Dex breaks; Western Refining up on amendment; Learning Care filling up; Getty firms timing

By Sara Rosenberg

New York, June 3 - Dex Media West's credit facility freed up for trading on Tuesday and Western Refining Inc.'s term loan headed higher after an amendment proposal was announced to lenders.

Also in trading, Residential Capital LLC's (ResCap) term loan was weaker as the company voiced liquidity concerns, General Motors Corp.'s term loan was down and Ford Motor Co.'s term loan was slightly better.

In other news, Learning Care Group's term loan has been met with a positive reaction from investors and Getty Images Inc. came out with firm timing for the launch of its credit facility.

Dex Media West's credit facility hit the secondary market on Tuesday, with the term loan B ending the day slightly higher than the original issue discount level at which it was sold, according to a trader.

The $950 million term loan B due October 2014 was quoted at 97 bid, 97¾ offered on the break and then it inched up to 97 3/8 bid, 97 7/8 offered, where it closed out the day, the trader said.

The term loan B is priced at Libor plus 400 basis points with a 3% Libor floor, was sold at a discount of 97 and carries 101 soft call protection for one year.

During syndication, pricing on the term loan B was increased from original talk at launch of Libor plus 350 bps to 375 bps and the discount widened from initial talk that was in the 98 area.

Dex Media West's $1.19 billion credit facility also includes a $100 million revolver due October 2013 and a $140 million term loan A due October 2013 with both of these tranches priced at Libor plus 375 bps with a 3% Libor floor, and an original issue discount of 981/2.

The revolver has a 50 bps commitment fee.

During syndication, pricing on the revolver and the term loan A was increased from original talk at launch of Libor plus 325 bps to 350 bps.

Financial covenants include a total leverage ratio and an interest coverage ratio.

JPMorgan and Bank of America are the lead banks on the deal that will be used to refinance the company's existing credit facility.

There is a $400 million accordion feature that can be used to get additional revolver and/or term loans, of which all of it can be used to refinance senior unsecured notes and only half can be used for general corporate purposes.

Dex Media is a Cary, N.C.-based publisher of Yellow Pages and White Pages directories.

Western Refining rises

Western Refining's term loan traded higher on Tuesday as the company launched an amendment that would result in lenders getting higher pricing and consent fees, according to a trader.

The term loan was quoted at 93¼ bid, 93¾ offered, up from Monday's levels of 89½ bid, 90½ offered, the trader said.

Under the amendment proposal, the company would raise pricing to Libor plus 375 bps from Libor plus 175 bps, add a 3.25% Libor floor and pay lenders a total of 100 bps for consents - half of which would be paid at the end of the second quarter and half of which would be paid at the end of the third quarter.

In return, the company wants the leverage covenant to be waived for the second quarter, replaced by a minimum-EBITDA requirement in the third and fourth quarters, and loosened in 2009.

The company also wants to upsize its revolver to $1 billion from $800 million.

Western Refining is an El Paso, Texas-based independent crude oil refiner and marketer of refined products.

ResCap trades down

In more trading news, ResCap's term loan inched its way lower after the company said that it may need a lot more cash to meet liquidity needs than it previously expected, according to a trader.

The term loan was quoted at 97¼ bid, 98¼ offered, down from 97½ bid, 98½ offered, the trader said.

On Tuesday morning, ResCap revealed in an 8-K filing that it might need about $2 billion in cash to meet its near-term liquidity needs, up from the previous estimate of $600 million in cash.

The revised cash estimate is a result of the company's inability to complete $1.3 billion in asset sales because of unfavorable conditions, adverse movement of hedge collateral, decreases in advance rates under some of its bilateral facilities and fees in connection with the amendment and extension of the bilateral facilities.

The company also said that it entered into various agreements with GMAC LLC and Cerberus Capital Management LP to improve liquidity.

One such agreement is GMAC's commitment to acquire 100% of ResCap's resort finance business, including its subsidiary RFC Resort Funding LLC, for a cash purchase price equal to the fair market value of the business.

Another is Cerberus' agreement to purchase $475 million of ResCap's model home assets for $225 million in cash and a series B junior preferred membership interest in a newly formed entity.

In addition, Cerberus has agreed to buy, at ResCap's option, some performing and non-performing mortgage loans and mortgage-backed securities for $300 million in net cash proceeds.

Lastly, ResCap plans on selling some of its performing and non-performing mortgage loans and mortgage-backed securities through a brokered auction process. Cerberus has committed to bid $650 million to purchase those assets.

ResCap, an indirect wholly owned subsidiary of GMAC Financial Services, is a Minneapolis-based real estate finance company focused primarily on the residential market.

GM, Ford active

General Motors' and Ford's term loans were both active during the trading session as the two companies released May sales results and General Motors announced restructuring plans and saw some movement on the ResCap news as well, according to a trader.

General Motors, a Detroit-based automotive company, saw its term loan quoted at 88 1/8 bid, 89 1/8 offered, down from 88¼ bid, 89¼ offered, the trader said.

And, Ford, a Dearborn, Mich.-based automotive company, saw its term loan quoted at 86 bid, 86½ offered, up from 85 5/8 bid, 86 3/8 offered, the trader continued.

"For sales, people were expecting down 23% for GM and down 17% for Ford," the trader remarked.

In May, General Motors' total sales were 272,363 vehicles, down 30.2% from sales of 375,682 vehicles in May 2007.

The downturn was attributed to soft truck demand and a decline in fleet deliveries impacted by the American Axle strike. About 15,000 to 18,000 sales were lost in May, or will be retimed, due to various work stoppages including the American Axle strike.

Truck sales were 142,248, down 36.7% from sales of 224,703 last year.

Ford reported total sales of 217,998 in May, down 16% from 259,470 in the same period last year.

The company said that its gains in the small- and mid-size car market are helping to mitigate sharp declines among traditional SUVs (down 44%) and trucks and vans (down 29%) as well as lower sales to daily rental companies (down 30%).

"GM had a lot going on today. CEO announced restructuring plan, laying off 10,000 people and closing four plants. May auto sales. And, news about ResCap needing more cash," the trader added.

On Tuesday, General Motors said that it will cease production at four truck plants and increase production of small and midsize cars.

The company expects that these actions, along with the recent announcement to remove shifts at two other U.S. truck plants, will result in an additional GM North America structural cost savings of more than $1 billion, on a running rate basis, by 2010. This is on top of the about $5 billion running rate reduction by 2011 that it announced earlier this year, and also in addition to the $9 billion reduction accomplished over the 2006-to-2007 period in North America.

The company also said that it is undertaking a strategic review of the Hummer brand and is considering all options, from a complete revamp of the product lineup to a partial or complete sale of the brand.

"From the start of our North American turnaround plan in 2005, I've said that our goal is not just to return GM to profitability, but to structure GM globally for sustained profitability and growth," said Rick Wagoner, chairman and chief executive officer, in a news release.

"Since the first of this year, however, U.S. economic and market conditions have become significantly more difficult. Higher gasoline prices are changing consumer behavior, and they are significantly affecting the U.S. auto industry sales mix.

"We are making a number of important announcements today, covering everything from product and technology investments to capacity adjustments to a strategic review of our Hummer brand. These moves are all in response to the rapid rise in oil prices and the resulting changes in the U.S., changes that we believe are more structural than cyclical," Wagoner continued.

"While some of the actions, especially the capacity reductions, are very difficult, they are necessary to adjust to changing market and economic conditions and to keep GM's U.S. turnaround on track and moving forward," Wagoner added in the release.

Learning Care nets orders

Learning Care Group's $175 million term loan has received a good response from the market, so much so that about two thirds or more of the tranche was already spoken for by around midday on Tuesday, according to a market source.

The term loan is part of a $215 million credit facility (Ba3/B+) that also includes a $40 million revolver, which will be undrawn at close.

A "well attended" bank meeting to officially launch the deal took place on Tuesday morning, but there were accounts who were given an early look at the financing, the source said.

As was previously reported, both the revolver and the term loan are being talked at Libor plus 450 bps.

The term loan has a 3.5% Libor floor and is being offered to investors at an original issue discount of 96.

Barclays Capital is the lead bank and administrative agent on the deal. Wells Fargo has signed on as the syndication agent.

Proceeds will be used to help fund Morgan Stanley Private Equity's purchase of a 60% interest in the company from A.B.C. Learning Centres.

Other financing for the transaction will come from a $247 million equity contribution from Morgan Stanley Private Equity and a rollover of A.B.C.'s 40% stake valued at $185 million.

A.B.C. will also retain $20 million of 81/2-year preferred equity in Learning Care, with a PIK coupon of Libor plus 250 bps in year one, Libor plus 350 bps in year two and Libor plus 450 bps thereafter.

In addition, Barclays has been engaged to arrange up to $55 million of potential mezzanine financing on a best efforts basis, which would be used to reduce the equity contribution.

If Barclays is unsuccessful in securing the mezzanine financing, Morgan Stanley Private Equity has the option to retain a 60% interest, provide the mezzanine financing, or decrease its equity ownership in the Learning Care to a minimum of 55%, with an option to increase its stake back to 60% within the next three years at the initial purchase price.

The transaction, which values Learning Care at $700 million, is expected to close following regulatory approval, funding of the committed financing facility and consent of A.B.C.'s senior lenders.

Learning Care Group is a Novi, Mich., provider of early education and care services to children between the ages of six weeks and 12 years.

Getty launch date emerges

Getty Images nailed down timing for the launch of its proposed $1.045 billion senior secured credit facility with the scheduling of a bank meeting for June 10, according to a market source.

Previously, the deal was simply labeled as expected June business.

The facility consists of a $75 million five-year revolver, a $705 million seven-year term loan and a $265 million 40-day delayed-draw, seven-year final maturity, term loan, with all tranches expected to have a 3.25% Libor floor, the source said.

As for spreads, filings with the Securities and Exchange Commission have said that all tranches would be priced at Libor plus 450 bps, but the source said that where price talk will fall out is still fluid, although it is known that it will be somewhere in the Libor plus 400s bps area.

The funded and delayed-draw term loans are basically going to be marketed as a single $970 million term loan. There will be an original issue discount on the term loan debt; however, that too is still to be determined, the source continued.

Financial covenants under the facility include a maximum total leverage ratio and a minimum consolidated interest coverage ratio.

Barclays, GE Capital and RBS Securities are the joint bookrunners on the deal, with Barclays and GE acting as co-lead arrangers. GE is the administrative agent.

Proceeds from the facility, along with up to $941.3 million in equity, will be used to help fund the buyout of the company by Hellman & Friedman LLC for $34 per share in cash. The transaction is valued at $2.4 billion, including the assumption of existing debt.

Completion of the transaction is expected to occur in the second quarter, subject to shareholder approval for which a special meeting is scheduled for June 20, and other customary closing conditions. The buyout is not subject to a financing condition.

Getty Images is a Seattle-based creator and distributor of still imagery, footage and multi-media products, and a provider of other forms of digital content.

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