Oshkosh, Tata Coffee float talk; Emdeon cuts second-lien spread; Idearc, NCO free to trade

By Sara Rosenberg

New York, Nov. 9 - Oshkosh Truck Corp. and Tata Coffee Ltd. came out with spread guidance on their credit facilities as both transactions were launched with bank meetings during Thursday's market hours, and Emdeon Business Services lowered pricing on its second-lien term loan.

Meanwhile, in secondary happenings, Idearc's credit facility broke for trading with the term loan B quoted in the upper par's, and NCO Group Inc.'s credit facility freed up as well after pricing on the deal firmed up at the high end of revised talk.

Oshkosh Truck officially kicked off syndication on its $3.5 billion senior credit facility (Ba3/BB) on Thursday, and with the launch, price talk on the deal started floating its way around the market place, according to a source.

It was heard that the company's $500 million five-year revolver and $400 million five-year term loan A are being talked in the Libor plus 175 to 200 basis points context, and the $2.6 billion seven-year term loan B is being talked in the Libor plus 200 to 225 bps area, the source said.

Bank of America and JPMorgan are the lead banks on the deal that will be used to fund the acquisition of JLG Industries, Inc. for $28.00 per share. Total consideration, including transaction costs and assumed debt, is $3.2 billion in cash on a fully diluted basis.

The company expects to pay down $300 million or more annually by fiscal 2008, bringing the debt to EBITDA ratio down to around 3 times by Sept. 30, 2008 from the upper-4s at closing of this transaction.

Oshkosh Truck is an Oshkosh, Wis., designer, manufacturer and marketer of specialty commercial, fire and emergency and military vehicles and bodies. JLG is a McConnellsburg, Pa., manufacturer of access equipment, including aerial work platforms and telehandlers.

Tata Coffee price talk

Tata Coffee also released pricing guidance on its $173 million credit facility Thursday as it too was launched with a bank meeting during the session, according to a market source.

The $15 million revolver and $105 million first-lien term loan are both being talked at Libor plus 275 bps, and the $53 million second-lien term loan is being talked at Libor plus 650 bps, the source said.

Call premiums on the second lien are 102 in year one and 101 in year two, the source added.

Rabo Bank is the lead bank on the India-based coffee company's deal that will be used to help fund the acquisition of Montvale, N.J.-based Eight O'Clock Coffee Co. from Gryphon Investors for a total acquisition price of $220 million.

This deal had originally been scheduled to launch on Sept. 14 with a second-lien loan that was $10 million larger (all other tranche sizes are the same) but was pushed off due to scheduling issues. The second lien was downsized from original expectations because the company decided to put in some subordinated debt.

Emdeon flexes second lien

Emdeon Business Services reduced pricing on its $170 million 71/2-year second-lien term loan C (Caa1/B-) to Libor plus 500 bps from original talk at launch that was in the Libor plus 550 bps area, according to a market source.

Call premiums on the second lien remained unchanged at 102 in year one and 101 in year two, the source said.

The second-lien flex came one day after the company firmed up pricing on its first-lien tranches - a $755 million seven-year first-lien term loan B (B1/B+) and a $50 million six-year revolver (B1/B+) - at Libor plus 250 bps. At launch, the term loan was being talked at Libor plus 250 to 275 bps. Revolver price talk had been Libor plus 250 bps throughout the syndication process.

Now that pricing has finalized, the facility is expected to allocate some time next week, the source added.

Citigroup, Deutsche Bank and Bear Stearns are the lead banks on the $975 million deal that will be used to help fund General Atlantic LLC's acquisition of a 52% interest in Emdeon Corp.'s Business Services business.

The transaction values the unit at $1.5 billion, according to Emdeon, which is retaining a 48% interest.

General Atlantic will contribute $320 million in equity.

The business services segment provides revenue cycle management and clinical communication services for health care.

Emdeon is a health care business, technology and information services company based in Elmwood Park, N.J. General Atlantic is a Greenwich, Conn., private equity firm.

Idearc breaks atop par

Moving to the secondary market, Idearc's credit facility started trading on Thursday, with its $4.75 billion term loan B quoted at par 5/8 bid, par 7/8 offered, according to traders.

The term loan B is priced at Libor plus 200 bps. During syndication, pricing on the loan was reverse flexed from revised talk of Libor plus 225 bps. When the deal first launched, the term loan B was actually being talked in the Libor plus 200 to 225 bps range, but shortly after the bank meeting, pricing was adjusted to just Libor plus 225 bps.

Idearc's $6.5 billion credit facility (Ba2/BB+) also includes a $250 million revolver and a $1.5 billion term loan A, with both tranches priced at Libor plus 150 bps.

JPMorgan and Bear Stearns are the lead banks on the deal.

Proceeds from the facility, along with $2.85 billion of senior 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.

NCO frees to trade

NCO Group's credit facility also hit the secondary on Thursday after final pricing on the transaction was determined, with the $465 million seven-year term loan B quoted at par ¼ bid, par ¾ offered, according to sources.

The term loan B ended up priced at Libor plus 300 bps, the high end of most recent price talk of Libor plus 275 to 300 bps, and up 50 bps from original talk at launch of Libor plus 250 bps.

In addition, a step down was added to the term loan B tranche under which pricing can drop to Libor plus 275 bps at 3.5 times leverage, one source added.

NCO's $565 million senior secured credit facility (Ba3/B+) also includes a $100 million five-year revolver priced at Libor plus 300 bps, the high end of most recent price talk of Libor plus 275 to 300 bps, and up 50 bps from original talk at launch of Libor plus 250 bps.

The revolver carries a 50 bps unused fee.

NCO finalized its credit facility pricing on the heels of pricing of its $365 million two-part bond deal late Wednesday. The company's $165 million tranche of seven-year senior floating-rate notes priced at par to yield three-month Libor plus 487.5 bps, and its $200 million tranche of eight-year senior subordinated notes priced at par to yield 11 7/8%.

Proceeds from the credit facility, the bonds and up to $368.2 million of equity, will be used to help fund the acquisition of NCO by its chairman and chief executive officer, Michael J. Barrist, in partnership with One Equity Partners II LP, for $27.50 per share in cash. The transaction is valued at $1.26 billion.

Morgan Stanley and JPMorgan are the lead banks on the credit facility.

NCO is a Horsham, Pa., provider of business process outsourcing services.

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