Clear Channel offers up to $3 billion of term B, floats OID; Lender Processing tweaks deal; GM trades up

By Sara Rosenberg

New York, June 17 - Clear Channel Communications Inc. officially launched up to $3 billion of its term loan B on Tuesday and formally came out with the original issue guidance on the debt.

Also in the primary, Lender Processing Services Inc. upsized its term loan B amid strong market reception and downsized its proposed bond offering.

Moving to the secondary market, General Motors Corp.'s term loan traded stronger during market hours as reports of potential additional capital requirements sparked some speculation on refinancing possibilities.

Clear Channel held a bank meeting on Tuesday morning to kick off syndication on its credit facility, and at the launch, the banks said that they are offering investors up to $3 billion of the $10.7 billion 71/2-year term loan B, according to a market source.

The final amount of term loan B debt sold will clearly end up depending on market demand, the source continued.

In addition, at the bank meeting, it was officially announced that the portion of term loan B that is up for sale is being offered to investors at an original issue discount in the 90 to 91 area, the source remarked.

On Monday, talk had emerged that around $3 billion to $4 billion of the term loan B would be offered and that the original issue discount could materialize in the 90 to 91 region; however, those details were all considered unofficial speculation.

Pricing on the term loan B is Libor plus 365 basis points with a step down to Libor plus 340 bps at less than 7:1 total leverage.

As for the bank meeting itself, the market source said that the room was "pretty packed of course. Whole process dragged out so everyone is pretty much aware of the story. No surprises."

Commitments from lenders are due on July 2.

Citigroup, Deutsche Bank and Morgan Stanley are the joint lead arrangers and bookrunners on the deal, with Citi the administrative agent, Deutsche and Morgan Stanley the syndication agents and Credit Suisse, RBS and Wachovia the co-documentation agents.

Clear Channel's approximately $16.77 billion senior secured credit facility also includes a $690 million six-year receivables-based revolver, a $1.425 billion six-year term loan A, a $2 billion six-year revolver that is split into $1.85 billion in U.S. dollars and $150 million available in alternate currencies, a $705.6 million 71/2-year asset sale term loan C and a $1.25 billion 71/2-year delayed-draw term loan.

As of now, the only debt that is formally being syndicated is the piece of term loan B, the source added.

Pricing on the receivables-based revolver is initially set at Libor plus 240 bps, but it can range from Libor plus 215 bps to 240 bps, depending on leverage. This tranche has a 37.5 bps commitment fee.

Initial pricing on the term loan A and the revolver is Libor plus 340 bps, but it can range from Libor plus 290 bps to 340 bps, depending on leverage. The revolver has a 50 bps commitment fee.

And, pricing on the term loan C and the delayed-draw term loan is Libor plus 365 bps with a step down to Libor plus 340 bps at less than 7:1 total leverage. The delayed-draw term loan has a 182.5 bps commitment fee.

Originally, it was expected that the receivables-based revolver could be sized at $1 billion and that the term loan A could be sized at $1.115 billion, based on filings with the Securities and Exchange Commission.

However, those filings explained that, if availability under the receivables-based revolver is less than $750 million due to borrowing base limitations, the term loan A would be increased by the amount of such shortfall and the maximum availability under the receivables facility will be reduced by a corresponding amount.

Covenants under the facility include a maximum consolidated senior secured net debt to adjusted EBITDA ratio requirement.

Proceeds will be used to help fund the buyout of Clear Channel by Bain Capital Partners LLC and Thomas H. Lee Partners LP for $36.00 in cash or stock per share in a transaction valued at about $17.9 billion. The purchase price was lowered from $39.20 per share in connection with a settlement agreement that enabled the buyout to progress, and entailed putting all debt and equity financing in escrow.

Of the total delayed-draw funds, $750 million can be used to purchase or repay Clear Channel's outstanding 7.65% senior notes due 2010 and the remainder will be available to purchase or repay Clear Channel's outstanding 4¼% senior notes due 2009.

Other buyout financing is coming from $980 million of 10¾% senior unsecured notes, $1.33 billion of 11% cash pay/11¾% PIK senior unsecured toggle notes and equity.

The acquisition of Clear Channel is expected to close by the end of the third quarter, subject to shareholder approval, which will be sought at a meeting on July 24.

Clear Channel is a San Antonio media and entertainment company specializing in "gone from home" entertainment and information services.

Lender Processing ups B loan

Lender Processing Services increased the size of its term loan B as the deal has been met positively by investors, and the company decreased the size of its high-yield bond deal, according to a market source.

The six-year term loan B is now sized at $510 million, up from $485 million, and the bond offering is now sized at $375 million, down from $400 million, the source said.

Price talk on the term loan B is still Libor plus 275 bps to 300 bps, but, since the deal is going very well, investors are focusing on the tight end of that talk, the source continued.

The original issue discount on the term loan B is still being guided at 981/2.

Lender Processing Services' $1.335 billion (up from $1.31 billion) senior secured credit facility (Baa3/BBB) also includes a $125 million five-year revolver and a $700 million five-year term loan A, with both of these tranches talked at Libor plus 250 bps to 275 bps. Like the B loan, investors are focusing on the tight end of that guidance as a result of the deal's successful syndication progress, the source added.

Pricing on the credit facility is expected to firm soon as commitments are due on Wednesday.

Some factors working in favor of the transaction are that people know the name pretty well, it's a fairly straight forward story, it has decent leverage and high free cash flow, and there were a lot of existing lenders from the past, a buyside source had previously explained to Prospect News.

JPMorgan, Bank of America and Wachovia are the lead banks on the deal that will be used, along with the bonds, to help fund the tax-free spinoff of the company from Fidelity National Information Services Inc.

Lender Processing Services is a provider of integrated data, servicing and technology services to large-scale mortgage lenders.

General Motors rises

Switching to trading news, General Motors' term loan gained ground during the Tuesday session after a Bloomberg article had some people contemplating that a refinancing could be possible, according to a trader.

The term loan was quoted at 93 bid, 94 offered, up from 91 bid, 91½ offered, the trader said.

In the article, it was said that General Motors may need $10 billion of additional capital, the trader remarked. This capital may be needed as early as the third quarter as a result of increasing commodity costs and decreasing sales.

"People are guessing how that might be done and people are thinking that they might have to refinance," the trader added.

General Motors is a Detroit-based automotive company.

Paul A. Harris contributed to this article.

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