachs is the lead arranger and bookrunner on the deal that will be used to help fund the buyout of the company by Bain Capital Partners LLC for $48.25 in cash per share. The transaction is valued at $1.3 billion.

Other financing will come from $300 million of senior subordinated mezzanine notes and $110 million of PIK holdco notes provided by GS Mezzanine Partners V LP, and $640 million in equity.

The acquisition is subject to stockholder approval, the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and other customary closing conditions.

Commitments towards the credit facility are due on May 12 and closing is targeted for May 21.

Bright Horizons is a Watertown, Mass., provider of employer-sponsored child care, early education and work/life services.

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