Alltel, Chrysler widen OIDs; Inverness sets discount; VNU trades up; UAL, Delta seesaw on merger buzz

By Sara Rosenberg

New York, Nov. 14 - Alltel Communications Inc. increased the original issue discount on its term loan B-2, with the expectation that the tranche will be fully subscribed by the upcoming commitment deadline.

Another deal to raise its original issue discount on Wednesday was Chrysler Corp. LLC (Chrysler Auto), and the syndicate also reduced the amount of first-lien term loan debt that it plans to syndicate at this time.

In other primary news, Inverness Medical Innovations Inc. firmed up the original issue discount on its term loan add-on.

Meanwhile, in the secondary, VNU NV's term loan B was stronger as the company released earnings to investors, UAL Corp. and Delta Air Lines Inc. bounced around on merger rumors and LCDX was better.

Alltel revised the original issue discount guidance on its $6 billion 71/2-year term loan B-2 so as to entice more investors to participate, according to a market source.

The term loan B-2 is now being offered in the 96 to 96½ context, as opposed to in the 97 to 97½ area, the source said.

Pricing talk on the term loan B-2 is unchanged at Libor plus 275 basis points, with soft call protection of 103 in year one, 102 in year two and 101 in year three.

As of Wednesday morning, there was more than $3 billion in the book at the new original issue discount range, and the anticipation is that there will be $5 billion to $6 billion in total orders by the end of the day Thursday when the books close, the source remarked.

Since Barclays, one of the lead banks on the deal, has opted to hold on to its piece of the term loan B-2 rather than sell it at the discount level (a move which the bank planned since syndication first began), only $4.8 billion of the tranche is actually being offered at this time - meaning that if $5 billion to $6 billion in orders is actually received, the deal would be fully subscribed.

Allocations on the term loan B-2 are planned to go out this Friday.

Lenders will get Most-Favored-Nation language through Jan. 15, 2008 to protect them on sales of Alltel's term loan B-1 or term loan B-3 below the term loan B-2 clearing level, the source added.

The $4 billion 71/2-year term loan B-1 and the $4 billion 71/2-year term loan B-3, which are not currently being syndicated, are priced at Libor plus 275 bps. The term loan B-1 carries no call protection, and the term loan B-3 is non-callable for three years.

Alltel's $16.25 billion senior secured credit facility (Ba3/BB-/BB) also includes a $1.5 billion six-year revolver and a $750 million one-year delayed-draw, with 71/2-year final maturity, term loan, with both of these tranches priced at Libor plus 275 bps as well.

The revolver and delayed-draw term loan are also not being syndicated at this time.

Goldman Sachs, Citigroup, Barclays and RBS Securities are the joint bookrunners on the credit facility, with Goldman and Citi the joint lead arrangers.

The facility has a consolidated net senior secured debt to consolidated EBITDA covenant beginning June 30, 2008 based on consolidated EBITDA for the relevant rolling four-quarter measurement period ended as of such date.

Proceeds from the credit facility will be used to help fund the leveraged buyout of the company by TPG Capital and GS Capital Partners for $71.50 per share in cash. The transaction is valued at $27.5 billion.

Other financing will come from $4.6 billion in equity and $5.2 billion in senior unsecured cash-pay notes and $2.5 billion in senior unsecured payment-in-kind option debt - all or a portion of which may take the form of a senior unsecured PIK option bridge loan.

The bonds/bridge loans were revised from their original structure, which called for $4.7 billion in senior unsecured cash-pay notes and $3 billion senior unsecured PIK notes.

The delayed-draw term loan will be available to purchase or otherwise acquire licenses and rights in the 700 MHz auction to be conducted by the Federal Communications Commission.

Pro forma for the transaction, Alltel Communications' senior secured debt to adjusted EBITDA will be 4.6 times and net debt to adjusted EBITDA will be 7.0 times. Total consolidated Alltel Corp. (the holding company) net debt to adjusted EBITDA will be 7.7 times and adjusted EBITDA to Alltel Corp. consolidated cash interest expense will be 1.5 times.

Alltel is a Little Rock, Ark., provider of wireless voice and data communications services.

Chrysler ups OID, cuts offered amount

Continuing on the topic of original issue discounts, Chrysler Auto increased the discount on its first-lien term loan (B1/BB-/BB+) to the 95½ to 96 area from the 97 to 97½ area, according to a market source.

In addition, the banks now only plan on selling about $2 billion of the $7.5 billion first-lien term loan tranche (B1/BB-/BB+), as opposed to the approximately $4 billion amount that was originally planned when the loan was launched last week, the source said.

The first-lien term loan is priced at Libor plus 400 bps and is non-callable for one year, then at 104 in year two, 102 in year three and 101 in year four.

Commitments are due from lenders on Monday.

The structure on the first-lien loan has changed from the structure that the deal was funded with and from the one that was seen when the deal was in market this summer.

When the loan funded in August, it was documented as a $5 billion first-out term loan (Ba3/BB-) and a $5 billion second-out term loan (B3/B).

And before being pulled from market in July because of primary conditions, it was structured as one $10 billion tranche that was guided at Libor plus 375 bps, after flexing up from original talk at launch of Libor plus 325 bps, with call protection of non-callable for one year then at 101 in year two.

Since funding this summer, $2.5 billion of the original $10 billion amount has been repaid using restricted cash on the balance sheet, which is why the total size of the deal is now $7.5 billion.

JPMorgan, Goldman Sachs, Citigroup, Bear Stearns and Morgan Stanley are the bookrunners on the loan, with JPMorgan, Goldman and Citigroup the joint lead arrangers.

Proceeds from the term loan were used to help fund the acquisition of a majority interest in the company by Cerberus Capital Management, LP from DaimlerChrysler AG.

Chrysler Auto also got a $2 billion delayed-draw for 12 months, seven-year second-lien term loan that was funded by Cerberus - which took down $500 million - and DaimlerChrysler - which took down $1.5 billion - and the agreement was made that this loan would not come back for broad syndication for at least a year from close.

Chrysler Auto is a producer and seller of Chrysler, Dodge and Jeep vehicles.

Inverness firms OID

Inverness Medical Innovations set the original issue discount on its $100 million term loan add-on at 99, according to a market source.

Previously, the discount was labeled as to be determined.

The add-on is priced at Libor plus 200 bps, in line with existing term loan pricing.

GE Capital is the lead bank on the deal that will be used to help fund the acquisition of Alere Medical Inc., a Reno, Nev., provider of health care management services.

The purchase price is $302 million, comprised of about $125 million in cash and $177 million in Inverness common stock.

Inverness is a Waltham, Mass.-based developer of advanced diagnostic devices.

MarkWest coming along

MarkWest Energy Partners LP's $575 million five-year senior secured credit facility is moving along, although the syndicate is still waiting on some commitments to fully subscribe the deal by Thursday's commitment deadline, according to a market source.

The facility, which launched with a bank meeting on Nov. 1, consists of a $225 million term loan A and a $350 million revolver.

Pricing on the two tranches can range from Libor plus 200 bps to 275 bps, based on leverage, according to filings with the Securities and Exchange Commission.

RBC Capital Markets is the lead bank on the deal.

Proceeds will be used to help fund the acquisition of MarkWest Hydrocarbon Inc. for 15.4 million common units of MarkWest Energy and $240 million in cash. The total value of the transaction is about $734 million.

MarkWest Energy is a Denver-based limited partnership with a solid core of midstream assets and a growing core of gas transmission assets. MarkWest Hydrocarbon is a Denver-based marketer of natural gas and NGLs.

Wilton revises first-lien pricing

Wilton Industries lowered the spread on its $445 million first-lien term loan (Ba3/B+), while increasing the original issue discount, according to a market source.

The first-lien term loan is now priced at Libor plus 325 bps and was sold at a discount of 93, as opposed to carrying pricing of Libor plus 375 bps and being sold at 97, the source said.

Most investors have already gotten their allocations on the first-lien loan, the source added.

Wilton's $950 million senior secured credit facility also includes a $65 million revolver (Ba3/B+), a $255 million second-lien term loan (Caa1/B-) priced at Libor plus 700 bps and a $185 million mezzanine holdco facility priced at 11½%, split into 4.2% cash pay and 7.3% PIK.

The second-lien term loan carries call protection of 102 in year one and 101 in year two, and the mezzanine facility is non-callable for one year, then at 102 in year two and 101 in year three.

UBS Investment Bank and Deutsche Bank acted as the lead banks on the deal.

The Wilton deal was originally launched to investors in July, but syndication is in limbo as a result of the summer's poor market conditions.

When the facility was launched in July, it consisted of a $65 million six-year revolver talked at Libor plus 300 bps to 325 bps, a $585 million seven-year first-lien term loan talked at Libor plus 300 bps to 325 bps, a $225 million eight-year second-lien term loan talked at Libor plus 650 bps and a $75 million holdco mezzanine facility talked at Libor plus 850 bps.

Proceeds from the credit facility were used to help fund GTCR Golder Rauner's already completed acquisition of Wilton Industries, Inc. and Dimensions Holdings, LLC through its portfolio company, EK Success Ltd.

The combined food, paper and celebration crafting company operates as Wilton Industries.

VNU heads higher

Moving to trading news, VNU's term loan B was better on Wednesday as the company announced earning results to lenders that were positive, according to a trader.

The term loan B ended the day at 95¾ bid, 96¼ offered, up from 95¼ bid, 95¾ offered, the trader said, adding that there was a good amount of volume in the name.

VNU is a Haarlem, Netherlands-based information and media company.

UAL, Delta active on merger speculation

UAL and Delta moved around during the session as rumors of a possible merger between the two companies hit the market, according to traders.

UAL, a Chicago-based airline, saw its term loan B end the day at 95 bid, 96 offered up a quarter of a point from previous levels, one trader said.

Delta, an Atlanta-based airline, saw its second-lien term loan trade up to 96½ bid, 97½ offered, but then it settled back in at 96 bid, 97 offered to end the day unchanged, a second trader remarked.

"They came out and denied the rumor so it was unchanged," the second trader said about Delta.

The trader went on to explain that UAL was able to keep its gains on the day because it trades lower than Delta.

LCDX stronger

LCDX 9 was a bit higher on Wednesday, while the cash market was flat to maybe up an eighth, according to a trader.

The index went out at 96.60 bid, 96.70 offered, up from 96.45 bid, 96.60 offered, the trader said.

"It traded up but it's off its highs," the trader said. "Highs today were in the 97 area."

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