Avis Budget sees interest; Blackboard, Telx rework deals; Endurance International talk emerges

By Sara Rosenberg

New York, Sept. 16 - Avis Budget Group Inc.'s revised term loan B appears to be getting a good reception, helped in part by the additional capital structure information that was made available to lenders and the dropped bid for Dollar Thrifty Automotive Group Inc.

Also in the primary, Blackboard Inc. made some changes to its credit facility, including widening the coupon and original issue discount on its first-lien term loan, and Telx Group Inc. downsized its term loan B while increasing pricing as well.

Additionally, Endurance International Group released price talk on it deal as the transaction was presented to lenders in the morning, and Buffalo Gulf Coast Terminals' term loan was in good shape ahead of its commitments deadline, with the deal clearing in line with talk.

Avis going well

Avis' revised/relaunched $420 million seven-year term loan B (Ba1) is said to be getting a good reception since an update call was held for lenders on Sept. 13 and, according to one source, there are even some crossover orders for the loan and the company's proposed $250 million senior notes offering.

"Once the 8-K was filed, it opened up all the information lenders were looking for. Now all the details [on capital structure] are out there," the source remarked, explaining that when the deal first launched in early August, that type of detailed information was not available.

In the regulatory filing, the company disclosed that in addition to the term loan B and notes, funding for its purchase of Avis Europe plc will come from a $20 million tranche A term loan and a $200 million revolver add-on - both having pricing ranging from Libor plus 275 bps to 325 bps based on ratings.

Also, the company plans to use cash of $955 million, borrow an additional $140 million under certain of its existing fleet debt financing arrangements, assume Avis Europe's existing vehicle finance leases of roughly $440 million, assume about $50 million of existing Avis Europe corporate debt and enter into a financing arrangement secured by certain of Avis Europe's vehicle assets.

Avis withdraws Dollar bid

Another factor that seems to be helping Avis in its syndication quest is the "dropped bid for Dollar Thrifty," the source continued. He said that the acquisition proposal was previously a big hang-up for investors since there was no information available on how the deal would be financed and what the transaction would ultimately look like.

In September 2010, Avis announced an offer to purchase Dollar Thrifty, a Tulsa, Okla.-based renter and leaser of vehicles, for a combination of $45.79 in cash and 0.6543 shares of common stock per share, or $1.5 billion total. Then, Hertz Global Holdings Inc., a Park Ridge, N.J.-based auto and equipment rental company, emerged with its own bid for Dollar Thrifty of $57.60 in cash and 0.8546 shares per Dollar Thrifty share.

Dollar Thrifty gave the two companies until Oct. 10 to submit their best and final offers. Avis, however, said in its recent 8-K filed with the Securities and Exchange Commission that it opted to drop out of the bidding war due to current market conditions.

Avis B loan guidance

Avis is talking its $420 million term loan B at Libor plus 525 basis points with a 1.5% Libor floor and an original issue discount of 97 to 98, and there is 101 soft call protection for one year.

By comparison, when the deal was first launched last month before the large market sell-off, the term loan B was sized at $400 million and talked at Libor plus 350 bps with a 1.25% Libor floor, an original issue discount of 99 and 101 soft call protection for one year.

The company was also looking to get a $200 million term loan A and a $300 million revolver add-on, both of which were talked at Libor plus 300 basis points, subject to a ratings-based grid, with no Libor floor.

Commitments towards the reworked term loan B are due on Thursday, and it is possible that the company's bond offering will price on that day as well, the source said.

Avis lead banks

Morgan Stanley & Co., Citigroup Global Markets Inc., Credit Agricole Securities (USA) Inc., Scotia Capital (USA) Inc. and RBS Securities Inc. are the lead banks on Avis' term loan B, and they are leading the notes, too.

Under the Avis Europe purchase agreement, Avis is buying Avis Europe for £3.15 in cash per share. The transaction is valued at £635 million, or about $1 billion.

Closing is expected to take place in October, subject to Avis Europe shareholder approval, court approval and regulatory clearances.

Parsippany, N.J.-based Avis and Bracknell, England-based Avis Europe are vehicle rental companies.

Blackboard flexes higher

In more primary happenings, Blackboard announced revisions to its first-lien term loan on Friday, sweetening pricing so as to attract more investors to the transaction, according to sources.

The $780 million seven-year first-lien term loan (B1/B+) is now being talked at Libor plus 600 bps with a 1.5% Libor floor and an original issue discount of 94 to 95 versus talk at launch of Libor plus 550 bps with a 1.5% Libor floor and an original issue discount of 96½ to 97, sources said.

As before, the first-lien term loan has soft call protection of 102 in year one and 101 in year two.

Initially, when the company detailed its financing plans in filings with the SEC, it was said that the first-lien term loan would be sized at $700 million. However, there was also room to upsize by $80 million if 100% of the outstanding equity interests of a portfolio company of Providence Equity Partners were to be contributed to the company.

Also, the regulatory filings had first-lien term loan pricing expected at Libor plus 475 bps with a 1.5% Libor floor.

Blackboard revolver, term

In addition to the first-lien term loan, Blackboard's $1.23 billion senior secured credit facility includes a $100 million five-year revolver (B1/B+) and a $350 million eight-year second-lien term loan (Caa1/CCC+).

Price talk on the second-lien term loan continues to be Libor plus 975 bps, with a 1.5% Libor floor and an original issue discount of 97½ to 98, and the debt is non-callable for one year, then at 102 in year two and 101 in year three.

The company's previous filings with the SEC had second-lien term loan pricing expected at Libor plus 800 bps with a 1.5% Libor floor.

Bank of America Merrill Lynch, Deutsche Bank Securities Inc. and Morgan Stanley & Co. Inc. are the lead banks on the deal and are asking for commitments by Sept. 21. Closing and funding is expected on Oct. 4.

Blackboard being acquired

Proceeds from Blackboard's credit facility will be used to help fund its buyout by Providence Equity Partners for $45 per share in cash. The transaction is valued at $1.64 billion, plus the assumption of $130 million of net debt.

Other funds for the transaction will come from $850 million of equity.

Completion of the buyout is subject to stockholder approval, other customary conditions and regulatory approvals.

Blackboard is a Washington, D.C.-based provider of enterprise software applications and related services to the education industry.

Telx raises pricing

Another company to come out with changes was Telx Group, as it reduced its six-year term loan B to $255 million from $290 million, flexed pricing to Libor plus 650 bps from talk of Libor plus 600 bps to 625 bps and moved the original issue discount to 94 to 95 from 96 to 97, according to a market source.

Furthermore, 101 soft call protection for one year was added to the term loan and the commitment deadline was moved to Wednesday from Monday, the source said.

The 1.25% Libor floor was left unchanged.

The company's now $305 million senior secured credit facility (B1/B), down from $340 million, also includes a $50 million five-year revolver.

Telx ups mezz

To compensate for the term loan B downsizing, Telx decided to increase its mezzanine debt by $35 million, the source explained.

Proceeds from the financings will be used to fund the buyout of the company by ABRY Partners and Berkshire Partners LLC from GI Partners.

Morgan Stanley Senior Funding Inc. and TD Securities (USA) LLC are the lead banks on the credit facility.

Telx is a New York-based provider of interconnection and colocation facilities.

Endurance reveals talk

Continuing on the topic of new issues, Endurance International Group held a bank meeting on Friday to launch its proposed $340 million credit facility (B2), and with the event, price talk was disclosed, according to a market source.

Both the $35 million three-year revolver and a $305 million six-year first-lien term loan are being talked at Libor plus 625 bps to 650 bps with a 1.5% Libor floor, the source said. However, the term loan is offered at an original issue discount of 96 and the revolver is offered at 991/2.

Morgan Stanley & Co. LLC is the lead bank on the deal that will be used to refinance existing debt and for general corporate purposes.

Endurance International is a Burlington, Mass.-based provider of online services to small- and medium-sized businesses.

Buffalo Gulf fills out

Buffalo Gulf Coast's $275 million secured term loan (Ba1) was oversubscribed ahead of its Friday commitment deadline at initial guidance, according to a market source.

The loan is talked at Libor plus 600 bps with a 1.5% Libor floor and an original issue discount of 98 and is non-callable for one year, then at 102 in year two and 101 in year three.

Barclays Capital Inc. is the lead bank on the deal that will be used to fund the acquisition of Houston Fuel Oil Terminal Co. LLC, a provider of crude and residual fuel oil storage in the Gulf of Mexico, from ArcLight Capital Partners.

Cumulus Media closes

In other news, Cumulus Media Inc. completed its $2.415 billion credit facility, comprised of a $300 million five-year revolver (Ba2/BB), a $1.325 billion seven-year first-lien term loan (Ba2/BB) and a $790 million 71/2-year second-lien term loan (B2/B-).

Of the total revolver size, $200 million was drawn at close, according to a company release.

During syndication, the revolver was downsized from $375 million and the first-lien term loan was upsized from $1.25 billion, but was reduced from an original size of $2.04 billion upon the addition of the second-lien term loan.

J.P. Morgan Securities LLC, UBS Securities LLC, Macquarie Capital, RBC Capital Markets LLC and ING Financial Markets LLC led the deal that was used to fund the acquisition of Citadel Broadcasting Corp. for $37 per share and to refinance outstanding debt.

Cumulus pricing

Pricing on Cumulus Media's first-lien term loan is Libor plus 450 bps with a 1.25% Libor floor, and it was sold at an original issue discount of 99 and has 101 soft call protection for one year.

As part of the syndication process, the first-lien term loan spread firmed at the high end of revised talk of Libor plus 425 bps to 450 bps and was sweetened from initial talk of Libor plus 375 bps to 400 bps. The discount came at the wide end of the 99 to 99½ guidance.

Meanwhile, the company's second-lien term loan is priced at Libor plus 600 bps with a 1.5% Libor floor and was sold at a discount of 981/2. This tranche is non-callable for one year, then at 103 in year two, 102 in year three and 101 in year four.

Cumulus is an Atlanta-based radio broadcaster. Citadel is a Las Vegas-based radio company.

Alkermes wraps merger

Alkermes Inc. completed its merger with Elan Drug Technologies to create Dublin, Ireland-based Alkermes plc in a cash and stock transaction valued at about $1 billion, according to a news release.

To help fund the transaction, Alkermes got a new $310 million six-year first-lien term loan B (BB) and a $140 million seven-year second-lien term loan C (B) led by Morgan Stanley & Co. Inc. and HSBC Securities (USA) Inc.

Pricing on the term loan B is Libor plus 525 bps, and pricing on the term loan C is Libor plus 800 bps. Both tranches have a 1.5% Libor floor. The term loan B was sold at an original issue discount of 99 and includes 101 soft call protection for one year, and the term loan C was sold at discount of 98 and provides for call protection of 103 in year one, 102 in year two and 101 in year three.

During syndication, pricing on the term B was increased from talk of Libor plus 425 bps to 450 bps and pricing on the term C was flexed up from talk of Libor plus 725 bps to 750 bps.

Alkermes Inc. is a Waltham, Mass.-based biotechnology company. Elan is an Ireland-based drug delivery business.

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