URS sets talk; First Data B-2 rumored as overfilled; Star Tribune up; LCDX, cash better with rate cut

By Sara Rosenberg

New York, Sept. 18 - URS Corp. released price talk on its credit facility as the deal was launched with a bank meeting during Tuesday's market hours, and talk is that First Data Corp.'s term loan B-2 is already oversubscribed.

Moving to the secondary, the Star Tribune Co.'s first-lien term loan headed higher after an ongoing court case against the company's head publisher was finally resolved, and LCDX and the cash market were stronger on the heels of the interest rate cut by the Federal Reserve.

URS held a bank meeting in New York on Tuesday to present its $2.1 billion credit facility (Ba1) to investors, and in connection with the launch, price talk was revealed, according to a market source.

The $700 million revolver and the $1.1 billion term loan A are both being talked at Libor plus 200 basis points, and the $300 million term loan B is being talked at Libor plus 275 bps, the source said.

The facility has a maximum leverage ratio and a minimum interest coverage ratio.

Morgan Stanley and Wells Fargo are the lead banks on the deal.

Previously, the term loan A was going to carry a size of $300 million and the term loan B was going to carry a size of $1.1 billion, but the sizes shifted due to market conditions.

Proceeds will be used to help fund the acquisition of Washington Group International, Inc. in a cash and stock transaction valued at $2.6 billion. Washington Group stockholders will receive $43.80 in cash and 0.772 of a share of URS common stock per share.

URS is a San Francisco-based engineering design services company. Washington Group is a Boise, Idaho-based provider of engineering, construction and management services for businesses and governments.

First Data moving quickly

Market talk on Tuesday was that First Data's $5 billion seven-year term loan B-2, which is the only B tranche that is currently going to be syndicated, has already attracted $6 billion in orders, according to a market source.

"I don't doubt it," a second source remarked. "People have been waiting for this for a while and they're ready to do it."

The term loan B-2 that was launched to investors with a retail bank meeting on Monday is priced at Libor plus 275 bps, with an original issue discount of 96 and call protection of 103 in year one, 102 in year two and 101 in year three.

The term loan B-2 includes a euro-denominated sub-tranche that is expected to be sized at $1 billion, but the final size will depend on demand.

First Data's $15 billion credit facility (Ba3/BB-/BB) also includes a $2 billion six-year revolver, a $5 billion seven-year term loan B-1 and a $3 billion seven-year term loan B-3, with all three of these tranches priced at Libor plus 275 bps as well.

The revolver has a 50 bps commitment fee.

The term loan B-1 is prepayable at par, and the term loan B-3 is non-callable for 3.25 years.

Under the original plan, the term loan B-1 and term loan B-3 were expected to be syndicated, or sold down, at a later time. But, with so many commitments rumored to be in on the term loan B-2, some are now anticipating that those orders will spill into the term loan B-3, the first source added.

The credit facility contains a maximum senior secured net debt-to-EBITDA ratio of 7.25 times that is first tested (quarterly) on Dec. 31, 2008, decreasing by 0.25 times each year after that to 6.00 times at Dec. 31, 2013.

Originally, First Data's credit facility was going to be covenant-light and carry a size of $16 billion, broken down into a $2 billion revolver and one $14 billion term loan B tranche. And when the deal was launched to senior managing agent banks in late May, price talk on the revolver and term loan B was set at Libor plus 225 bps to 250 bps.

However, because of market volatility, the leverage covenant was added, the credit facility was restructured and the price talk was revised.

Credit Suisse, Citigroup, Deutsche Bank, Goldman Sachs, HSBC, Lehman Brothers and Merrill Lynch are the lead banks on the deal.

Proceeds will be used to help fund Kohlberg Kravis Roberts & Co.'s buyout of the company for $34.00 in cash per share. The total value of the transaction is about $29 billion.

First Data is a Greenwood Village, Colo., provider of electronic commerce and payment services for businesses.

Laureate sees orders at various ranges

Laureate Education Inc.'s $775 million in senior secured term loan debt (B1) has received some interest since launching early last week, although original issue discounts have yet to firm up because orders are coming in at a range of levels, according to a market source.

"The deal seems to be going well," the source added.

Laureate's term loan debt is comprised of a $675 million covenant-light term loan B and a $100 million covenant-light delayed-draw term loan.

Both term loan tranches are priced at Libor plus 325 bps and both will carry an original issue discount.

Goldman Sachs, Citigroup, Credit Suisse and JPMorgan are the lead banks on the deal.

Proceeds will be used to help fund the already completed buyout of the company by an investor group led by company chairman and chief executive officer Douglas L. Becker that includes Kohlberg Kravis Roberts, Citi Private Equity, S.A.C. Capital Management, LLC, SPG Partners, Bregal Investments, Caisse de depot et placement du Quebec, Sterling Capital, Makena Capital, Torreal SA, Brenthurst Funds, Vulcan Capital and others.

Laureate already has a $400 million revolver in place that was completed in connection with the buyout.

Leverage is around 7.1 times.

Laureate is a Baltimore-based provider of higher education.

CW, Motion also catch attention

CW Media Inc. and Motion Picture Distribution LP are two other deals that have been getting "good interest" from potential lenders since changes were made earlier this month, according to a market source.

CW's C$525 million credit facility (Ba1/B+) consists of a C$50 million revolver and a C$475 million term loan, with both tranches priced at Libor plus 325 bps after flexing up from original guidance in July of Libor plus 250 bps to 275 bps.

Motion Picture's C$410 million credit facility consists of a C$50 million six-year revolver (Ba3/B) priced at Libor plus 325 bps, a C$260 million 71/2-year first-lien term B (Ba3/B) priced at Libor plus 325 bps and a C$100 million eight-year second-lien term loan (B3/CCC+) priced at Libor plus 625 bps. Pricing on the revolver and first-lien term loan was flexed up from original guidance in July of Libor plus 250 bps to 275 bps, and pricing on the second-lien term loan was flexed up from original guidance of Libor plus 550 bps.

CW's term loan and Motion Picture's first- and second-lien term loans are all being offered with an original issue discount, although specifics on that are still to be determined.

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

The first-lien debt under both facilities has a net total leverage maintenance test.

CW's credit facility, which already funded, was used to help finance the acquisition of Alliance Atlantis Communications Inc. by CanWest Global Communications Corp. and GS Capital.

Motion Picture's credit facility, which also already funded, was used to help finance the acquisition of the company by EdgeStone Capital Partners and GS Capital Partners.

CW Media is a provider of specialty channels in Canada. Motion Picture is a distributor of motion pictures in Canada.

Star Tribune trades up

Switching to trading news, Star Tribune's first-lien term loan was stronger on Tuesday after head publisher Par Ridder was forced to step down for one year, ending a nearly three-month court battle, according to a trader.

The first-lien term loan ended the day at 84 bid, 86 offered, up from 82½ bid, 85½ offered, the trader said.

"People are just happy to have this resolved and disposed of, and now the sponsor can just bring someone else in and move on," the trader remarked.

The lawsuit against Ridder had been brought by his former employer, the St. Paul Pioneer Press, which claimed that he took ad rate and budget information and broke a non-compete agreement.

Star Tribune is a Minneapolis-based information provider and includes the Star Tribune newspaper, StarTribune.com and other print and digital products and services.

LCDX, cash better with rate cut

LCDX and the cash market in general were stronger as everyone was happy about the Federal Reserve's decision to cut interest rates by 50 bps, according to traders.

The index went out around 96.70 bid, 96.85 offered, up from 96.00 bid, 96.15 offered, traders said.

"It was up about half a point before the FOMC [Federal Open Market Committee]. Then it jumped up to 963/4, 97 right after the rate cut was announced and then it just settled back in a little bit," one trader added about LCDX.

As for the cash market, that was up anywhere from half a point to a point.

For example, Thomson Learning, a Stamford, Conn.-based higher education, careers and library reference company, saw its term loan B move up to 96 bid, 97 offered from 95¼ bid, 95¾ offered, one trader said.

Kinder Morgan Inc., a Houston-based energy infrastructure provider, saw its term loan B end the day at 96¼ bid, 96 5/8 offered, up about half a point on the day, a second trader said.

And, Georgia-Pacific Corp., an Atlanta-based manufacturer and marketer of tissue, packaging, paper, building products and related chemicals, saw its term loan B end the day at 97 bid, 97¾ offered, also up about half a point on the day, the second trader added.

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