Warner Chilcott reveals OID talk; Delta breaks; Windstream up with amendment; Swift strengthens

By Sara Rosenberg

New York, Sept. 29 - Warner Chilcott plc launched its multi-billion credit facility on Tuesday, and in connection with the launch, official guidance on the original issue discount for the term loans emerged.

In other news, Delta Air Lines Inc.'s new term loan hit the secondary market with levels quoted above the original issue discount at which it was sold, Windstream Corp.'s term loan B was stronger on an amended and extended deal, and Swift Transportation Co. Inc.'s term loan B rose on amendment chatter.

Warner Chilcott OID guidance

Warner Chilcott held a bank meeting on Tuesday to kick off the general syndication of its up to $2.75 billion senior secured credit facility (Ba3/BB+), at which time investors were told where the original issue discount on the term loans is being discussed, according to a buyside source.

Both the term loan A and the term loan B are being offered at a discount that's in the 98 to 99 range, the source said.

By comparison, according to the commitment letter that was filed with the Securities and Exchange Commission, 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, rumors surfaced that the loans could be offered more in the 98½ range, since that early syndication round was heard to be going very well.

Warner Chilcott order requirements

Investors were told on Tuesday that all orders must be pro rata towards Warner Chilcott's term loan A and term loan B, inclusive of the delayed-draw term loan, the source remarked.

As described by the lead banks on Tuesday, the five-year term loan A and the 51/2-year term loan B could total $2.5 billion, with up to $350 million of that 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.

Unchanged from the commitment letter is price talk on the two term loan tranches, with the A guided at Libor plus 350 basis points and the B guided at Libor plus 375 bps.

Both tranches have a 2.5% Libor floor.

The commitment letter said that the delayed-draw term loan commitment fee will be half of the drawn spread.

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

Warner Chilcott includes revolver

Warner Chilcott's proposed credit facility also includes a $250 million five-year revolver that is priced at Libor plus 350 bps with a 2.5% Libor floor and a 75 bps commitment fee, according to the company's commitment letter.

Bank of America and Credit Suisse are the co-lead arrangers on the 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 will be used to help fund the acquisition of Procter & Gamble Co.'s pharmaceuticals business.

Warner Chilcott also plans notes

In addition to the credit facility, Warner Chilcott plans on selling some senior unsecured notes for acquisition financing.

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.

LEO Pharma is paying $1 billion in cash for the assets and Warner Chilcott expects its net cash proceeds from the sale to be around $980 million.

Warner Chilcott plans on using $950 million of the net proceeds to repay the $480 million balance outstanding under its existing credit facility and to help fund the pharmaceuticals business acquisition.

The senior unsecured notes are backed by a commitment for a $1.4 billion one-year bridge loan priced at Libor plus 800 basis points with a 2.5% Libor floor. The spread increases by 50 bps after each three-month period.

The acquisition may close by the end of October. Closing is 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.

Delta frees to trade

Over in trading, Delta Air Lines' new $250 million four-year term loan broke for trading on Tuesday, and following the entrance of the debt into the secondary market, the company's existing first-lien term loan softened, according to a trader.

The new term loan was seen at par bid, par ¾ offered on the break and then levels moved to par ¼ bid, par 5/8 offered, where they closed out the day, the trader said.

Meanwhile, the company's existing first-lien term loan headed lower in trading, moving to 91½ bid, 92½ offered from 92 bid, 93 offered on Monday, the trader continued.

"New deal is a first-lien deal, so it makes sense it's down," the trader remarked regarding the existing first lien's performance.

As for the company's existing second-lien term loan, that was actually up a quarter of a point on the day at 83¾ bid, 84¾ offered as the airline sector in general felt strong, the trader added.

Delta new loan trading atop OID

Delta's new term loan was trading on Tuesday a few points above the 98 original issue discount at which it was sold to investors while being syndicated.

Pricing on the Atlanta-based airline company's term loan is Libor plus 675 bps with a 2% Libor floor.

During syndication, the loan was reduced from $500 million as the company's first-lien bond offering was increased to $750 million from $500 million and pricing finalized at the low end of the Libor plus 675 bps to 700 bps talk.

Proceeds from the new credit facility, along with the bonds, were used to repay borrowings under Northwest Airlines Inc.'s senior corporate credit facility.

The company also sold $600 million of senior second-lien notes for extra liquidity. This second-lien offering was added to the deal and was initially sized at $500 million.

As a result, Delta now expects its unrestricted liquidity at Sept. 30 to be $5.6 billion.

Citigroup and Deutsche Bank acted as the joint lead arrangers and bookrunners on the $750 million credit facility (Ba2), which also includes a $500 million 31/2-year revolver.

Windstream gains ground

In more trading news, Windstream's term loan headed higher during market hours following the company's announcement that it will seek an amendment and extension of its credit facility, according to a trader.

The term loan was quoted at 97 1/8 bid, 97 7/8 offered, up from 97 bid on Monday, the trader said.

Under the amendment, the company is looking to extend some or all of its revolver and term loan A to July 2013 from July 2011, and its term loan B to December 2015 from July 2013.

The extended revolver will be priced at Libor plus 225 bps with a 50 bps undrawn fee, compared to pricing on the non-extended debt of Libor plus 125 bps with a 25 bps unused fee, extended term loan A will be priced at Libor plus 225 bps versus Libor plus 125 bps on the non-extended debt, and the extended term loan B will be priced at Libor plus 275 bps versus Libor plus 150 on the non-extended.

JPMorgan and Bank of America are the joint lead arrangers on the deal that is scheduled to launch with a conference call on Wednesday at 1 p.m. ET and is expected to be completed in mid-October.

Lenders are being offered a 5 bps consent fee.

Windstream is a Little Rock, Ark.-based provider of phone, high-speed internet and high-definition digital TV services.

Swift term loan trades up

Swift Transportation's term loan B was stronger by a couple of points on Tuesday on rumors of an amendment, according to traders.

The term loan B was quoted by one trader at 90 bid, 91 offered, up from 85 bid, 88 offered and by a second trader at 90 bid, 91½ offered, up from 86 bid, 88 offered.

Swift Transportation is a Phoenix-based truckload carrier.

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