VNU shifts funds; U.S. Shipping ups term loan spreads; Kerzner, O&M set talk; United Surgical breaks

By Sara Rosenberg

New York, Aug. 4 - VNU NV made some final tweaks on its multi-billion-dollar credit facility, moving some funds out of its U.S. dollar term loan and into its euro term loan, and U.S. Shipping Partners LP increased pricing on its funded and delayed-draw term loans.

Also in the primary, Kerzner International Ltd. and O&M Star Generation LLC came out with price talk on their credit facilities as both deals were launched with bank meetings on Friday.

Switching over to the secondary, United Surgical Partners International Inc.'s term loan freed for trading with the paper quoted atop par.

VNU came out with a last round of changes to its credit facility on Friday when it decided to shift some funds out of its dollar-denominated term loan B and into its euro-denominated term loan B, according to a market source.

The seven-year U.S. dollar term loan B is now sized at $4.1875 billion, down from a most recent size of $4.625 billion and an original size at launch of $4.7125 billion, the source said.

On the flip side, the seven-year euro-denominated term loan B is now sized at €800 million, up from a most recent size of €450 million and an original size at launch of €380 million, the source added.

Pricing on the U.S. term loan is set at Libor plus 275 basis points, after flexing up on July 27 from original talk at launch of Libor plus 250 basis points.

Pricing on the euro term loan is set at Euribor plus 250 basis points and has been throughout the syndication process.

Both the dollar and the euro term loans are being sold to investors with an original issue discount of 991/2. This discount was added to the tranches this past Tuesday. Originally, the term loans were being offered at par.

In addition, an interest charge covenant was added to the credit agreement this past Tuesday as well.

VNU's credit facility (B1/B+) also contains a $687.5 million six-year multi-currency revolver that is priced with an interest rate of Libor plus 250 basis points.

Allocations on the deal are expected to go out during the week of Aug. 7.

Citigroup, Deutsche Bank and JPMorgan are the lead banks on the deal, with Citi the left lead.

Proceeds from the credit facility are being used to help back the acquisition of VNU by Valcon Acquisition BV, a company controlled by a private equity group consisting of affiliated funds of AlpInvest Partners NV, The Blackstone Group LP, The Carlyle Group, Hellman & Friedman LLC, Kohlberg Kravis Roberts & Co. LP and Thomas H. Lee Partners LP.

VNU is a Netherlands-based information and media company.

U.S. Shipping ups pricing

U.S. Shipping flexed pricing higher on its $250 million funded term loan and its $60 million delayed-draw term loan, moving spreads to Libor plus 350 basis points from original talk at launch of Libor plus 300 to 325 basis points, according to a market source.

In addition, pricing on the company's $40 million revolver firmed up at Libor plus 325 basis points, the high end of original guidance of Libor plus 300 to 325 basis points, the source continued.

The ticking fee on the delayed draw is set at Libor plus 175 basis points. It was always contemplated that the fee would be half the funded spread.

Earlier this past week, the company played around with loan tranche sizes after pricing a $100 million 13% senior secured note offering that was downsized from a most recent size of $175 million.

At that time, the funded term loan tranche was upsized from $235 million, the delayed-draw term loan was upsized from $50 million and the revolver was downsized from $50 million, resulting in a new total credit facility size of $350 million (B1/B+) compared to $335 million.

However, that was not the first time that the bank deal had been upsized to compensate for a downsizing in the bond deal. On July 27, the company increased the size of its funded term loan to $235 million from an original size at launch of $210 million after downsizing its bond offering to $175 million from an originally proposed size of $200 million.

CIBC and Lehman Brothers are the lead banks on the deal, with CIBC the left lead.

Proceeds from the credit facility, the bonds and a $75 million class B common units issuance, will be used to fund $182.6 million into an escrow account available solely for the construction of three new articulated tug-barges, to fund up to $70 million of equity contributions to a joint venture, to refinance $152.1 million of existing debt and for general corporate purposes.

Between the bond downsizing and the bank deal upsizing, the company is still losing about $50 million in funds, and the reason behind that is that it is only building three articulated tug-barges as opposed to four as was originally contemplated.

Each of the financing transactions is dependent on completion of the others and the joint venture.

The joint venture being formed is USS Product Investors LLC and this new subsidiary has entered into an agreement with National Steel and Shipbuilding Co. for the construction of nine double-hulled tankers and the option to construct five additional tankers.

U.S. Shipping will own a 40% equity interest in the joint venture, with affiliates of The Blackstone Group, Lehman Brothers and certain other investors owning in total a 60% equity interest.

U.S. Shipping is an Edison, N.J., provider of long-haul marine transportation services, primarily for refined petroleum products.

Kerzner spread guidance

Kerzner announced price talk of Libor plus 300 basis points on all tranches under its $575 million senior secured credit facility as the deal was presented to lenders with a bank meeting Friday, according to a market source.

Prior to the launch, market sources heard rumors that the transaction would be launched at Libor plus 275 basis points and various company filings with the Securities and Exchange Commission had placed price talk in the area of Libor plus 250 basis points.

Tranching on the facility is comprised of $175 million six-year revolver, a $250 million seven-year term loan B and a $150 million seven-year delayed-draw term loan.

The revolver will carry a 50 basis point commitment fee.

Credit Suisse and Deutsche Bank are joint lead arrangers on the deal that will be used to help fund the leveraged buyout of Kerzner by its chairman, Sol Kerzner, and its chief executive officer, Butch Kerzner. The investor group also includes Istithmar PJSC, Whitehall Street Global Real Estate LP 2005, Colony Capital LLC, Providence Equity Partners Inc. and The Related Companies LP.

Under the purchase agreement, the group will pay $81 in cash per outstanding ordinary share. The total transaction value is about $4 billion.

Other LBO financing will come from a new $2.88 billion CMBS financing facility and equity.

Kerzner is a Paradise Island, The Bahamas, developer and operator of destination resorts, luxury resort hotels and gaming properties.

O&M price talk

O&M Star Generation released price talk on its proposed $278 million eight-year credit facility as the syndication on the deal officially kicked off with a bank meeting during the Friday session, according to a market source.

Both the $19 million funded letter-of-credit facility and the $259 million term loan were launched with talk of Libor plus 300 basis points, the source said.

However, after ratings are released, which is expected to happen after the credit facility closes, pricing will be based on a ratings grid that's built into the transaction, the source added.

That rating grid is as follows: if the deal is rated Ba2/BB or better, pricing will be Libor plus 200 basis points, if the deal is rated Ba3/BB-, pricing will be Libor plus 225 basis points, if the deal is rated B1/B+, pricing will be Libor plus 250 basis points, if the deal is rated B2/B, pricing will be Libor plus 275 basis points and if the deal is rated below B2/B or is unrated, pricing will be Libor plus 425 basis points.

BNP Paribas and Lehman are the lead banks on the deal, with BNP the left lead.

Proceeds will be used to help fund the acquisition of two power plants by AIG Highstar Generation and Ontario Teachers Pension Plans.

Ohmstede shifts funds

Ohmstede Ltd. moved some funds out of its second-lien term loan and into its first-lien term loan, and, at the same time, increased pricing on the second-lien tranche, according to a market source.

The eight-year second-lien term loan (Caa1/CCC) is now sized at $50 million, down from an original size of $65 million, and pricing was flexed up to Libor plus 700 basis points from original talk at launch of Libor plus 675 basis points, the source said. This tranche contains call protection of 102 in year one and 101 in year two.

Meanwhile the seven-year first-lien term loan B (B2/B-) is now sized at $115 million, up from an original size of $100 million, the source continued. Pricing on this tranche remained at Libor plus 300 basis points.

Ohmstede's $195 million credit facility also contains a $30 million revolver (B2/B-), size unchanged, with an interest rate of Libor plus 300 basis points.

Morgan Stanley and Credit Suisse are the lead banks on the deal, with Morgan Stanley the left lead.

Proceeds from the credit facility will be used to help fund First Reserve Corp.'s leveraged buyout of Ohmstede from Tanglewood Investments Inc.

Ohmstede is a Beaumont, Texas, company that manufactures and maintains heat exchangers.

United Surgical frees to trade

In trading news, United Surgical Partners' $200 million seven-year term loan B (Ba2/BB-) hit the secondary, with the paper quoted at par ¼ bid, par ½ offered, according to a trader.

The term loan is priced with an interest rate of Libor plus 175 basis points and carries a step up to Libor plus 200 basis points if the company loses either one of its current loan ratings. During syndication, pricing was reverse flexed from original talk at launch of Libor plus 200 to 225 basis points with the addition of the step.

Bear Stearns and SunTrust are joint lead arrangers on the deal, with Bear acting as bookrunner.

The term loan will have two covenants - a debt to EBITDA requirement and an EBITDAR to interest plus rents requirement.

At close, leverage will be 2.7x.

Proceeds will be used to fund a tender offer for the company's approximately $160 million 10% senior subordinated notes due 2011 and to repay some revolver borrowings.

United Surgical Partners is an Addison, Texas, owner and operator of surgical facilities.

Secondary strength continues

The overall secondary loan market continued to feel positive on Friday, a nice close to a week that steadily saw levels inching higher, according to a trader.

With this better tone, names like Eastman Kodak Co. and Charter Communications Inc. got a bit of a pop, with Kodak's bank debt closing the day quoted at par 1/8 bid, par 3/8 offered, up an eighth of a point, and Charter's bank debt closing the day quoted at par ¼ bid, par ½ offered, also up an eighth of a point, the trader said.

Kodak is a Rochester, N.Y.-based digital imaging products, services and solutions company. Charter is a St. Louis-based broadband communications company.

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