Clear Channel slides; Interactive Data, Ocwen set talk; GEO reveals OID; Kenan readies launch

By Sara Rosenberg

New York, June 23 - Clear Channel Communications Inc.'s term loan B weakened during the session following news that the company's president and chief executive officer stepped down from his position.

Meanwhile, over in the primary market, price talk surfaced on Interactive Data Corp. and Ocwen Loan Servicing LLC, and original issue discount guidance came out on GEO Group Inc. as all three companies presented their new bank deals to lenders.

Also, Kenan Advantage Group is getting ready to launch its new deal, and Valeant Pharmaceuticals International Inc. released details on expected tranching and pricing on its proposed senior secured credit facility that is being done in connection with the merger with Biovail Corp.

Clear Channel softens on CEO news

Clear Channel's term loan B headed lower in trading after the company announced that Mark P. Mays has decided to step down from his role as president and chief executive officer and has asked that a replacement be found, according to traders.

Mays will continue to lead the company until a replacement is named, which is expected to be later this year.

After leaving his position, Mays will continue as chairman of the board of directors.

Following the news, the company's term loan B was quoted by one trader at 77¾ bid, 78¾ offered, down from 78½ bid, 79¼ offered, and by a second trader at 77½ bid, 78½ offered, down from 78½ bid, 79¼ offered.

Clear Channel is a San Antonio, Texas-based media and entertainment company.

Interactive Data announces guidance

Switching to the primary, Interactive Data held a bank meeting at 12:30 p.m. ET on Wednesday at the Palace Hotel in New York to kick off syndication on its proposed credit facility, and in conjunction with the launch, price talk on the term loan was released, according to a market source.

The $1.3 billion term loan was presented to lenders with talk of Libor plus 475 bps with a 1.75% Libor floor and an original issue discount of 98, the source said.

Additionally, the term loan carries 101 soft call protection for one year, the source continued.

The company's $1.46 billion senior secured credit facility (Ba3) also includes a $160 million revolver.

Originally, based on filings with the Securities and Exchange Commission, it was thought that the revolver would be sized at $150 million, but when official details on tranching surfaced, it was said that the revolver would be coming at the larger size of $160 million.

Interactive Data being acquired

Proceeds from Interactive Data's credit facility will be used to help fund the buyout of the company by Silver Lake and Warburg Pincus for $33.86 in cash per share. The transaction has a total value of $3.4 billion.

Bank of America, Barclays Bank, Credit Suisse and UBS Investment Bank are the lead banks on the deal, and they are asking for commitments by June 30.

Other financing for the buyout will come from $700 million of senior unsecured notes, which are backed by a commitment for a senior unsecured bridge loan, and up to $1.31 billion of equity.

Completion of the transaction is expected in early August, the source added, following regulatory approvals and other customary conditions.

Interactive Data is a Bedford, Mass.-based provider of financial market data.

Ocwen releases talk

Another deal to launch with a bank meeting on Wednesday was Ocwen Loan Servicing, and it, too, came out with price talk in connection with the event, according to a market source.

The company's $350 million senior secured term loan (B1) is being guided at Libor plus 700 bps with a 2% Libor floor and an original issue discount of 98 to 99, the source said.

In addition, the loan includes 101 soft call protection for one year.

Barclays and Deutsche Bank are the joint bookrunners on the deal, with Barclays the sole lead arranger.

Ocwen funding acquisition

Proceeds from Ocwen Loan Servicing's term loan will be used to help fund the purchase of Barclays Bank plc's HomEq Servicing, a U.S. mortgage servicing business, for $1.3 billion in cash.

As part of the purchase agreement, Barclays has agreed to provide the company with seller financing in the form of a $140 million bridge loan, which is expected to be replaced by the term loan.

Furthermore, Barclays said that it will provide a $905 million servicer advance facility.

Closing on the acquisition is expected to take place in the third quarter, subject to customary conditions, including competition clearance.

Ocwen Loan Servicing is a subsidiary of Ocwen Financial Corp., a West Palm Beach, Fla.-based provider of residential and commercial loan servicing, special servicing and asset management services.

GEO floats B loan OID

GEO Group also held a bank meeting on Wednesday to launch a credit facility, and while price talk had already hit the market, guidance for the original issue discount on the term loan B was first heard as the meeting took place, according to a market source.

The $200 million six-year term loan B is being offered to lenders at an original issue discount of 99, the source said.

As was previously reported, price talk on the term loan B is Libor plus 325 bps with a 1.5% Libor floor.

The company's $750 million credit facility also includes a $400 million five-year revolver and a $150 million five-year delayed-draw term loan A, with both of these tranches talked at Libor plus 275 bps.

Upfront fees on the revolver and the term loan A range from 37.5 bps to 62.5 bps based on commitment size.

GEO led by BNP

BNP Paribas is the lead bank on GEO Group's credit facility that will be used to refinance existing debt and to help fund the acquisition of Cornell Cos. Inc. at an estimated enterprise value of $685 million, including the assumption of $300 million in Cornell debt and excluding cash.

Cornell stockholders can choose to receive GEO common stock or cash. In order to preserve the tax-deferred treatment of the transaction, no more than 20% of the outstanding shares of Cornell common stock may be exchanged for cash.

The merger is expected to close in the third quarter.

When the transaction was first announced, the company had said that it would get $150 million of additional bank debt for the acquisition through the existing credit facility's accordion feature.

Boca Raton, Fla.-based GEO Group and Houston-based Cornell are prison operators.

Kenan Advantage sets launch

Kenan Advantage has set a bank meeting for Tuesday to launch its proposed $450 million credit facility, according to a market source.

The facility consists of a $75 million revolver, a $250 million term loan B and a $125 million delayed-draw term loan, the source said, adding that price talk is not yet available.

KeyBanc Capital Markets is the lead arranger, bookrunner and administrative agent on the deal that will be used to help fund the buyout of the company by Goldman Sachs from Littlejohn & Co. and to refinance existing debt.

Kenan Advantage is a North Canton, Ohio-based logistics and liquid bulk transportation services provider to the fuels, chemical, and food end-markets.

Valeant discloses facility structure

Valeant Pharmaceuticals filed with the SEC on Wednesday the commitment letter for its proposed $3.022 billion senior secured credit facility, which outlines structure and pricing on the upcoming deal.

Tranching on the deal is comprised of a $250 million 41/2-year revolver, a $500 million five-year term loan A, an up to $1.972 billion six-year term loan B and a $300 million delayed-draw six-year term loan B that is available until the earlier of Dec. 31 or 60 days after closing.

By comparison, when the deal was first announced on Monday, the company simply said that there would be a $250 million revolver and a $2.8 billion term loan.

Amortization on the term loan A is 10% in years one and two, 20% in years three and four, with the remaining balance due at maturity, and amortization on the term loan B is 1% per annum, with the remaining balance due at maturity.

Valeant anticipated pricing divulged, too

Also, in the filing, Valeant Pharmaceuticals talked about pricing on the credit facility, with the expectation being that the revolver and the term loan A will come at Libor plus 450 bps, and the funded and delayed-draw term loan B will come at Libor plus 475 bps with a 1.75% Libor floor.

However, pricing can change based on ratings.

If the credit facility is rated at least Ba3/BB-, pricing on the revolver and term loan A is then expected to be Libor plus 425 bps, and pricing on the term loan B is then expected to be Libor plus 450 bps.

And, if the rating is B2/B, pricing on the revolver and term loan A is outlined at Libor plus 525 bps, and pricing on the term loan B is outlined at Libor plus 550 bps.

The revolver has a 75 bps commitment fee and the delayed-draw term loan B has a 75 bps ticking fee.

Financial covenants include maximum total leverage ratio, minimum total interest coverage and maximum capital expenditures.

Valeant lead banks

Goldman Sachs, Morgan Stanley and Jefferies are the joint lead arrangers and joint bookrunners on Valeant Pharmaceuticals' deal, with Goldman the administrative agent and left lead. Goldman and Morgan Stanley each committed 45% of the facility, while Jefferies committed the remaining 10%.

Proceeds from the credit facility will be used to refinance existing debt, including Valeant's 7.625% and 8.375% senior unsecured notes, and to fund the merger with Biovail.

Under the terms of the agreement, Valeant stockholders will receive a one-time special cash dividend of $16.77 per share immediately prior to closing of the merger and 1.7809 shares of Biovail common stock upon closing of the merger in exchange for each share of Valeant common stock they own.

On a trailing 12-month basis as of March 31, the combined company would have had pro forma revenues of $1.75 billion and pro forma cash flow from operations of $575 million.

Also, the combined company's debt/total capitalization will be less than 40%.

Valeant B loan size may shrink

The amount of the initial draw under Valeant Pharmaceuticals' term loan B will be reduced dollar for dollar by the net proceeds of any securities issued by the company prior to closing and the aggregate principal amount of the existing notes that remain outstanding after closing.

The transaction is expected to close before year-end, subject to Valeant and Biovail stockholder approval and regulatory approvals.

All stockholders of the merged company are expected to receive an additional one-time $1.00 per share special dividend by Dec. 31, 2010, which is what the delayed-draw term loan B will fund.

Aliso Viejo, Calif.-based Valeant and Mississauga, Ont.,-based Biovail are specialty pharmaceutical companies. The combined company will be based in Mississauga and will be named Valeant Pharmaceuticals International Inc.

© 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.