TXU weaker despite strong market; LCDX dips; Warner Chilcott well received post-changes

By Sara Rosenberg

New York, Oct. 6 - Texas Competitive Electric Holdings Co. LLC's (TXU) term loan B-1 was softer on Tuesday even though the cash market in general was better, and the LCDX 13 index came in a little as well.

Over on the new deal front, the book on Warner Chilcott plc's term loans was heard to still be very full even with the changes that were recently announced, and investors are now expecting allocations to surface next week being that syndication on the institutional loans wrapped up on Tuesday.

TXU trades down

Texas Competitive saw its term loan B-1 head lower in trading despite the overall cash market being up by about a quarter of a point in sympathy with equities, according to traders.

The term loan B-1 was quoted at 77½ bid, 78 offered, down from 78¼ bid, 79 offered, traders said.

"No real news. One seller shows up. That happens," one trader remarked in explanation of Texas Competitive's slide.

Texas Competitive is a Dallas-based energy company.

LCDX softens

Also losing some ground during the trading session was the LCDX 13 index, which had just started trading at the beginning of this week, according to a trader.

The index was quoted at 96¾ bid, 97 offered, down about an eighth of a point from Monday, the trader said.

"Not sure what's going on with the index," the trader continued, adding that cash was better with stocks.

Nasdaq closed up 35.42 points, or 1.71%, Dow Jones Industrial Average closed up 131.5 points, or 1.37%, S&P 500 closed up 14.26 points, 1.37%, and NYSE closed up 104.55 points, or 1.54%.

Warner Chilcott book holds strong

Moving to the primary, market chatter is that Warner Chilcott received a lot of recommitments and orders for its recently revised term loans ahead of Tuesday's 5 p.m. ET commitment deadline, according to a fund manager.

Allocations on the deal are anticipated to go out late next week, the source added.

As was previously reported, the amount of term loan debt that the company is getting was upsized on Monday, pricing and Libor floor were reduced, and the original issue discount was set.

The term loan debt is comprised of a $1 billion five-year term loan A, a $1.6 billion 51/2-year term loan B, up from $1.5 billion, and a $350 million delayed-draw term loan.

The delayed-draw term loan was able to come from either the term loan A or the term loan B. On Monday, it was announced that the delayed-draw is made up of term loan B debt.

Warner Chilcott pricing

Warner Chilcott's term loan A is priced at Libor plus 325 basis points and the term loan B is priced at Libor plus 350 bps, with both tranches carrying a 2.25% Libor floor and sold at an original issue discount of 99.

On Monday, pricing on the term loan A was reduced from initial talk of Libor plus 350 bps, pricing on the term loan B was reduced from initial talk of Libor plus 375 bps, the Libor floor was cut from 2.5% and the discount was set at the tight-end of the 98 to 99 talk.

The delayed-draw commitment fee, as before, is half the drawn spread. Since the delayed-draw is based off the term loan B, the commitment fee will be 175 bps.

All orders from lenders had to be pro rata towards the term loan A and term loan B, inclusive of the delayed-draw term loan.

The company's credit facility also includes a $250 million five-year revolver that has a 2.25% Libor floor.

Bank of America and Credit Suisse are the co-lead arrangers on the $3.2 billion senior secured credit facility (Ba3/BB+). Bookrunners are Bank of America, Credit Suisse, Barclays, Citigroup, JPMorgan and Morgan Stanley. Credit Suisse is the administrative agent.

WarnerChilcott buying business

Proceeds from Warner Chilcott's credit facility will be used to fund the acquisition of Procter & Gamble Co.'s pharmaceuticals business.

Closing on the facility and the acquisition is expected to take place at the end of this month, subject to regulatory approvals, the receipt of proceeds of the financing, the delivery of audited financial statements for the pharmaceuticals business and other customary conditions.

Originally, the company was planning on selling $1.4 billion of senior unsecured notes to help fund the acquisition.

The offering was then reduced to $450 million as a result of Warner Chilcott's sale of exclusive product licensing rights in the United States to its topical psoriasis treatments Taclonex, Taclonex Scalp, Dovonex to LEO Pharma for $1 billion.

Now, with the upsizing to the term loan B, the company eliminated all plans for a notes offering.

Warner Chilcott is a Rockaway, N.J.-based specialty pharmaceutical company.

Abraxas closes

Abraxas Petroleum Corp. closed on its $310 million credit facility in connection with the completion of the company's merger with Abraxas Energy Partners LP, according to a news release.

The facility includes a $10 million term loan due Dec. 31, 2010 and a $300 million revolver.

Based on filings with the Securities and Exchange Commission, pricing on the term loan was expected to be Libor plus 575 basis points and pricing on the revolver was expected to range from Libor plus 250 bps to 375 bps based on use. There is a 2% Libor floor.

Societe Generale acted as bookrunner and administrative agent on the deal. Societe Generale, Royal Bank of Canada, ING Capital LLC, and the Royal Bank of Scotland acted as co-lead arrangers.

Covenants include a current ratio as of the last day of each quarter of not less than 1.00 to 1.00, an interest coverage ratio as of the last day of each quarter of not less than 2.50 to 1.00, and a total net debt to EBITDA ratio as of the last day or each quarter of not more than 4.50 to 1.00 for the quarter ended Sept. 30 through the quarter ending Sept. 30, 2010, and 4.00 to 1.00 thereafter.

Proceeds were used to repay all of Abraxas Petroleum's and Abraxas Energy's outstanding bank debt.

Abraxas Petroleum is a San Antonio, Texas-based crude oil and natural gas exploration and production company. Abraxas Energy is a San Antonio, Texas-based upstream master limited partnership.

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