InfrastruX, Hexion, MediMedia set talk; Reynolds tweaks deal; Ply Gem flex official; Lear trades up

By Sara Rosenberg

New York, Oct. 17 - InfrastruX Group Inc., Hexion Specialty Chemicals, Inc. and MediMedia released price talk on their credit facilities as the deals were launched with bank meetings during the Tuesday session.

In other primary news, The Reynolds and Reynolds Co. made a round of changes to its credit facility, including upsizing the first-lien term loan while cutting pricing, and downsizing the third-lien term loan while increasing pricing.

Continuing on the new deal front, Ply Gem Industries Inc., as anticipated, significantly lowered pricing on its second-lien term loan and, at the same time, added a step down provision to its first-lien term loan.

Meanwhile, in trading, Lear Corp.' term loan B headed higher on news of a stock purchase deal with Carl C. Icahn, The Goodyear Tire & Rubber Co.'s second-lien loan rebounded as investors digested the recent draw down news and Dex Media West Inc.'s term loan B headed lower as players are facing the realization that more directory paper will soon be hitting the secondary.

InfrastruX presented its $555 million credit facility to lenders with a bank meeting on Tuesday, and, in conjunction with the launch, opening price talk levels on the deal were announced, according to a market source.

The $100 million revolver, $330 million term loan and $50 million delayed-draw term loan were all launched with talk of Libor plus 300 basis points, while the $75 million revolver at a joint venture, InfrastruX Energy Services, was launched with talk of Libor plus 250 bps, the source said.

Both revolvers carry a 50 bps unused fee.

The delayed-draw term loan unused fee is the full spread of Libor plus 300 bps, the source added.

Credit Suisse and UBS are joint lead arrangers on the credit facility, with Credit Suisse the left lead.

InfrastruX Energy Services is a joint venture that is being created by TXU Corp. and InfrastruX Group. TXU is contributing its electric transmission and distribution company, TXU Electric Delivery, to the venture and InfrastruX is contributing its legacy business assets.

InfrastruX Energy Services expects to be fully operational by the end of the year, subject to customary conditions, including the restructuring of existing debt held by InfrastruX Group.

InfrastruX Group is a Bellevue, Wash.-based provider of end-to-end infrastructure construction services, primarily for the electric and natural gas utility end-markets.

Hexion spread talk

Hexion announced opening price talk of Libor plus 250 bps on its proposed $2.05 billion in new seven-year bank debt (Ba3) that was launched to investors on Tuesday, according to an 8-K filed with the Securities and Exchange Commission.

The debt is comprised of $2 billion term loan and a $50 million synthetic letter-of-credit facility.

Credit Suisse and JPMorgan are the lead banks on the deal.

Proceeds from the bank debt, along with $825 million of bonds, will be used to replace the company's May term loan and synthetic letter-of-credit facilities, fund a $500 million common stock dividend to its shareholders, and fund tender offers for its $300 million of second-priority senior secured floating-rate notes due 2010 and $325 million of 9% second-priority senior secured notes due 2014.

Prior to the meeting, it was anticipated that the new bank debt would be launched at a higher interest rate than the Libor plus 200 basis points spread that the existing term loan and synthetic letter-of-credit facility carry since the market has widened since May and the company is using proceeds for a dividend recapitalization to the sponsor.

Hexion will continue to have access to its current $225 million five-year revolving credit facility.

The tender offers will expire on Nov. 8.

Hexion is a Columbus, Ohio, thermoset resins company.

MediMedia guidance

MediMedia went out with opening price talk of Libor plus 250 to 275 bps on both tranches under its $250 million credit facility (Ba3/B+) shortly after the "well-attended" bank meeting to launch the deal took place on Tuesday morning, according to market source.

Tranching on the facility consists of a $200 million term loan B and a $50 million revolver.

Goldman Sachs and Credit Suisse are the lead banks on the deal, with Goldman the left lead.

Proceeds from the credit facility, along with $150 million in senior subordinated high-yield bonds, will be used to fund the buyout of MediMedia by Vestar Capital Partners and management from Cinven, The Carlyle Group and Apax Partners.

The revolver is expected to be undrawn at closing.

MediMedia is a Chatham, N.J.-based specialty health care communications, publishing and patient education company.

Reynolds reworks deal

Reynolds and Reynolds made a number of changes to its credit facility, including lowering pricing and adding step downs to the revolver and first-lien term loan, increasing the size of the first-lien term loan, decreasing the size of the third-lien term loan and raising pricing on the third lien, according to a market source.

With the changes, the $75 million revolver (Ba2/BB-) and the $1.64 billion first-lien term loan (Ba2/BB-), which was upsized from $1.485 billion, are now priced at Libor plus 250 bps with a step down to Libor plus 225 bps at less than 4.75 times leverage, the source said. Original price talk on the two tranches was Libor plus 275 bps with no step down.

Meanwhile, the third-lien term loan (B3/B-) was downsized to $250 million from $405 million and pricing was flexed up to Libor plus 750 bps from original talk at launch of Libor plus 700 bps, the source continued.

Reynolds' $520 million second-lien term loan (B3/B) was left unchanged in terms of size and pricing, which is set at Libor plus 550 bps, the source added.

Before the deal ever came to market, it was expected that the total facility size would be $2.685 billion, with the difference being that the revolver was anticipated at $150 million and the first-lien term loan was anticipated at $1.61 billion. However, at the bank meeting, lenders were presented with a slightly smaller deal because the company decided to do an accounts receivable securitization.

Deutsche Bank, Credit Suisse and Bank of America are the lead banks on the $2.485 billion deal, with Deutsche the left lead.

Proceeds from the credit facility will be used to help fund the company's merger with Universal Computer Systems Inc.

Under the agreement, Universal Computer is buying Reynolds for $40.00 per share in cash, with the surviving Dayton, Ohio-based dealer services company to be named The Reynolds and Reynolds Co. The transaction is valued at $2.8 billion, including the assumption of Reynolds' $300 million of debt.

Equity financing for the merger will come primarily from a group of investors led by Goldman Sachs Capital Partners, Vista Equity Partners and others.

The transaction is subject to approval by Reynolds shareholders and regulatory clearances and is expected to close late this year or in early 2007.

Reynolds has scheduled a special meeting of shareholders for Oct. 23 to vote on the agreement.

The merger has already been granted early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 by the Federal Trade Commission.

Ply Gem trims pricing

Ply Gem made the rumors official on Tuesday as it came out with new, lower pricing on its massively oversubscribed second-lien term loan, while also adding a step down to the first-lien term loan paper, according to a market source.

Under the changes, the $117 million second-lien term loan (B3/B+) is now priced at Libor plus 575 bps, down from original talk at launch of Libor plus 675 bps, the source said.

It had been speculated that the second-lien term loan would come lower than price talk even before the deal actually launched on Oct. 3 being that it had already been subscribed before the bank meeting took place.

And, recently, that speculation had pricing on the second lien ending up somewhere in the Libor plus mid-to high-500 bps area.

Call premiums on the second lien are, and have been since launch, 102 in year one and 101 in year two.

In addition, the company tweaked its $175 million add-on to its first-lien term loan (Ba3/BB-) by adding a pricing grid.

The spread on the first-lien paper is Libor plus 300 bps, but now, pricing can drop to Libor plus 275 bps when leverage is under 4.5 times, the source added.

UBS, Deutsche Bank and JPMorgan are the lead banks on the $292 million of new term loan debt, with UBS the left lead.

Proceeds will be used to help fund the acquisition of Alcoa Home Exteriors, Inc. from Alcoa Inc. in a cash transaction valued at about $305 million.

Completion of the transaction, which is expected to occur in the fourth quarter, is subject to customary closing conditions.

Ply Gem is a Kearney, Mo., manufacturer and marketer of products for use in the residential new construction, do-it-yourself and professional renovation markets. Alcoa Home Exteriors is a manufacturer of vinyl siding, aluminum siding, injection molded shutters and vinyl, aluminum and injection molded accessories.

Verizon Directories revisits price talk

Verizon Directories Disposition Corp. has adjusted price talk on its $4.75 billion term loan B to just Libor plus 225 bps as opposed to the previous range of Libor plus 200 to 225 bps that was announced in conjunction with Monday's bank meeting, according to a market source.

Price talk on the company's $250 million revolver and $1.5 billion term loan A is still Libor plus 150 bps.

JPMorgan and Bear Stearns are the lead banks on the $6.5 billion credit facility (Ba2/BB+).

Proceeds from the facility, along with $2.85 billion of 10-year senior unsecured notes, will be used to help fund the spinoff of the print and internet yellow pages directories business from Verizon Communications Inc.

Leverage through the bank debt will be 3.9 times, and leverage through the bonds will be 5.7 times.

NE Energy shifts funds, cuts pricing

NE Energy moved some funds out of its synthetic letter-of-credit facility and into its revolver, lowered pricing on all tranches and removed soft call premiums from the first-lien debt, according to a market source.

Through the modifications, the revolver (B1/B+/BB-) was upsized to $70 million from $35 million while the synthetic letter-of-credit facility (B1/B+/BB-) was downsized to $65 million from $100 million, the source said.

In addition, pricing on the revolver, the synthetic letter-of-credit facility and the $550 million (size unchanged) term loan B (B1/B+/BB-) was reverse flexed to Libor plus 250 bps from original talk at launch of Libor plus 275 bps, and pricing on the $170 million (size unchanged) second-lien term loan (B3/B-/B-) was reduced to Libor plus 450 bps from original talk of Libor plus 500 bps, the source continued.

Furthermore, 101 soft call protection was eliminated from the term loan B and synthetic letter-of-credit facility agreements.

The second-lien term loan still carries call protection of 102 in year one and 101 in year two, the source added.

Allocations are expected to go out later this week, and closing is anticipated to occur at the end of this month.

Goldman Sachs and JPMorgan are the lead banks on the $855 million deal.

Proceeds will be used to help fund Energy Capital Partners' acquisition of Northeast Utilities' competitive generation assets in Connecticut and Massachusetts for $1.34 billion, including the assumption of $320 million in debt.

The sale includes 15 generating plants at 14 sites with a total output of 1,442 megawatts.

MetroPCS fills up

MetroPCS Communications Inc.'s $1.4 billion term loan B is already oversubscribed as orders from existing and new accounts started rolling in before the actual launch took place and have continued to do so since last Wednesday's bank meeting was held, according to a market source.

Currently, the term loan B is being talked at Libor plus 275 bps.

MetroPCS' $1.5 billion credit facility (B1/B) also includes a $100 million revolver talked at Libor plus 275 bps with a 50 bps commitment fee.

Bear Stearns is lead arranger on the deal and joint bookrunner with Merrill Lynch and Bank of America.

Proceeds from the facility, along with a $1.1 billion senior notes offering, will be used to refinance $900 million of existing debt and fund the purchase of wireless spectrums won in Auction 66.

The company's existing credit facility includes, among other things, a first-lien loan that is callable at 102 and a second-lien loan that is non-callable until May. The company plans to tender for the second-lien loan to get this refinancing done.

Following this transaction, senior secured leverage will be 3.5 times against core EBITDA, total leverage will be 6.2 times against core EBITDA and net leverage will be 4.9 times against core EBITDA.

MetroPCS is a Dallas-based provider of wireless communications services.

Lear stronger on Icahn deal

Moving to the secondary market, Lear's term loan B moved up by almost a point after the company announced that it will issue $200 million of common stock in a private placement to affiliates of and funds managed by Carl C. Icahn, according to a trader.

Lear plans on using the proceeds from the stock sale for strategic investments and to increase financial and operating flexibility.

In return for the purchase, Icahn is provided with the right to a representative on Lear's board of directors.

The transaction is subject to receipt of applicable antitrust approvals and is expected to close within 45 days.

In conjunction with the Icahn announcement, Lear released preliminary third-quarter numbers, including expected net sales of $4.1 billion, core operating earnings in the range of $44 million to $48 million and a pretax loss in the range of $60 million to $70 million.

The expected pretax loss takes into account costs related to restructuring actions of about $17 million and a loss on sale of about $29 million.

On the heels of all this news, Lear's term loan B closed the day at 99¾ bid, par ¼ offered, up from prior levels of 98 7/8 bid, 99 3/8 offered, the trader said.

Lear is a Southfield, Mich.-based supplier of automotive interior systems and components.

Goodyear second lien rebounds

Goodyear's second-lien term loan also headed higher on Tuesday, moving back to levels that were seen prior to news of a large precautionary draw down hitting the market, according to a trader.

The second-lien term loan closed the day at par ½ bid, 101 offered, up from Monday's levels of par ¼ bid, par ¾ offered and back in line with Friday's closing levels, the trader said.

Late in the day Friday, the Akron, Ohio-based tire company revealed that it drew down about $675 million under its revolving credit facility in addition to borrowing $300 million under its $1.5 billion U.S. first-lien credit facility on Oct. 5.

Goodyear said that the move was to provide additional cash in the unlikely event of a prolonged United Steelworkers strike in North America.

Dex Media West pressured

Dex Media West's term loan B fell by about a quarter of a point during market hours likely because of the recently launched Verizon Directories deal, according to a trader.

"There's more directory paper coming to market," the trader said. The Verizon deal, as mentioned above, includes a $4.75 billion term loan B talked at Libor plus 225 bps. The Dex Media West term loan B is priced at Libor plus 150 bps.

Dex Media West's term loan B closed the day at 99½ bid, 99¾ offered, down from previous levels of 99¾ bid, par offered, the trader added.

Dex Media is an Englewood, Colo.-based publisher of Yellow Pages and White Pages directories.

Bally closes

Bally Total Fitness Holding Corp. closed on its new $284 million credit facility, according to a company news release.

JPMorgan acted as the lead arranger, bookrunner and administrative agent on the deal, Morgan Stanley as syndication agent, and Canyon and Goldman Sachs are lenders.

Proceeds were used to refinance the company's existing credit facility and will be used to fund capital expenditures and provide for additional liquidity.

The expiration date of the credit facility can be accelerated from Oct. 1, 2010 to 14 days prior to the maturity date of the company's 9 7/8% senior subordinated notes due 2007 if those notes are not repaid or extended.

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