Avaya OID guidance emerges; Contec narrows down discount; Hudson sets talk; Chrysler rises; Ford dips

By Sara Rosenberg

New York, July 28 - Avaya Inc. came out with talk on the original issue discount on its term loan B debt that is currently up for sale now that the banks have had a few days to get some responses from potential lenders.

Also on the new deal front, the original issue discount on Contec Holdings' term loan B is expected to finalize in the midpoint of talk, and allocations on the deal are targeted to go out soon, and Hudson Products Corp. released price talk on its credit facility as the deal was launched during the session.

Over in the secondary market, trading was extremely light on Monday so there was little movement in most names, but Chrysler Financial Services LLC did see an improvement in levels and Ford Motor Co. saw a bit of a weakening.

Avaya released guidance on the original issue discount on the portion of its already funded $3.8 billion term loan B (Ba3/B) that is currently in the syndication process, according to a buyside source.

The term loan B is being talked at a discount that is in the 88 area, the source said. The actual spread on the loan is Libor plus 275 basis points.

A bank meeting to officially kick off syndication on the piece of term loan B debt took place last Tuesday; however, at that time, talk on the discount was described as still to be determined because the banks wanted to have a chance to get some feedback from investors before floating a level out in the market.

Morgan Stanley and JPMorgan held the bank meeting, with Morgan Stanley leading the process.

Citigroup was the left lead bank on the deal when it was first done, but sources said that the bank is rumored to have sold out its portion of the tranche. Back in March, Citigroup did approach some lenders about the B loan and was guiding the original issue discount around 88, but whether the debt sold at that level is unavailable.

In addition, sources have said that Morgan Stanley indicated that they moved blocks of the term loan B in the 90 area earlier this year when they broke rank and all the underwriters sold pieces of the tranche on their own.

Proceeds from the term loan B, which funded last fall, were used to help fund the buyout of the company by Silver Lake and TPG Capital for $17.50 in cash per share. The transaction was valued at $8.2 billion.

The term loan B is part of a $4.335 billion credit facility that also includes a $335 million six-year asset-based revolver priced at Libor plus 175 bps, with a 25 bps commitment fee, and a $200 million six-year multi-currency revolver (Ba3/B) priced at Libor plus 275 bps, with a 50 bps commitment fee.

Avaya is a Basking Ridge, N.J., provider of communication systems, applications and services.

Contec zeroes in on OID

Contec Holdings anticipates that its term loan B will wrap at a discount price that falls smack in the middle of initial talk and the hope is that allocations will go out sometime this week, according to a market source.

The discount on the $185 million term loan B is expected to finalize at 971/2, the source said. Talk at launch had been for a discount in the 97 to 98 context.

Pricing on the term loan B is set at Libor plus 475 bps with a 3% Libor floor, in line with original talk.

Contec's $205 million credit facility also includes a $20 million revolver that is priced at Libor plus 450 bps.

Barclays is the lead bank on the deal that will be used to help fund the leveraged buyout of the company by Bain Capital.

Contec is a consumer premise equipment repair company providing services to the broadband industry with offices in Schenectady, N.Y.

Hudson Products price talk

Hudson Products held a bank meeting on Monday afternoon in New York to kickoff syndication on its $250 million credit facility, and in connection with the launch, price talk was announced, according to a market source.

Both the $30 million five-year revolver and the $220 million seven-year term loan B are being talked at Libor plus 425 bps, the source said.

The term loan has a 3% Libor floor for the life of the deal and is being offered to investors at an original issue discount of 98, the source added.

BNP Paribas is the lead bank on the facility that will be used to help fund the buyout of the company by Riverstone Holdings LLC from the Sterling Group LP.

Other buyout financing will come from $125 million of mezzanine debt.

Hudson is a Sugar Land, Texas, designer and manufacturer of air-cooled heat exchanger equipment to serve the oil, gas and petrochemical processing industries.

Weather Channel allocates

Weather Channel's $1.22 billion credit facility allocated on Monday, but the deal won't trade until closing later this year, according to a market source.

The facility consists of a $1.07 billion term loan and a $150 million revolver, with both tranches initially priced at Libor plus 400 bps. Pricing on the term loan can step down to Libor plus 375 bps when total leverage is 5¼ times.

The term loan has a 3.25% Libor floor and it was sold to investors at an original issue discount of 97.

During syndication, the term loan was upsized from $1.02 billion and pricing was reduced from Libor plus 425 bps on strong demand.

When initial guidance emerged on the term loan, it was said that the deal was being talked in the area of Libor plus 400 bps to 425 bps with an original issue discount in the range of 97 to 98; however, after a conference call with select investors was held, which was the only launch into syndication that the deal experienced, price talk was focused on Libor plus 425 bps at a discount of 97.

Deutsche Bank and GE Capital Markets are the co-lead arrangers on the credit facility, with Deutsche the left lead.

Proceeds will be used to help fund the acquisition of the company by NBC Universal, Bain Capital and Blackstone Group from Landmark Communications for about $3.5 billion.

Other financing for the buyout is coming from $610 million of mezzanine debt. The mezzanine was initially going to be sized at $660 million, but it was reduced as a result of the term loan upsizing.

Total leverage is 6.7 times. Senior secured leverage is 4.3 times, up from an original 4.1 times because of the additional term loan debt.

Following completion of the buyout, Weather Channel will be operated as a separate entity, based in Atlanta, with management services to be provided by NBC Universal.

The transaction includes The Weather Channel Networks, the third-most distributed cable network, The Weather Channel Interactive, which includes the web site weather.com, and Weather Services International, a weather forecasting provider.

Chrysler Financial strengthens

Switching to trading happenings, Chrysler Financial's first- and second-lien term loan were better in light activity, according to traders.

The first-lien term loan was quoted at 82¾ bid, 83¾ offered, up from 82 bid, 83 offered, and the second-lien term loan was quoted at 61¾ bid, 63¾ offered, up from 61 bid, 63 offered, traders said.

Meanwhile, Chrysler Corp. LLC (Chrysler Auto), which saw its term loan plunge lower on Friday after news surfaced that the company would stop leasing vehicles, was basically unchanged and not really quoted as no trading activity was seen in the name.

On Friday, the Chrysler Auto term loan was quoted at 37 bid, 47 offered, down from Thursday's levels of 47 bid, 49 offered. With no real levels on Monday, one trader guessed that the paper was probably somewhere in the low-40 context.

"Not really sure why Chrysler Financial is up. [Leasing is a] relatively small portion of their business, so news on Friday didn't really affect it," one trader added.

Chrysler Financial is a provider of financial services for vehicles. Chrysler Auto is a producer and seller of Chrysler, Dodge and Jeep vehicles.

Ford softens

Ford's term loan traded down on Monday, although these was no particular news seen sparking the movement, according to a trader.

The term loan was quoted at 80 3/8 bid, 80 7/8 offered, down from Friday's levels of 80¼ bid, 81¼ offered, the trader said.

On Monday morning, the paper did open higher with levels of 81 bid, 81½ offered, but then it came in for no specific reason, the trader added.

Ford is a Dearborn, Mich.-based automotive company.

B/E Aerospace closes

B/E Aerospace Inc. closed on its new $875 million senior secured credit facility (Ba1/BBB-), according to a news release.

The facility consists of a $350 million five-year revolver priced at Libor plus 275 bps and a $525 million six-year term loan priced at Libor plus 275 bps, with a step down to Libor plus 250 bps if total leverage is less than 2.5 times (only available after delivery of a Dec. 31 compliance certificate).

Both the revolver and the term loan have a 3% Libor floor, and the term loan was sold to investors at an original issue discount of 99.

During syndication, the term loan was first downsized by $100 million from $575 million after the company upsized its 10-year senior notes offering to $600 million from $500 million, and then it was upsized by $50 million to account for a drop in value of B/E Aerospace's stock price, which is a component of the funding for the acquisition for which the bank debt and bonds are being obtained.

In addition, during syndication, the step down in pricing was added to the oversubscribed term loan and the original issue discount was decreased from the initially proposed 98½ level.

JPMorgan, UBS and Credit Suisse acted as the joint lead arrangers and joint bookrunners on the deal, with JPMorgan the administrative agent.

Covenants include an interest coverage ratio and a total leverage ratio.

Proceeds were used to help fund the acquisition of Honeywell International Inc.'s consumables solutions distribution business and to repay existing bank debt, and the revolver is available for working capital and general corporate purpose.

B/E Aerospace bought the Honeywell business for $901.4 million in cash, plus six million shares of the company's common stock.

B/E Aerospace is a Wellington, Fla.-based manufacturer of aircraft cabin interior products and an aftermarket distributor of aerospace fasteners.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.