Realogy bounces around; Cengage up following earnings; Learning Care approaches some lenders

By Sara Rosenberg

New York, May 14 - Realogy Corp.'s term loan was quoted all over the place as the company released numbers late in the day, and Cengage Learning's (Thomson Learning) term loan was better as people continued to react positively to recent quarterly results.

Also in trading, Visteon Corp.'s term loan headed lower with the rest of the cash market and General Motors Corp.'s term loan headed higher.

In other news, Learning Care Group's credit facility is currently being shopped around to some investors and North American Energy Alliance LLC is in the process of looking for senior managing agents.

Realogy's term loan seesawed throughout the session, moving up prior to the release of earnings and then coming back in later in the day, according to traders.

One trader said that the term loan ended the day at 84 bid, 85 offered, the same levels where it went out on Tuesday.

A second trader remarked that he saw the loan quoted at 84½ bid, 85½ offered on Wednesday afternoon prior to the first-quarter numbers coming out, and he had the paper going out on Tuesday at 84¼ bid, 85¼ offered. He went on to say that he did not see any quotes on the loan following the earnings news since the numbers came out fairly late in the session and people were "still digging through them trying to figure it out."

For the quarter, Realogy posted net revenues of $1.054 billion, up from $1.373 billion in the first quarter of 2007.

Net loss for the quarter was $132 million, compared to net income of $32 million last year, due mainly to interest expense of $164 million.

And, EBITDA was $4 million, modestly above the company's earlier guidance.

"The first quarter of any year is historically our slowest from an earnings perspective almost entirely due to the seasonality of the residential real estate market," said Richard A. Smith, president and chief executive officer, in a news release. "We still have most of our annual EBITDA opportunity in front of us and, of course, that's where our focus lies.

"Realogy's first quarter 2008 operating results reflected the continued industry-wide slowdown in U.S. existing home sales, but were partially offset by management's focus on overhead, productivity and growth.

"In April, we saw some early indications that the improving year-over-year unit change trends being forecasted by the National Association of Realtors and Fannie Mae in the back half of 2008 may be starting to develop. While we expect to see some mixed results in the coming months, we are encouraged by these positive signs of activity in April," Smith added in the release.

Realogy is a Parsippany, N.J.-based provider of real estate and relocation services.

Cengage buoyed by numbers

Cengage's term loan was a bit stronger on Wednesday as investors were still reacting to the company's Tuesday release of results for the quarter ended March 31, according to a trader.

The term loan was quoted at 89½ bid, 90½ offered, up from 89¼ bid, 90¼ offered, the trader said, adding that people liked the earnings numbers.

For the quarter, the company reported total revenues of $286 million, up from $266 million in the same period last year. On a pro forma basis, revenues last year were $263 million.

Net loss for the quarter was $195 million, compared to $41 million last year. On a pro forma basis, net loss last year was $237 million.

And, operating loss for the quarter was $71 million, versus $57 million in the comparable period of 2007. On a pro forma basis, operating loss last year was $105 million.

Cengage also said that it plans on closing its acquisition of Houghton Mifflin's college division by June 30 upon satisfaction of regulatory approvals and other customary closing conditions.

As was previously reported, the company plans on getting a $625 million incremental term loan to fund the $750 million acquisition, with the remainder financed through an equity contribution.

Cengage is a Stamford, Conn., provider of print and digital instructional and reference materials for the higher education and library reference markets.

Visteon slides as cash weakens

Visteon's term loan gave up some ground during the trading session as the cash market in general was off by about an eighth of a point; however, the debt lost a little more than the average name, probably on some profit taking, according to traders.

The term loan was quoted at 84 5/8 bid, 85 5/8 offered, down from 85 bid, 86 offered, traders said.

Visteon did put out some news on Wednesday, announcing that Donald J. Stebbins has been elected as president and chief executive officer, effective June 1, but traders did not think this played a part in the term loan's movement.

Stebbins, who was president and chief operating officer, succeeds Michael F. Johnston in the chief executive officer role. Johnston will continue as executive chairman.

Meanwhile, although the cash market was down, LCDX 10 was up with levels quoted at 98.95 bid, 99.10 offered, compared to 98.65 bid, 98.75 offered on Tuesday, traders added.

Visteon is a Van Buren Township, Mich.-based automotive supplier that designs, engineers and manufactures climate, interior, electronic and lighting products for vehicle manufacturers, and also provides a range of products and services to aftermarket customers.

General Motors inches up

General Motors' term loan was actually stronger on Wednesday as it appeared that some opportunistic buyers stepped in, according to a trader.

The Detroit-based automotive company's term loan was quoted at 90 3/8 bid, 91 3/8 offered, up from 89½ bid, 90½ offered, the trader said.

"They've gotten beaten up so bad recently people are coming in," the trader continued.

Ford Motor Co., which has also come under pressure recently, saw its term loan end the day unchanged at 88 5/8 bid, 89 1/8 offered, but levels did get as high as 88¾ bid, 89¼ offered before settling back in, the trader added.

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

Learning Care being shopped around

Moving to primary happenings, Learning Care Group's proposed $215 million credit facility is currently being talked "to anchor orders," although an official bank meeting has not yet taken place, according to a market source.

In fact, there is no bank meeting scheduled as of yet for the deal, the source remarked.

The facility consists of a $40 million revolver, which will be undrawn at close, and a $175 million term loan.

Price talk on the deal is not currently available, the source said.

Barclays Capital is the lead bank on the facility that 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.

North American Energy seeks SMAs

North American Energy Alliance has just recently started to syndicate its proposed $545 million credit facility (BB+) to senior managing agents, as a launch took place this past Tuesday, and is looking to begin the retail round sometime in early June, according to a market source.

The facility consists of a $40 million revolver, an $80 million letter-of-credit facility, an $85 million term loan and a $340 million delayed-draw term loan, with all tranches talked in the Libor plus 275 bps area, the source said.

The unused fee on the delayed-draw term loan is expected to be about half the drawn pricing.

Banks are being asked to commit pro rata for all of the tranches, the source added.

Barclays and Union Bank of California are the joint lead arrangers on the deal that will be used, along with $325 million of senior unsecured notes, to help back the roughly $1.477 billion acquisition of 1,706 megawatts of generation projects by Industry Funds Management from Consolidated Edison Inc.

The acquisition is being done in two stages. The first stage has already been completed and the second stage, which is what the delayed-draw funds will be used for, is expected to close in June.

The projects being acquired are located in New Hampshire, Massachusetts, New Jersey and Maryland.

DirecTV closes

DirecTV Holdings LLC closed on its $1 billion five-year incremental term loan C (Baa3/BBB-/BB+), according to a news release.

The term loan is priced at Libor plus 225 bps with a 3% Libor floor, and was sold at an original issue discount of 99.

During syndication, pricing firmed up at the wide end of talk of Libor plus 200 bps to 225 bps at a discount of 99 to 991/4.

Bank of America and JPMorgan acted as the lead banks on the deal.

Proceeds from the term loan, along with $1.35 billion of 7 5/8% eight-year senior notes due 2016, are being used for general corporate purposes, including to pay a dividend to its parent, DirecTV Group, who can then use the funds to purchase stock under its share repurchase program.

DirecTV is an El Segundo, Calif., provider of digital multichannel television entertainment.

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