Fiserv OID emerges; Saxon sets talk; Wrigley tweaks deal; Booz, Ticketmaster break; Supervalu dips

By Sara Rosenberg

New York, July 22 - Fiserv Insurance Solutions Inc. came out with an original issue discount on its term loan as the deal was launched during the session, and Saxon Energy Services Inc. released price talk on its credit facility as it too held a bank meeting on Tuesday.

Also in the primary, Wrigley Co. announced a change to the size of its proposed term loan B ahead of the Wednesday bank meeting that will launch the deal into syndication.

Over in the secondary, Booz Allen Hamilton Inc. and Ticketmaster's credit facilities freed up for trading, Supervalu Inc.'s term loan B headed down after the company lowered its fiscal 2009 guidance, and UAL Corp. and US Airways Group Inc. both ended the day higher after releasing earnings.

Fiserv Insurance Solutions held a bank meeting during market hours to officially kick off syndication on its credit facility, and in connection with the launch, the original issue discount on the term loan was announced, according to a market source.

The $335 million six-year term loan was presented to lenders with an original issue discount price of 981/2, the source said.

As was previously reported, the loan is talked at Libor plus 350 basis points with a 3.25% Libor floor.

Fiserv Insurance Solutions' $385 million credit facility also includes a $50 million five-year revolver that is talked at Libor plus 350 bps as well.

Credit Suisse is the lead bank on the deal.

Proceeds will be used to help back Stone Point Capital LLC's acquisition of a 51% interest in the company, the completion of which was announced on July 15.

The acquisition was initially funded through about $205 million in equity and $335 million in bridge financing out of one of Stone Point's private equity funds.

Stone Point purchased the majority interest in Fiserv Inc.'s insurance business through its private equity fund Trident IV.

Fiserv received about $510 million in net after-tax proceeds and retains a 49% equity interest in the business.

Fiserv Insurance Solutions is a Cedar Rapids, Iowa, provider of insurance technology, professional services and outsourcing services.

Saxon Energy price talk

Also launching with a bank meeting on Tuesday was Saxon Energy, at which time it came out with price talk on its $350 million senior secured credit facility, according to a market source.

Both the $65 million five-year revolver and a $285 million six-year term loan are being talked at Libor plus 400 bps with tiered upfront fees, the source said.

RBC Capital Markets and HSBC are the lead banks on the deal that will be used to help fund the buyout of the company by Schlumberger Oilfield Holdings Ltd. and First Reserve Corp. for C$7.00 per share in cash.

Saxon is a Calgary, Alberta-based oilfield services company.

Wrigley revises B loan size

Wrigley has changed the size of it proposed term loan B to $3.6 billion from the initially expected $4.45 billion to account for a bond issue being left in place, a buyside source told Prospect News on Tuesday.

Sizes on the company's pro rata debt were left unchanged with the revolver still at $250 million and the term loan A still at $1 billion, the source said.

Price talk on the term loan B is Libor plus 375 bps with a 3% Libor floor and an original issue discount of 97, and price talk on the revolver and the term loan A is Libor plus 325 bps.

Back in May, when the structure on the deal first emerged in a filing with the Securities and Exchange Commission, sources heard rumors that the term loan B was expected around the Libor plus 400 bps context and that ratings could be in the four-Bs area, but nothing official had been announced at that time.

Goldman Sachs is the lead arranger on the now $4.85 billion deal, down from $5.7 billion, that is scheduled to launch with a bank meeting on Wednesday. Barclays, GE Capital, Rabobank and Sumitomo have already signed on as co-arrangers.

Proceeds will be used to help fund the merger of Wm. Wrigley Jr. Co. and Mars Inc., and to provide for ongoing working capital and general corporate purposes.

As part of the merger, Mars received a separate debt commitment from JPMorgan, Bank of America, BNP Paribas, Citigroup, Deutsche Bank, Lloyds TSB Bank and RBS Securities that provides for a $12 billion senior unsecured credit facility.

The Mars facility, which is expected to be investment grade, consists of a $1.5 billion revolver, an $8.5 billion term loan and a $2 billion bridge loan, according to filings with the SEC.

Proceeds from the Mars facility will be used to finance the equity contribution from Mars, the repayment or refinancing of certain Mars debt and for general corporate purposes.

Also, Berkshire Hathaway has agreed to provide $4.4 billion in subordinated debt financing to the surviving corporation in the merger and to invest $2.1 billion in equity securities.

Under the merger agreement, Mars will pay $80 cash for each share of Wrigley common stock and class B common stock in a transaction valued at about $23 billion.

Confections company Wrigley Co. will be operated as a separate, stand-alone subsidiary of Mars, keeping its headquarters in Chicago. Mars is a McLean Va.-based producer of confectionery, food and petcare products.

Booz Allen frees to trade

Switching to trading happenings, Booz Allen's credit facility hit the secondary, with the $585 million seven-year term loan B moving above its original issue discount price, according to a trader.

The term loan B was quoted at 99 bid, 99½ offered on the break, it then moved up to 99¾ bid, par offered, and then it settled in at 99½ bid, par, the trader said.

The term loan B is priced at Libor plus 450 bps with a 3% Libor floor, and was sold to investors at an original issue discount of 98.

During syndication, the term loan B had been upsized from $460 million as a result of strong demand for the paper, pricing was reduced from initial talk of Libor plus 475 bps and the original issue discount tightened from initial guidance of 97.

Booz Allen's $810 million credit facility (Ba2/BB) also includes a $100 million revolver and a $125 million term loan A, with both of these tranches priced at Libor plus 400 bps.

The term loan A was sold at an original issue discount of 98.

During syndication, the term loan A was downsized from $250 million when the term loan B was upsized, and, like the term loan B, the discount price came in from initial guidance of 97.

Bank of America, Credit Suisse and Lehman Brothers are the joint lead arrangers and joint bookrunners on the deal that will be used to help fund the buyout of Booz Allen Hamilton Inc.'s U.S. government business by Carlyle Group for $2.54 billion.

The U.S. government business, based in McLean, Va., has more than 18,000 employees in 80 offices worldwide, generating annual net revenues in excess of $2.7 billion.

Other acquisition financing will come from $550 million of eight-year mezzanine debt.

Leverage through the bank deal will be around the low-3s, and total leverage will be around the mid-5s.

Completion of the transaction is expected to occur at the end of this month, subject to shareholder and regulatory approvals and other customary closing conditions.

Ticketmaster breaks

Also freeing up for trading on Thursday was Ticketmaster's credit facility, with the $350 million 61/2-year term loan B quoted at 99 1/8 bid, 99 5/8 offered, according to a market source.

The term loan B is priced at Libor plus 325 bps and was sold at an original issue discount of 981/2.

During syndication, the term loan B was upsized from $250 million after the decision was made to reduce the company's senior notes offering to $300 million from $400 million, and pricing on the loan was flexed up from initial talk at launch of Libor plus 275 bps.

Ticketmaster's $650 million credit facility (Ba1/BBB-) also includes a $200 million five-year revolver and a $100 million five-year term loan A, with both of these tranches priced at Libor plus 250 bps.

JPMorgan and Merrill Lynch are the lead banks on the deal that will be used to help fund the company's spin-off from IAC/InterActiveCorp.

Ticketmaster is a West Hollywood, Calif., live entertainment ticketing and marketing company.

Supervalu softens

Supervalu's term loan B weakened on Tuesday after the company announced that it lowered fiscal 2009 estimates, according to a trader.

The term loan B was quoted at 94 bid, 94½ offered, down from Monday's levels of 94½ bid, 95 offered, the trader said.

The company's revised fiscal 2009 guidance includes expected earnings in the range of $3.00 to $3.16 per diluted share, down from previous guidance of $3.06 to $3.22 per share, and $3.04 to $3.20 on an adjusted basis when excluding one-time acquisition-related costs, down from previous guidance of $3.10 to $3.25 per share.

Furthermore, identical stores sales growth, excluding fuel, is now projected to be about 0.5% compared to previous guidance of 1% to 2%.

The fiscal 2009 guidance includes assumptions that, among other things, net sales will be about $45 billion, capital spending will be around $1.3 billion and debt reduction will be around $400 million.

For the first quarter of fiscal 2009, Supervalu reported net sales of $13.3 billion, compared to $13.3 billion last year, net earnings of $162 million, an increase of 9% compared to $148 million last year, and diluted earnings per share of $0.76, an increase of 10% compared to $0.69 last year.

Operating earnings for the quarter were $456 million, or 3.4% of net sales, compared to $466 million, or 3.5% of net sales last year.

"While we are pleased with our record results and the continued progress of the Albertsons integration, the ongoing weakness in the economy combined with higher food and energy inflation has created conditions that make us take a more cautious view for the balance of the fiscal year," said Jeff Noddle, chairman and chief executive officer, in a news release.

"In light of the macroeconomic environment, we have updated our guidance and are responding with tighter expense controls and other cost-savings activities. We remain confident that we are doing the right things for the long-term health of our business and are effectively managing those factors under our control in order to create a foundation for sales momentum and future growth," Noddle added in the release.

Supervalu is an Eden Prairie, Minn., supermarket operator.

UAL trades up

UAL's term loan was stronger in trading after the company released quarterly financials that, although showing a deep loss, still beat estimates, according to a trader.

The term loan was quoted at 71 bid, 73 offered, up from 70 bid, 72 offered, the trader said.

For the second quarter, the company reported a net loss of $2.73 billion, or $21.47 per diluted share, versus net income of $274 million, or $1.83 per diluted share, in the same period last year. Excluding certain largely non-cash accounting charges, the net loss was $151 million, or $1.19 per diluted share, $425 million worse than in 2007.

Operating loss for the quarter was $2.69 billion, compared to operating income of $537 million last year. Excluding the accounting charges, the company generated an operating loss of $87 million in the quarter.

The company said that its financial results were impacted by previously disclosed largely non-cash accounting charges that, coupled with a $773 million or 54.1% increase in consolidated fuel expense, caused the net, pre-tax and operating results to be significantly lower year-over-year.

"Our industry is challenged as never before by the unrelenting price of oil, and United is taking aggressive action to offset unprecedented fuel costs and to strengthen the competitiveness of our business," said Glenn Tilton, president, chairman and chief executive officer, in a news release.

"The elimination of our entire B737 fleet and our alliance with Continental are examples of the different approach we are taking to respond to dramatically changed market conditions to deliver better results for all our stakeholders."

In total, UAL will retire 100 aircraft and will reduce fourth-quarter mainline domestic capacity 15.5% to 16.5% year over year. In conjunction with the capacity reductions, the company expects to reduce its workforce by about 7,000 by year-end 2009.

The company also recently announced a framework agreement to form a partnership with Continental Airlines. This agreement will link networks and services worldwide, creating revenue opportunities, cost savings and other operating efficiencies.

For the second quarter, UAL realized $217 million of operating cash flow, versus $1.034 billion last year, and $127 million of free cash flow.

The company raised $90 million through new aircraft financing transactions and asset sales and freed up $130 million in restricted cash by replacing it with a $100 million letter of credit during the quarter.

At the end of the quarter, UAL had an unrestricted cash balance of $2.9 billion and a restricted cash balance of $655 million.

In addition, early in the third quarter, the company received funds from a $241 million aircraft financing transaction. The company freed up another $50 million of restricted cash by replacing it with letters-of-credit worth $34 million.

UAL is a Chicago-based airline company.

US Airways ends on a high note

Also closing out the day on higher ground was US Airways Group's term loan as the company came out with earnings that topped estimates as well, according to a trader.

The term loan went out at 63½ bid, 64½ offered, up from 63 bid, 64 offered, the trader said. "It was down about a point around midday and then it came back," the trader added.

For the second quarter, the company reported a net loss of $567 million, or $6.16 per share, compared to a net profit of $263 million, or $2.77 per diluted share for the same period last year. Excluding net special items of $466 million, the company reported a net loss of $101 million, or $1.11 per share, compared to a net profit excluding special items of $261 million, or $2.74 per diluted share last year.

Operating loss for the quarter was $536 million, compared to operating income of $289 million last year.

"Our second quarter results reflect the unprecedented rise in fuel prices that are impacting our industry. We are working diligently to reduce capacity and costs and execute on the new revenue programs recently announced by US Airways and other airlines," said Doug Parker, chairman and chief executive officer, in a news release.

"On the liquidity front, we ended the quarter with a strong total cash and investments balance of $2.8 billion. While pleased with this position relative to our peers, in light of the industry environment, we are working productively with all of our stakeholders to further enhance liquidity," Parker added in the release.

Of the company's $2.8 billion in total cash and investments at June 30, $2.3 billion was unrestricted.

In order to preserve liquidity, the company previously announced that it reduced its forecasted capital expenditure plan for 2008 by about $90 million since the beginning of the year. This brings the total 2008 estimated non-aircraft capital expenditures to $225 million.

US Airways is a Tempe, Ariz.-based airline company.

Cash, LCDX better

The cash market and LCDX 10 both closed out the day feeling strong as they rode the coattails of the equity market, according to a trader.

Cash in general was higher by about a quarter to a half a point by the end of the day, depending on the name, the trader said.

And, the index was quoted around 97.70 bid, 97.85 offered, up from 97.35 bid, 97.45 offered, the trader added.

As for stocks, Nasdaq closed up 24.43 points, or 1.07%, Dow Jones Industrial Average closed up 135.16 points, or 1.18%, S&P 500 closed up 17 points, or 1.35%, and NYSE closed up 66.91 points, or 0.79%.

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