Texas Competitive sets OID on B-2 tranche; Bausch upsizes; PRA fills out; Telesat breaks

By Sara Rosenberg

New York, Oct. 15 - Texas Competitive Electric Holdings Co. LLC (TXU Corp.) revealed the discount at which it will be selling its term loan B-2, which is the only institutional tranche that is currently being syndicated, and firmed up price talk at previous indications.

Also in the primary, Bausch & Lomb Inc. upsized its U.S. term loan tranche and downsized its bond offering as a result of the term loan being massively oversubscribed, and PRA International's credit facility is subscribed ahead of the commitment deadline.

Moving to the secondary, Telesat's credit facility freed up for trading, with the strip of funded and delayed-draw term loan B debt trading in the upper 99 context, well above its discount price.

Texas Competitive released details on the original issue discount on its term loan B-2, revealed call protection on its term loan debt and firmed up price talk on the entire credit facility in line with the pricing that was announced at funding last week, according to market sources.

The $7 billion term loan B-2, which was launched to investors on Monday with an afternoon bank meeting, is being offered with a discount in the 99½ area, is priced at Libor plus 350 basis points and carries soft call protection of 103 in year one, 102 in year two and 101 in year three, sources said.

The company's $16.45 billion of seven-year term loan B debt also includes a $3.45 billion term loan B-1 at Libor plus 350 bps with no call protection and a $6 billion term loan B-3 at Libor plus 350 bps that is non-callable for three years, sources remarked.

The term loan B-1 and the term loan B-3 are not currently being syndicated, making this transaction very reminiscent of First Data Corp.'s leveraged buyout financing deal - a move that some sources had speculated about last week.

First Data had divided its $13 billion in seven-year term loan B debt, which was all priced at Libor plus 275 bps, into a $5 billion term loan B-1 offered at a discount of 96 and prepayable at par, a $5 billion term loan B-2 offered at 96 with call protection of 103 in year one, 102 in year two and 101 in year three, and a $3 billion term loan B-3 offered at 97 and non-callable for 3.25 years.

At first, First Data was only syndicating its term loan B-2, but upon strong market reception it was decided that the term loan B-1 and term loan B-3 should be marketed as well. However, not all of the term loan debt was allocated.

Despite the similarity in structuring between Texas Competitive and First Data, sources previously told Prospect News that Texas Competitive may actually have a leg up because it's a utility-related credit and has hard assets.

That being said, momentum on Texas Competitive has been incredibly strong with a significant amount of early orders thrown in before the bank meeting even took place on top of a significant amount of interest being indicated by potential investors.

"All I know is that it's in the billions in actual orders. Don't know specifics though," a market source said.

Texas Competitive's $24.5 billion senior secured credit facility (Ba3/B+) also includes a $4.1 billion seven-year final maturity delayed-draw term loan, a $1.25 billion seven-year deposit letter-of-credit facility and a $2.7 billion six-year revolver, with all of these tranches priced at Libor plus 350 bps as well.

The delayed-draw term loan, revolver and letter-of-credit facility are also not currently being syndicated, sources said.

The revolver has a commitment fee of 50 bps.

Of the total delayed-draw term loan amount, $2.15 billion was funded at close. It is unclear what B loan tranche this funded delayed-draw debt will fall under at this point, so what type of call protection it will have is not yet known, sources explained, adding that the final determination will likely depend on demand.

The additional $1.95 billion of delayed-draw term loan commitments in place are to ensure available liquidity to fund the construction of new plants.

The delayed-draw term loan has an undrawn fee of 125 bps for the first year and 150 bps after that.

Under the facility, the company must maintain a maximum secured leverage ratio beginning on Sept. 30, 2008 of 7.25 to 1.00.

There is a $2 billion accordion feature.

Citigroup, JPMorgan, Goldman Sachs, Lehman Brothers, Morgan Stanley and Credit Suisse are the joint lead arrangers and bookrunners on the deal, with Citi administrative agent, JPMorgan syndication agent, and Credit Suisse, Goldman, Lehman and Morgan Stanley co-documentation agents.

Proceeds from the credit facility were used to help fund the recently completed leveraged buyout of TXU Corp. by an investor group led by Kohlberg Kravis Roberts & Co. and Texas Pacific Group for $69.25 per share. The transaction was valued at $45 billion.

In addition, the company got a senior secured cash collateral posting facility, the size of which is capped by the mark-to-market exposure of Texas Competitive and its subsidiaries on a portfolio of commodity swaps and futures transactions.

In connection with the LBO, TXU changed its name to Energy Future Holdings Corp.

Other LBO financing came from a $5 billion senior unsecured cash-pay bridge loan with initial pricing of Libor plus 325 bps at Texas Competitive, a $1.75 billion senior unsecured toggle bridge loan with initial pricing of Libor plus 350 bps at Texas Competitive, a $2.5 billion senior unsecured cash-pay bridge loan with initial pricing of Libor plus 400 bps at Energy Future and a $2 billion senior unsecured toggle bridge loan with initial pricing of Libor plus 425 bps at Energy Future.

On Monday, Texas Competitive announced plans to sell approximately $2.5 billion of cash-pay senior notes due 2015 and Energy Future announced plans to sell up to roughly $2 billion of cash-pay senior notes due 2017, with proceeds from these transactions going towards the repayment of some of the bridge loan debt.

As of June 30, Texas Competitive's total senior secured debt was 4.8 times pro forma adjusted last-12-months EBITDA and total debt was 6.9 times.

In connection with the LBO, Oncor Electric Delivery Co. closed on a $2 billion six-year senior secured revolver (Ba1/BBB-) that was also launched to investors on Monday.

The revolver is priced at Libor plus 27.5 bps to 80 bps based on ratings. Initial pricing is Libor plus 57.5 bps.

JPMorgan, Citigroup, Credit Suisse, Goldman Sachs, Lehman Brothers and Morgan Stanley are the joint lead arrangers and bookrunners on the Oncor deal, with JPMorgan as administrative agent, Citi the syndication agent, and Credit Suisse, Goldman, Lehman and Morgan Stanley co-documentation agents.

Energy Future is a Dallas-based energy company.

Bausch ups term loan size

Bausch & Lomb lifted the size of its 71/2-year U.S. term loan to $1.2 billion from $1.1 billion, while dropping its bond offering to $650 million from $750 million, according to a market source.

The decision to shift funds into the bank deal was not much of a surprise being that the loan was heard by sources to be around 5½ times oversubscribed.

The U.S. term loan is talked at Libor plus 325 bps at a discount of 981/2.

Bausch's $2.575 billion senior secured credit facility (B1/BB-) also includes a $500 million six-year revolver, a $575 million 71/2-year euro equivalent term loan and a $300 million 71/2-year delayed-draw until Dec. 31, 2009 term loan, with all of these tranches talked at Libor/Euribor plus 325 bps.

The euro term loan and delayed-draw term loan are being offered at a discount of 981/2.

The facility has a total net leverage covenant.

Credit Suisse, Bank of America, Citigroup and JPMorgan are the lead banks on the deal.

Proceeds will be used to help fund the buyout of the company by Warburg Pincus for $65.00 per share in cash. The transaction is valued at $4.5 billion, including about $830 million of debt.

Bausch & Lomb is a Rochester, N.Y., eye health company.

PRA subscribed

PRA International's senior secured credit facility is fully subscribed ahead of Wednesday's commitment deadline and the deal is expected to close at initial terms, according to a market source.

The facility consists of a $40 million revolver (B1/BB-) and a $170 million first-out term loan (B1/BB-) that are both priced at Libor plus 325 bps.

The first-out term loan is being sold to investors with an original issue discount of 98.

PRA's $295 million credit facility also includes an $85 million first-loss term loan (B3/CCC+) that was placed prior to the deal's bank meeting.

UBS Securities LLC and Jefferies Finance LLC are the joint lead arrangers and joint bookrunners on the deal.

Proceeds, along with $170 million in mezzanine financing, will be used to help fund the buyout of the company by Genstar Capital, LLC for $30.50 in cash per share. The transaction is valued at about $790 million.

Originally, the company expected to finance the buyout with a $40 million six-year revolver expected at Libor plus 275 bps, a $255 million seven-year first-lien term loan expected at Libor plus 275 bps, a $115 million 71/2-year second-lien term loan expected at Libor plus 650 bps and $55 million of mezzanine debt, according to filings with the Securities and Exchange Commission.

PRA is a Reston, Va., clinical research organization.

Telesat frees to trade

Switching to trading news, Telesat's credit facility hit the secondary on Monday, with the strip of funded and delayed-draw term loan B debt quoted at 99 5/8 bid, par offered, according to traders.

The $1.764 billion seven-year term loan B and the $150 million delayed-draw term loan B are both priced at Libor plus 300 bps and were both sold with an original issue discount of 98.

During syndication, the funded term loan B was upsized from $1.44 billion and the discount on the term loans firmed up from original guidance in the 97½ to 98 range.

Telesat's roughly $2.25 billion credit facility (B1/BB-) also includes a C$160 million five-year revolver and a $169 million five-year term loan A.

During syndication, the term loan A was downsized from around $469 million.

There are maintenance covenants under the facility.

Morgan Stanley, UBS and JPMorgan are the lead arrangers and bookrunners on the deal, with Morgan Stanley and UBS as senior lead arrangers and Morgan Stanley on the left. Morgan Stanley is administrative agent on the credit facility, UBS is syndication agent and Bank of Nova Scotia, JPMorgan and Citigroup are joint documentation agents.

Proceeds from the credit facility, along with $910 million of high-yield senior notes and $761 million of equity, will be used to help fund the acquisition of Telesat Canada by a joint venture company formed by Loral Space & Communications Inc. and the Public Sector Pension Investment Board.

The newly formed joint venture is buying Telesat Canada from BCE Inc. for about $2.8 billion, plus the assumption of $148 million of debt.

In connection with this transaction, Loral will transfer the fixed satellite services and network services assets of Loral Skynet to the joint venture, which will be known as Telesat and be based in Ottawa.

LKQ closes

LKQ Corp. completed its acquisition of Keystone Automotive Industries, Inc. for $48.00 per share in cash, according to a news release.

To help fund the transaction, LKQ got an approximately $750 million senior secured credit facility (Ba3/BB+) consisting of a $100 million revolver, a $610 million term loan A and a C$40 million term loan A, with all tranches priced at Libor plus 225 bps.

Lehman Brothers and Deutsche Bank acted as the lead banks on the deal.

LKQ is a Chicago-based provider of recycled light vehicle OEM products and related services and aftermarket collision replacement products and refurbished wheels.

Prometric closes

ETS completed its acquisition of Prometric from the Thomson Corp. for approximately $435 million, including approximately $310 million in cash plus $125 million to be paid through a promissory note due in 2014, according to a news release.

To help fund the transaction, Prometric got a new $215 million credit facility (Ba3/BB) consisting of a $25 million five-year revolver priced at Libor plus 300 bps, with a 50 bps commitment fee, and a $190 million six-year first-lien term loan priced at Libor plus 300 bps that was sold at a discount of 97.

Credit Suisse acted as the lead bank on the deal.

Prometric is a Baltimore-based provider of technology-enabled testing and assessment services.

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