Goodyear ups third-lien pricing, then allocates; Macerich term loan opens for trading in mid-par region

By Sara Rosenberg

New York, April 1 - The Goodyear Tire & Rubber Co. increased pricing on its third-lien term loan Friday morning and then proceeded to allocate the credit facility late in the afternoon, with the first- and third-lien term loans quoted in the pars and the second-lien term loan quoted in the 101s.

In the secondary, The Macerich Partnership LP's $950 million credit facility broke for trading, with the term loan quoted in the mid-par area and the bridge loan quoted in the low-par context.

Goodyear flexed pricing higher on its $300 million third-lien secured term loan (B3/B-) due March 2011 to Libor plus 350 basis points from original price talk in the Libor plus 325 basis points area, according to a market source.

The tranche then broke for trading late in the day with levels of par bid, par ½ offered, according to a trader.

The third-lien term loan, which is secured equally with Goodyear's existing secured bonds due in 2011, is non-callable for one year, callable at 101 in year two and callable at par thereafter.

JPMorgan and Deutsche Bank Securities Inc. are joint lead arrangers on the third-lien term loan.

Meanwhile, Goodyear's $1.2 billion second-lien term loan (B2/B+) broke fro trading with levels of 101¼ bid, 101¾ offered on Friday, according to the trader.

The second-lien term loan is priced with an interest rate of Libor plus 275 basis points. The tranche was reverse flexed from original price talk of Libor plus 325 basis points during syndication.

The second-lien term loan, which is also being led by JPMorgan and Deutsche, is non-callable for six months, callable at 101 for the next six months and callable at par thereafter.

Goodyear's U.S. facility also contains $1.5 billion in asset-based loans (Ba3/BB) - comprised of a $1 billion revolver and a $500 million term loan (otherwise known as a deposit funded term loan) - with an interest rate of Libor plus 175 basis points. These asset-based loans were reverse flexed during syndication from Libor plus 200 basis points.

The asset-based term loan was quoted at par ½ bid, 101 offered by the end of the day and the asset-based revolver was quoted at 99½ bid, par offered, the trader said.

JPMorgan and Citigroup are joint lead arrangers on the asset-based facility, with JPMorgan the left lead.

Goodyear's $3.65 billion five-year facility also has the euro equivalent of $650 million in credit facilities (B+) for its Goodyear Dunlop Tires Europe affiliate.

The euro facility was marketed in Europe via joint lead arrangers JPMorgan and BNP Paribas, with JPMorgan the left lead.

Proceeds from the new credit facility, excluding the third-lien term loan, will be used to refinance an approximately $3.3 billion credit facility consisting of a $1.3 billion asset-based credit facility due March 31, 2006, a $650 million asset-based term loan due March 31, 2006, a $680 million deposit funded credit facility due Sept. 30, 2007 and $650 million in credit facilities for the Goodyear Dunlop Tires Europe affiliate due April 30, 2005.

The third-lien term loan, which was added to Goodyear's refinancing deal around mid-March - about two to three weeks after the company launched its credit facility into syndication - will be used for general corporate purposes.

Goodyear opted to add the third-lien piece because the demand for the originally sized $3.35 billion credit facility had been very solid and the company wanted to give lenders who wanted to get involved another vehicle that they could participate in, a company spokesperson previously explained to Prospect News.

Goodyear's facility was off to a good start from day one as early commitments rolled in immediately after the deal launched via an extremely well attended bank meeting and existing lenders were expected to account for a good amount of orders.

And, although the new asset-based facility is priced with a much lower interest rate than the existing asset-based facility - Libor plus 175 basis points compared to Libor plus 400 basis points - it was expected that existing lenders would roll over their positions rather then give up the paper given the current market environment where supply has not been able to keep up with demand.

Closing on the Akron, Ohio, tire company's new facility is expected to occur in early April.

Macerich breaks

Macerich's $950 million credit facility freed up for trading on Friday - although both the term loan and the bridge loan did not see much flow during the session, according to a trader.

The $300 million five-year term loan was quoted at par ½ bid with no offers, while the $650 million one-year bridge loan was quoted at par bid, par ½ offered, the trader said.

Both tranches are priced with an interest rate of Libor plus 162.5 basis points, but pricing on the bridge loan can go up after six months if the company does not pay down some of the debt, the trader added.

Deutsche is the lead bank on the deal that will be used to help fund the acquisition of Wilmorite Properties Inc. and Wilmorite Holdings LP for about $2.333 billion.

The $2.333 billion acquisition price includes the assumption of about $882 million of existing debt at an average interest rate of 6.43% and the issuance of convertible preferred units and common units.

Macerich is a Santa Monica, Calif., real estate investment trust, which focuses on malls.

IAP closes

IAP Worldwide Services closed on its new $435 million credit facility consisting of a $240 million term loan B with an interest rate of Libor plus 275 basis points, a $120 million second-lien term loan with an interest rate of Libor plus 575 basis points and a $75 million revolver.

The term loan B came at the low end of original price talk of Libor plus 275 to 300 basis points, and the second-lien term loan came at the high end of original price talk of Libor plus 550 to 575 basis points.

Proceeds from the new deal were used to help fund the acquisition of Johnson Controls World Services, the completion of which was announced late Thursday night.

Deutsche Bank and Goldman Sachs were the lead banks on the deal, with Deutsche the left lead. CIBC World Markets and Credit Suisse First Boston LLC were participants in the deal.

IAP Worldwide Services, a Cerberus portfolio company, is an Imco, S.C.-based company that provides products and services to public and private sector companies and government agencies.

Nexstar closes

Nexstar Broadcasting Group Inc./Mission Broadcasting Inc. closed on its new $452.5 million credit facility (Ba3/B+) due 2012 on Friday. Bank of America, UBS and Merrill Lynch acted as joint lead arrangers on the deal, with Bank of America the administrative agent and UBS and Merrill the co-syndication agents.

The facility consists of a $355 million 71/2-year term loan - divided into a $182.3 million piece and a $172.7 million piece with one term loan going to Nexstar and one going to Mission Broadcasting - with an interest rate of Libor plus 175 basis points, and a $97.5 million seven-year revolver with an interest rate of Libor plus 125 basis points - which is divided into two tranches, one going to each borrower.

Financial covenants include a maximum total combined leverage ratio of 7.5x the last 12 months operating cash flow through June 30, 2006, a maximum combined senior leverage ratio of 5.25x the last 12 months operating cash flow through June 30, 2006 and a minimum combined interest coverage ratio of 1.50 to 1.00 through Dec. 30, 2008.

Proceeds were used to help redeem all of the Irving, Texas, television broadcasting company's $160 million outstanding 12% senior subordinated notes due April 1, 2008 and refinance debt.

"These transactions improve our capital structure by enhancing enhance free cash flow through a lower cost of capital and providing greater financial flexibility," said Perry A. Sook, president and chief executive officer of Nexstar Broadcasting, in a company news release. "Our top priorities in 2005 are to continue improving the performance of stations we acquired over the past two years and use available free cash flow to reduce debt. We do not intend to make any acquisitions in 2005, and are instead pursuing the divestiture of certain non-strategic station assets, the proceeds from which we would use to further strengthen our balance sheet."

AMI closes

AMI Semiconductor Inc. closed on its new $300 million credit facility (Ba3/BB-) consisting of a $90 million five-year revolver with an interest rate of Libor plus 175 basis points and a $210 million seven-year term loan B with an interest rate of Libor plus 150 basis points.

The facility was launched with opening price talk of Libor plus 175 basis points on the revolver and opening price talk of Libor plus 150 to 175 basis points on the term loan B.

Credit Suisse First Boston and Lehman Brothers acted joint lead arrangers, with CSFB the sole bookrunner and administrative agent.

Proceeds from the term loan were used to repay about $123.1 million of outstanding term loan debt and help fund a tender offer for the company's outstanding 10¾% senior subordinated note due 2013 with a redemption cost of about $157.9 million.

Pricing on the new term loan is 100 basis points lower than pricing on the company's previous term loan.

The revolver was undrawn at closing.

"This refinancing lowers our overall debt by over $40 million and cuts our annual interest expense by more than half based on current Libor rates," said David Henry, senior vice president and chief financial officer, in the release. "We are gratified by the positive reaction by the rating agencies and the credit markets to our refinancing. It is reflective of our demonstrated ability to deliver solid operating results and strong cash flows.

"This refinancing will result in a positive impact to earnings per share of approximately $0.015 starting in the second quarter and approximately $0.05 for the remainder of 2005. In addition, we gain greater flexibility to pay down our debt and less restrictive covenants compared to our prior credit facility."

AMI is a Pocatello, Idaho-based designer and manufacturer of application-specific integrated circuits.

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