IPC cuts spreads; Exco adds covenants; United Subcontractors sets talk; Boart under scrutiny

By Sara Rosenberg

New York, Sept. 18 - IPC Information Systems LLC reduced pricing on all tranches under its credit facility due to strong demand and even accelerated the commitment deadline, and Exco Resources Inc. added two covenants to its second-lien term loan.

In other primary news, United Subcontractors Inc. started circulating price talk to accounts on its in-market credit facility. Also, Boart Longyear Co.'s deal is being watched as some are hearing that investors are unpleased with the structure, while others are saying that despite existing lender unhappiness, orders are being placed.

IPC Information reverse flexed pricing on its first- and second-lien tranches on Monday and moved up the commitment deadline to noon Wednesday from the close of business Thursday as the deal is well-oversubscribed, according to a market source.

Pricing on the $415 million seven-year first-lien term loan (Ba3/B+) and the $50 million six-year revolver (Ba3/B+) was reduced to Libor plus 250 basis points from original talk at launch in the Libor plus 275 basis points area, the source said.

Meanwhile, pricing on the $170 million eight-year second-lien term loan (Caa1/B-) was reduced to Libor plus 650 basis points from original talk at launch in the Libor plus 675 basis points area, the source added.

Call premiums on the second-lien loan were left unchanged at 102 in year one and 101 in year two.

The $635 million credit facility was heard to be oversubscribed within a day of the Sept. 7 bank meeting as investors started pouring into the deal before the launch even took place.

Goldman Sachs, JPMorgan and Morgan Stanley are the lead banks on the deal, with Goldman the left lead.

Proceeds will be used to help fund Silver Lake Partners' leveraged buyout of the company for about $800 million from GS Capital Partners.

IPC is a New York-based provider of mission-critical communications solutions and services.

Exco revises covenant package

Exco Resources decided to add two new covenants to its in-market $750 million five-year second-lien term loan - a cash flow sweep and a capital expenditures requirement, according to a market source.

The second-lien loan, which was launched into general syndication on Sept. 11, is talked at Libor plus 450 basis points.

Exco's $1.5 billion senior secured credit facility also includes a $750 million four-year revolver with pricing ranging from Libor plus 100 to 175 basis points based on utilization. Initial pricing on the revolver will be Libor plus 175 basis points.

The revolver was already launched to senior managing agents in late July.

JPMorgan and Credit Suisse are leading the second-lien term loan, with JPMorgan the left lead. JPMorgan is the lead bank on the revolver.

The credit facility is being borrowed by a wholly-owned unrestricted subsidiary of Exco to fund the acquisition of Winchester Energy Co. Ltd. from Progress Energy, Inc. for $1.2 billion in cash, subject to purchase price adjustments. The debt will be non-recourse to Exco Resources.

Credit statistics for the transaction include first-lien net debt to EBITDA of 2.5 times and net debt to EBITDA of 5.4 times.

Exco's existing amended and restated revolving credit facility will remain in place following this transaction.

The acquisition is expected to close on Oct. 2, subject to customary conditions to closing and governmental clearance.

Exco is Dallas-based independent energy company.

United Subcontractors spread talk

United Subcontractors released price talk to interested accounts on its proposed $550 million credit facility during Monday's market hours, according to a fund manager.

Potential lenders are being told that the $35 million revolver (B2/B) is talked at Libor plus 275 basis points, while the $300 million first-lien term loan (B2/B) and the $15 million synthetic letter-of-credit facility (B2/B) are talked at Libor plus 275 to 300 basis points, the fund manager said.

As for the $200 million second-lien term loan (Caa1/CCC+), that is being talked at Libor plus 750 to 800 basis points, the fund manager added.

Goldman Sachs is the lead bank on the deal that was launched with a bank meeting this past Wednesday.

Leverage through the first lien would be around the mid-2 times area, and leverage through the second lien would around the mid-4 times area.

Proceeds will be used to fund a $125 million dividend payment to Wind Point Partners and to refinance existing debt.

United Subcontractors is a Salt Lake City-based installer of residential and commercial insulation systems and provider of related products and services.

Boart raises eyebrows

Boart Longyear's in-market credit facility has got people talking as some are hearing that the deal is "really struggling," while others are saying that although there is some opposition, there are also interested parties, according to various sources.

According to one source, complaints on the deal focus mainly on it being over levered with not enough equity.

"[It's] structured poorly. After deal fees, [the] sponsor has no cash equity in deal. Some existing lenders are not happy that a good company has a bad capital structure. [Lenders would want] full turn less leverage on the first and more equity," the source remarked.

However, according to a second source, "commitments continue to roll in" even though "a lot of the existing lenders don't like the leverage or the cap markets tranche."

Boart's $1.395 billion credit facility is structured as a $125 million five-year revolver, $320 million 18-month first-lien term loan and $650 million six-year first-lien term loan B, all talked at Libor plus 325 basis points, and a $300 million seven-year second-lien term loan talked at Libor plus 700 basis points.

Second-lien call premiums are 102 in year one and 101 in year two.

Credit Suisse is bookrunner on the deal that will be used to help fund the acquisition of a majority interest in Boart Longyear by an investor group led by Macquarie Bank Ltd.

Macquarie's investor group will own a 51% stake in the business, while existing sponsors Advent International, Bain Capital and management will roll over $200-plus million and retain a 49% stake in the company.

Concurrently, Boart Longyear is acquiring two businesses, Northwest Drilling and Drillcorp, increasing Sept. 30 last-12-month EBITDA to $225 million.

Leverage will be around 4.4 times through the first lien and around 5.7 times through the second lien.

Pro forma for the paydown of the 18 month facility, leverage would drop to 2.8 times through the first lien and 4.2 times through the second lien.

Boart Longyear is a Salt Lake City-based drilling-services provider.

Open Text filling up

Open Text Corp.'s credit facility is heard to be moving along nicely as a "bunch of commitments" have come in to the deal since it launched on Sept. 6, according to a market source.

The $465 million credit facility (Ba3/BB-) consists of a $390 million term loan B and a $75 million revolver, with both tranches talked in the Libor plus 225 basis points area.

Last week, the term loan B was downsized from $415 million as the company decided to use $25 million more of cash on hand to help finance its approximately $489 million acquisition of Hummingbird Ltd.

RBC Capital Markets is the lead bank on the deal.

Open Text is a Waterloo, Ont., provider of enterprise content management software solutions. Hummingbird is a Toronto provider of enterprise software solutions.

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