Idearc, MetroPCS trade up; LyondellBasell launches B-2, nets orders; Bright Horizons closing in on OID

By Sara Rosenberg

New York, May 6 - Idearc Inc. and MetroPCS Communications Inc. both saw their term loans gain some ground during market hours as the two companies released first-quarter numbers.

Over in the primary market, LyondellBasell Industries launched its term loan B-2 to U.S. investors during Tuesday's market hours and syndication was heard to be going well right off the bat as a number of early commitments had been placed by the afternoon.

Also, although the original issue discount on Bright Horizons Family Solutions, Inc.'s term loan B is still fluid, new talk emerged on what level the discount is trending towards.

Idearc's term loan headed higher in trading after the company announced pretty decent first-quarter earnings results, according to a trader.

The term loan was quoted at 83 bid, 84 offered, up from 81¾ bid, 82¾ offered, the trader said.

For the quarter, Idearc had revenues of $770 million, a decrease of 4.5% from $806 million in the same period in 2007.

EBITDA for the quarter was $359 million, up 1.4% from $354 million in the same period last year. On an adjusted pro forma basis, first-quarter EBITDA was $367 million, a decrease of 3.2% from $379 million in the first quarter of 2007.

Net income was $111 million, or $0.76 per diluted share, an increase of 7.8% from $103 million in the same period in 2007, or $0.70 per diluted share. On an adjusted pro forma basis, first-quarter net income was $116 million, or $0.79 per diluted share, a decrease of 2.5% from $119 million, or $0.82 per share, last year.

Free cash flow for the period was $193 million based on cash from operating activities of $202 million, less capital expenditures of $9 million.

"The set of assets that make this business an attractive investment are still in place and the business fundamentals are still sound and solid. The economic softness that began in the latter half of 2007 continues to impact our results and, while the first quarter proved to be challenging, we remain committed to our multi-product strategy, which we believe will ultimately maximize value to our investors," said Frank Gatto, acting chief executive officer, in a news release.

Idearc is a Dallas-based provider of yellow and white page directories and related advertising products.

MetroPCS stronger on numbers

MetroPCS Communications' term loan was also better on Tuesday as it too reported favorable numbers for the first quarter, according to a trader.

The term loan was quoted at 95 bid, 95½ offered, up from 94 3/8 bid, 95 1/8 offered, the trader said.

For the first quarter, the company reported total revenues of $662 million, an increase of 23% from $537 million in the first quarter of 2007, and income from operations of $112 million, an increase of 9% from $103 million last year.

Net income was $40 million, or $0.11 per common share, as compared to net income of $36 million, or $0.11 per common share, for the same period in 2007. On a non-GAAP basis, excluding an $8 million impairment charge, net income would have been $48 million, or $0.13 per common share.

Consolidated adjusted EBITDA for the quarter was $178 million, up 19% from $149 million last year.

And, the company ended the quarter with about 4.4 million subscribers, compared to about 3.4 million subscribers at the end of the first quarter of 2007.

"Results in the first quarter were very strong considering the current challenging macro economic environment. Highlighted by 452 thousand net additions and flat churn year over year, our compelling value proposition as well as the ongoing trend of landline replacement in the United States, resulted in continued subscriber growth as well as solid quarterly Adjusted EBITDA," said Roger D. Linquist, chairman, president and chief executive officer, in a news release.

"Every operating market continues to report positive net additions resulting in increased penetration and total subscribers. With this momentum, we reported Adjusted EBITDA as a percentage of service revenues during the first quarter of 46.2% for our core markets, and 31.6% on a consolidated basis. We also maintained our focus on managing costs and reported industry-leading low consolidated CPGA and CPU."

Also on Tuesday, MetroPCS reaffirmed its guidance for full year 2008 of net subscriber additions in the range of 1.25 million to 1.52 million on a consolidated basis. The company currently expects consolidated adjusted EBITDA for the year to be in the range of $750 million to $850 million.

MetroPCS is a Dallas-based provider of unlimited wireless communications service for a flat-rate with no signed contract.

LyondellBasell sees early interest

Switching to primary news, LyondellBasell held a bank meeting in the United States on Tuesday to officially kick off syndication on its roughly $2.5 billion plus €433 million term loan B-2, and the deal was is being well received as a bunch of early tickets have already come in, according to a market source.

In fact, around midday, it was heard that the term loan B-2 had already received enough orders to account for half plus of the deal, the source said.

Goldman Sachs, Merrill Lynch, ABN Amro and UBS are the joint lead arrangers and joint bookrunners on the already funded deal, with Goldman the left lead.

Originally, Citigroup was the left lead bank on the deal, but sources said that the bank sold off its 20% share already and therefore is no longer involved.

If you take out the 20% sold by Citi, plus some amortization, there's less than $2 billion of the term loan B-2 currently for sale, the source remarked.

The term loan B-2 is initially priced at Libor plus 375 basis points, with a 3.25% Libor floor, and the paper carries call protection of 103 in year one and 101½ in year two.

Guidance on the original issue discount on the B-2 surfaced on Tuesday in the low-to-mid 90s context, although official pricing is still to be determined, the source added.

A bank meeting to launch the term loan B-2 to European investors will take place in London on Wednesday.

The term loan B-2 is part of about $9.5 billion in total term loan B debt that is currently in the company's possession.

The rest of the term loan B debt is divided between a term loan B-1 with no call protection and a term loan B-3 that is non-callable for two years, with each of these tranches also sized at roughly $2.5 billion plus €433 million and carrying pricing of Libor plus 375 bps, with a 3.25% Libor floor.

The term loan B-1 and term loan B-3 have yet to be launched into syndication. The assumption is that Citi's 20% was taken equally out of each B loan tranche.

Pricing on all three term loan B tranches can step down to Libor plus 350 bps if first-lien senior secured leverage is less than or equal to 1.625:1, according to an 8-K filed with the Securities and Exchange Commission Tuesday.

The term loan B is part of a senior secured credit facility that funded in December and includes a cash flow revolver, a term loan A, an ABL receivables purchase program facility and an ABL inventory-based facility.

When the term loan B first funded it was sized at $9.45 billion and was priced at Libor plus 325 bps.

In order for the term loan B debt to have a Libor floor, a three tranche structure and a 50 bps increase in pricing from when it funded, the company agreed to amend and restate the credit agreement, effective April 30.

The amendment and restatement also modified certain debt covenants - including increasing the debt basket, eliminating an interest rate hedging requirement, and adding a covenant prohibiting any reduction of aggregate commitments under the $750 million access group revolver before its initial maturity - upsized the company's ABL inventory-based facility to $1.6 billion from $1 billion by using the accordion feature and increasing that accordion feature to $1.1 billion from $600 million, and raising pricing on the term loan A and cash flow revolver to Libor plus 350 bps.

Proceeds from the credit facility were used to help fund Basell AF SCA's acquisition of Lyondell Chemical Co. for $48 per common share in an all-cash transaction with a total enterprise value of about $19 billion, including the assumption of debt.

LyondellBasell is a Netherlands-based polymers, petrochemicals and fuels company.

Bright Horizons OID picture clearing up

Bright Horizons launched its $265 million seven-year term loan B with original issue discount guidance that was in the mid-90s, but sources are now saying that, based on investor interest, the discount is "trending towards 96."

As was previously reported, price talk on the term loan B is Libor plus 400 bps, with a 3.5% Libor floor.

The term loan B was heard to be already oversubscribed on the day of the deal's bank meeting, which took place on April 29.

Bright Horizons' $440 million senior secured credit facility (Ba3) also includes a $75 million six-year revolver and a $100 million six-year term loan A, with both of these tranches talked at Libor plus 350 bps.

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.

Fairchild well received

Fairchild Semiconductor's $100 million term loan add-on (BB) is oversubscribed, according to a market source.

The add-on is talked at Libor plus 250 bps, with an original issue discount of 99.

The company's existing term loan debt will remain priced at Libor plus 150 bps.

Bank of America and JPMorgan are the lead banks on the deal.

Proceeds from the term loan, along with cash on hand, will be used to retire convertible securities.

Fairchild is a South Portland, Maine, supplier of power analog, power discrete and nonpower semiconductor services.

Agco wraps syndication

Agco Corp. completed syndication of its $300 million five-year unsecured revolving credit facility, which was oversubscribed, according to a market source.

Funding and closing of the revolver is expected to occur by the end of the month, the source added.

Pricing on the revolver can range from Libor plus 100 bps to 175 bps. If the company reaches investment-grade status, pricing drops by 25 bps.

Rabobank is the lead bank on the deal that will be used to refinance the company's existing $300 million revolver.

Agco is a Duluth, Ga., manufacturer and distributor of agricultural equipment and related replacement parts.

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