Ondeo Nalco term loan B upsizes by $200 and reverse flexes by 25 basis points

By Sara Rosenberg and Paul A. Harris

New York, Oct. 27 - Ondeo Nalco made some changes to its term loan B including changing the size and pricing of the institutional tranche as the company opted to move some of the proposed bond financing over to the bank side to take advantage of cheaper rates.

The seven-year B tranche was increased to $1.3 billion from $1.1 billion and pricing was reverse flexed to Libor plus 250 basis points from Libor plus 275 basis points, according to a source close to the deal.

This extra $200 million was taken from the proposed bond offering, which is now sized at $1.6 billion compared to the previously anticipated $1.8 billion and is expected to price Wednesday.

The bond deal now consists of $700 million equivalent (decreased from $900 million equivalent) of eight-year senior notes in dollar and euro tranches, talked at 7¾%-8% and $900 million equivalent of 10-year senior subordinated notes in dollar and euro tranches talked at 125 basis points behind the senior notes.

"Their bank deal was two times oversubscribed," a market professional said. "Why pay 8% or 9% for senior sub notes when you can get bank debt for less? It's cheaper capital. They had the book to support it so why not."

Another attractive feature of the bank debt is that it's prepayable, another source added.

The $1.85 billion credit facility (B1/BB) also contains a $300 million six-year term loan A with an interest rate of Libor plus 250 basis points and a $250 million six-year revolver with an interest rate of Libor plus 250 basis points. Both pro rata tranches were left unchanged in terms of initial sizing and pricing.

Citigroup, Bank of America, Goldman Sachs, JPMorgan and Deutsche Bank are the lead banks on the deal.

Proceeds from the credit facility combined with proceeds from the bond offering will be used to back the acquisition of Ondeo Nalco by The Blackstone Group, Apollo Management, LP and Goldman Sachs Capital Partners from Suez S.A. in a transaction valued at $4.2 billion. The remainder of the transaction will be funded in equity provided by Blackstone, Apollo and Goldman.

Closing on the acquisition is expected to take place in the fourth quarter of 2003, subject to customary regulatory approvals. Following the transaction, Nalco will operate as an independent company.

Ondeo Nalco is a Naperville, Ill. provider of water treatment and process chemicals and services.

Amphenol Corp.'s repricing of its term loan B, which launched this past Friday, appears to be going well, according to a syndicate source, as some existing lenders have already requested to increase their commitments.

"From the guys we've heard from, everybody with the exception of two lenders wants to upsize their positions," the source said. "We did the original deal in March 2003 and they've already paid down $87 million [on the B loan] using free cash flow."

The $413 million term loan B, which was originally sized at $500 million, is being repriced with an interest rate of Libor plus 200 basis points, down from Libor plus 250 basis points.

The deadline for responses is Nov.3 and the repricing is expected to close later that week.

Deutsche is the lead bank on the deal.

Amphenol is a Wallingford, Conn. designer, manufacturer and marketer of electrical, electronic and fiber-optic connectors, interconnect systems and coaxial and flat-ribbon cable.

In the secondary, Western Wireless Corp.'s bank debt was up about half a point on Monday, with the term loan B trading at par, the term loan A trading at 97½ and the revolver B trading at 971/4, according to a trader.

Recently the company released positive third quarter earnings numbers that included consolidated adjusted EBITDA of $129.4 million, an increase of 53% over the third quarter of 2002, consolidated total revenue of $401 million for the third quarter, a 31% increase over the third quarter of 2002, consolidated net loss for the quarter of $18.5 million or $0.23 per basic and diluted share, an increase in domestic subscriber revenue by 20% over the third quarter of 2002 to $187.1 million, an increase in domestic roamer revenue of 12% over the second quarter of 2003 to $61.1 million and an increase in domestic free cash flow for the nine months ending Sept. 30 of 30% compared to the same period last year.

Also during the quarter, the Bellevue, Wash. wireless communications provider prepaid $400 million of its senior credit facility and redeemed all its 10½% senior subordinated notes due 2006 and 2007 with proceeds from a $600 million senior notes offering, the sale of the company's interest in its Croatian wireless business and the offering of $115 million in convertible subordinated notes.

Following Thursday's late day release of these results, the company's bank debt headed into the 99 region on the bidside on Friday, with the term B quoted at 99¼ bid, 99½ offered at the end of the day, compared to opening levels of 98¾ bid, 99¼ offered.

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