Avis loan changes expected when bonds surface; Garden Ridge floats talk; Telx readies deal

By Sara Rosenberg

New York, Sept. 6 - Syndication of Avis Budget Group Inc.'s credit facility is still in process, with the expectation being that an update on pricing, and maybe even size, will likely come out when the company's proposed bond offering launches.

In other loan happenings, Garden Ridge began circulating price talk on its term loan B as a launch date for the deal was announced, and Telx Group Inc. and George Little Management emerged with plans to bring new credit facilities to market this week.

Avis still working

Avis Budget Group's $900 million of incremental senior secured credit facility debt (BB) is still in the process of being syndicated as investors are awaiting the release of revised price talk alongside the launch of the company's bond deal, a market source told Prospect News.

The leads on the financing are heard to be watching the market day-to-day to figure out when to bring the bonds to market and update loan guys, the source remarked.

Chatter is that pricing on the credit facility is anticipated to move higher as a result of market conditions and that tranche sizing could be changed for the bank and bond deals, the source added.

It was explained that the credit facility initially launched in early August, prior to the large sell-off in the market, so original talk does not reflect current conditions.

Avis loan structure

As launched in early August, Avis' credit facility consists of a $300 million revolver add-on, a $200 million term loan A and a $400 million term loan B.

Original price talk on the revolver and A loan is Libor plus 300 basis points, subject to a ratings-based grid, with no Libor floor. These tranches are being sold as a strip in a 1:1 ratio.

The term loan B, meanwhile, was launched with talk of Libor plus 350 bps with a 1.25% Libor floor, an original issue discount of 99 and 101 soft call protection for one year.

Morgan Stanley & Co., Citigroup Global Markets Inc., Credit Agricole Securities (USA) Inc., Scotia Capital (USA) Inc. and RBS Securities Inc. are the lead banks on the deal.

Avis funding acquisition

Proceeds from Avis' new loans and bonds will be used to help fund the acquisition of Avis Europe plc for £3.15 in cash per share. The transaction is valued at £635 million, or about $1 billion.

Closing is expected to take place in October, subject to Avis Europe shareholder approval, court approval and regulatory clearances.

In order to complete the transaction, Avis had to amend its existing credit facility to allow for the acquisition.

The amendment also increased the consolidated leverage ratio by 0.50 for periods subsequent to Sept. 30, increased the maximum amount of incremental facilities by $385 million and provided additional flexibility under the debt, lien and investment covenants.

Avis interim loans

A commitment for the debt needed by Avis for the Avis Europe acquisition was actually obtained in June, as the company entered into agreements for roughly $1.4 billion of financing comprised of an up to €694 million senior secured interim loan and an up to $400 million senior unsecured interim loan.

The senior secured seven-year interim loan is priced at Euribor plus 700 bps with a 1.5% floor, and the senior unsecured five-year interim loan is priced at Libor plus 900 bps with a 1.5% Libor floor.

The availability of the interim loans is subject to the completion of the acquisition of Avis Europe and may be used to fund the purchase and refinance existing Avis Europe debt.

However, the company does not plan to borrow the interim loans. Instead it hopes to complete its proposed credit facility and bond deals.

Parsippany, N.J.-based Avis Budget and Bracknell, England-based Avis Europe are vehicle rental companies.

Garden Ridge guidance emerges

In more primary news, Garden Ridge started going out with price talk of Libor plus 625 bps to 650 bps with a 1.5% Libor floor and an original issue discount that is still to be determined on its $250 million six-year term loan B as a bank meeting has been scheduled for Wednesday to launch the deal to investors, according to a market source.

Bank of America Merrill Lynch and UBS Securities LLC are the lead banks on the $330 million credit facility, which also includes an $80 million ABL revolver and will be used to help fund the buyout of the company by AEA Investors LP.

Initially, it was thought that the deal would be launched on Aug. 8, but then the decision was made to postpone the meeting until after Labor Day.

Garden Ridge is a Houston-based seller of mattresses, ready-to-assemble furniture, discount apparel and handbags and books.

Telx coming soon

Another company to announce bank meeting plans was Telx Group, as it set a 10:30 a.m. ET launch on Thursday for a proposed $340 million senior secured credit facility, according to sources.

The facility consists of a $50 million revolver and a $290 million term loan, sources said, adding that price talk is not yet available.

Morgan Stanley Senior Funding Inc. and TD Securities (USA) LLC are the lead banks on the deal that will be used to help fund the buyout of the company by ABRY Partners and Berkshire Partners LLC from GI Partners.

Telx is a New York-based provider of interconnection and colocation facilities.

George Little sets launch

Meanwhile, George Little Management revealed that it will be holding a bank meeting on Wednesday to launch a proposed $88 million credit facility that is being led by GE Capital Markets, according to a market source.

Proceeds will be used to help fund the buyout of the company by Providence Equity Partners from Daily Mail and General Trust plc for roughly $173 million in cash.

Closing is expected by the end of September, subject to customary conditions and regulatory approvals.

George Little Management is a creator of face-to-face and online buying, selling and networking platforms for designers, product developers, manufacturers, reps, retailers and operators.

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