West up with IPO; Level 3 steady; Warner Chilcott sees strong reception; Skype nets orders

By Sara Rosenberg

New York, Oct. 2 - West Corp.'s bank debt saw a bit of a pop during Friday's trading session as the company announced plans for an initial public offering of common stock, and Level 3 Communications Inc.'s term loan held firm with news of a convertibles offering.

In primary happenings, Warner Chilcott plc's multi-billion credit facility is heard to be going exceptionally well since launching to retail investors just a few days ago and Skype Technologies' (Springboard Finance LLC) recently launched credit facility is also catching some interest.

West heads higher

West's bank debt was stronger during market hours with the company's news that it will do an initial public offering, according to a trader.

The term loan B-2 was quoted at 94½ bid, 95½ offered, up from 94 bid, 95 offered, and the term loan B-3 was quoted at 101 bid, 102 offered, up from par ¾ bid, 101 ¼ offered, the trader said.

However, the company's term loan B-4, which is the recently amended and extended tranche, was unchanged on the day at 95¼ bid, 96¼ offered, the trader added.

On Friday, West filed an S-1 with the Securities and Exchange Commission announcing that it will be selling shares of common stock.

Proceeds from the IPO will be used to repay or repurchase debt, and to fund the amounts payable upon the termination of the management agreement between the company and the sponsors entered into in connection with the consummation of its recapitalization in 2006.

The company may also use proceeds to repurchase certain of its notes and for working capital and other general corporate purposes.

West is an Omaha, Neb.-based provider of outsourced communication services.

Level 3 holds firm

Level 3's term loan was basically flat on the day as the company revealed plans to sell $275 million of convertible senior notes, according to traders.

Traders were quoting the term loan at 88 bid, 89 offered, in line with Thursday's levels.

Proceeds from the convertibles will be used for general corporate purposes, including repurchases of outstanding debt.

Level 3 is a Broomfield, Colo.-based communications company.

Warner Chilcott oversubscribed

Moving to new deal happenings, Warner Chilcott's senior secured credit facility (Ba3/BB+), which was just launched into general syndication this past Tuesday, was already being described by a couple of sources as a "blowout" on Friday.

According to one source, the deal already had $4.5 billion in the book as of Wednesday afternoon.

Market chatter is that an early round syndication for big ticket orders netted around $1.5 billion towards the term loans before the retail launch even took place.

The company is in market with a five-year term loan A and a 51/2-year term loan B, with both tranches totaling $2.5 billion and up to $350 million of that amount available as delayed-draw debt.

The company's commitment letter had the term loan A sized at $1 billion and the term loan B sized at $1.5 billion.

Warner Chilcott has said that if the delayed-draw is not needed, it expects to raise a total of $2.15 billion of term loan A and term loan B debt, as opposed to $2.5 billion.

Investors have been told that all orders must be pro rata towards the term loan A and term loan B, inclusive of the delayed-draw term loan.

Books on the term loans close on Oct. 13, but investors were warned that they could close sooner based on demand.

The $2.75 billion credit facility also includes a $250 million five-year revolver.

Warner Chilcott pricing details

Warner Chilcott's revolver and term loan A are being talked at Libor plus 350 basis points and the term loan B is being talked at Libor plus 375 bps, and all tranches carry a 2.5% Libor floor.

The revolver has a 75 bps commitment, while the delayed-draw term loan commitment fee is expected to be half of the drawn spread, according to the credit facility commitment letter.

Original issue discount on the term loan A and the term loan B was launched in the range of 98 to 99.

"If I were to guess, I'd say tight end, so 99," one buyside source told Prospect News on Friday, basing the assumption on the rumors that the deal is blowing out.

"Not sure, though," the source added.

According to the commitment letter, the term loan A and term loan B were expected to be offered to lenders at a discount of 98. However, after the lead banks on the deal approached some larger investors for big tickets towards the term loans, talk surfaced that the loans could be offered more in the 98½ range, since that early syndication round went well.

Warner Chilcott lead banks

Bank of America and Credit Suisse are the co-lead arrangers on the Warner Chilcott deal. Bookrunners are Bank of America, Credit Suisse, Barclays, Citigroup, JPMorgan and Morgan Stanley. Credit Suisse is the administrative agent.

The banks have committed to provide 16 2/3% of the credit facility.

Financial covenants under the facility include a maximum leverage ratio opening at 4.25 times and decreasing until it reaches 2.5 times after Sept. 30, 2013, and an interest coverage ratio that opens at 2.0 times and increases until it reaches 3.0 times after Sept. 30, 2013, the commitment letter said.

Proceeds from the credit facility, along with some senior unsecured notes, will be used to help fund the acquisition of Procter & Gamble Co.'s pharmaceuticals business.

The notes were initially expected to be sized at $1.4 billion, but may end up being $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.

The acquisition may close by the end of October, 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.

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

Skype nabs interest

Skype's credit facility is also heard to be attracting attention from investors, with talk being that there was about $200 million in commitments towards the term loan shortly after the Wednesday bank meeting took place, according to a fund manager.

The $600 million five-year term loan is talked at Libor plus 600 bps with a 2% Libor floor and an original issue discount of 97.

JPMorgan, Barclays and RBC Capital Markets are the lead banks on the $630 million credit facility (B1/B) that also includes a $30 million four-year revolver.

Proceeds from the facility, along with equity, will be used to help finance the purchase of a 65% stake in the company by an investor group led by Silver Lake and including Index Ventures, Andreessen Horowitz and the Canada Pension Plan Investment Board.

eBay Inc., the current owner of Skype, will retain a 35% interest in the company. eBay is expected to receive about $1.9 billion in cash upon the completion of the sale and a subordinated note from the buyer in the principal amount of $125 million.

The acquisition, which is not subject to a financing condition, is expected to close in the fourth quarter.

Skype is a Luxembourg-based software that enables individuals and businesses to make free video and voice calls, send instant messages and share files with other Skype users.

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