Fiserv pulled; AlliedBarton, Texas American, Broadlane tweak deals; Hexion dips with numbers

By Sara Rosenberg

New York, Aug. 14 - Fiserv Insurance Solutions Inc.'s credit facility was removed from market as the amount of investor pushback towards the deal was going to making it way to pricey to get done.

Also in the primary, AlliedBarton Security Services upsized its term loan and widened the original issue discount, Texas American Resources Co. revised pricing, Libor floor and call protection on its second-lien term loan, and Broadlane moved some funds into its term loan B from its mezzanine financing as a result of oversubscription.

In addition, talk is that Nations Petroleum LLC may have also modified its credit facility structure, with speculation being that the deal was downsized, pricing was increased and the original issue discount was widened.

Moving to the secondary market, Hexion Specialty Chemicals Inc.'s term loan was softer after the company released earnings results for the second quarter and the first half of the year.

Fiserv Insurance Solutions decided to cancel syndication of its $385 million credit facility (BB-) as it appeared that the only way investors would get on board would be to make the deal more expensive than was desired, according to fund managers.

The credit facility consisted of a $50 million five-year revolver talked at Libor plus 450 basis points and a $335 million six-year term loan talked at Libor plus 450 bps with a 3.25% Libor floor and an original issue discount of 98.

Late last month, pricing on the revolver and the term loan had been increased from initial talk at launch of Libor plus 350 bps, and the original issue discount on the term loan had been increased from 981/2.

When the changes were announced, sources said that they resulted from a ratings glitch - Moody's Investors Service had decided that they will not provide a rating until certain audited financial information is available - and by the company's performance as bottom line EBITDA was kind of moving around.

"Heard it was still struggling after [the] changes. People want the Moody's rating. Heard tickets were coming in at Libor plus 500 bps and they were proposing a bigger OID and possibly tiered pricing," one fund manager remarked.

"It's not that there wasn't going to be a Moody's rating. Moody's was planning to rate after one year once the company had audited financials," a second fund manager said. "I think the overall concern was over the business - one third of the business bought back account receivables from pharmacies for workman's comp, which is a tough business - making this company less of a tech/software play, but more of a play on purchase receivables. Also the quality of earnings report they had done wasn't stellar."

"As for coming back to the market, no word. Probably will try to relaunch this after Labor Day, if at all," the second fund manager added.

Credit Suisse was acting as the lead bank on the credit facility that was going to 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.

AlliedBarton modifies term loan

AlliedBarton Security Services made some more revisions to its credit facility, this time increasing both the term loan size and the original issue discount offered on the debt, according to sources.

The term loan is now sized at $330 million, up from $325 million, and the original issue discount is now 96 compared to the 98 level that was announced at launch, sources said.

The change in the size of the term loan was done to account for the larger discount price, sources explained.

As for the spread on the term loan, that remained at Libor plus 450 bps with a 3.25% Libor floor.

"Sounds like it got quite a bit of interest once they did that," one source said regarding the increase to the original issue discount. "Sounded like over $100 million in new orders came in this morning so the guess is, it's pretty much done."

AlliedBarton's now $385 million, up from $380 million, senior secured credit facility (Ba3/B+) also includes a $55 million revolver priced at Libor plus 450 bps.

On Wednesday, news of other changes had already emerged on the deal, including amortization on the term loan was bumped up primarily in years two and three, the leverage and the interest coverage ratio covenants were tightened and the equity cure in the credit agreement was modified.

Commitments from lenders were due on Thursday.

Credit Suisse, HSBC and GE Capital are the lead banks on the deal.

Proceeds will be used to help fund the buyout of the company by the Blackstone Group - a transaction that is expected to close in August subject to certain government approvals and other customary conditions.

AlliedBarton is a King of Prussia, Pa.-based provider of highly trained security personnel.

Texas American restructures second-lien

Texas American Resources came out with a number of changes to its $175 million second-lien term loan, including flexing pricing higher, raising the Libor floor and sweetening call protection, according to sources.

The second-lien term loan is now priced at Libor plus 1,000 bps, up from initial talk of Libor plus 850 bps, the Libor floor was changed to 3.5% from 3.25%, and call protection is now non-callable for one year, then at 103, 102, 101, compared to just 103, 102, 101, sources said.

Unchanged on the second-lien term loan is the original issue discount, which is set at 97.

Credit Suisse and BNP Paribas are the lead banks on the second-lien loan, with Credit Suisse the left lead.

Texas American is also currently in the process of syndicating a $125 million three-year reserve-based revolving credit facility, which has an initial borrowing base of $75 million.

BNP Paribas is the lead bank on the revolver, which was launched to a small club of banks, with price talk of Libor plus 175 bps to Libor plus 250 bps based on use, and a 50 bps commitment fee.

Proceeds will be used by the Austin, Texas, energy company to refinance existing debt and for general corporate purposes.

Broadlane ups B loan size

Also modifying its deal was Broadlane, as the term loan B was upsized and the mezzanine financing was downsized so as to help lenders with allocations being that the term loan B was 1½ times oversubscribed, according to a market source.

The term loan B is now sized at $140 million, up from $135 million, and the mezzanine is now sized at $62.5 million, down from $67.5 million, the source said.

The company's now $155 million, up from $150 million, credit facility (Ba3/BB) also includes a $15 million revolver.

Both the term loan B and the revolver are priced in line with initial talk at Libor plus 525 bps with a 3.25% Libor floor and an original issue discount of 981/2.

Jefferies is the lead bank on the deal that will be used to help fund TowerBrook Capital Partners LP's acquisition of the company from Tenet Healthcare Corp. for about $155 million in cash.

Broadlane's senior management team will continue to retain a significant ownership interest in the company.

Total leverage is 4.4 times.

Broadlane is a Dallas-based technology-oriented health care services company.

Nations Petroleum deal reworked?

Rumor has it that Nations Petroleum's term loan may have undergone a number of changes, including a downsizing, and a pricing and discount increase, according to a market source.

Talk is that the term loan is now $220 million, down from $325 million, pricing is now Libor plus 1,250 bps, up from Libor plus 750 bps, and the original issue discount is now 97, up from 98, the source said.

There is a Libor floor on the loan but whether it stayed at the original 3.25% was not speculated on, the source added.

Official word on these changes was unattainable prior to press time.

Credit Suisse is the lead bank on the deal.

Proceeds will be used to fund the development of the heavy-oil Lost Hills field in the San Joaquin Valley Basin of Kern County, Calif.

Hexion trades down

Switching to trading news, Hexion's term loan weakened during market hours on not much volume following the release of the company's financial results, according to traders.

The term loan was quoted at 86 bid, 87 offered by one trader and at 85¾ bid, 86¾ offered by a second trader.

The first trader said that the term loan dropped to 85¼ bid, 86¼ offered for a bit, but didn't trade at those levels.

By comparison, on Wednesday, the term loan was quoted around 86½ bid, 87½ offered after trading at 863/4, the first trader added.

For the second quarter, Hexion reported a net loss of $180 million versus a net loss of $4 million in the second quarter of 2007 primarily due to the write-off of $167 million for previously-deferred merger costs associated with the possible acquisition of Huntsman Corp.

Hexion said that while it is continuing to comply with the terms of the merger agreement with Huntsman, it expensed previously capitalized merger costs because it believes that the transaction is not likely to be consummated.

Operating loss for the quarter was $105 million versus operating income of $89 million last year, also affected by the write-off.

And, revenues for the quarter were $1.67 billion, up 14% from $1.46 billion during the prior year period.

For the first six months of 2008, net loss was $186 million, compared to breakeven results in the comparable period last year.

Operating loss for the six month period was $23 million, compared to operating income of $193 million in the first six months of 2007.

Sales for the first six months were $3.3 billion, a 14% increase from $2.9 billion last year.

And, adjusted EBITDA was $645 million for the last 12-month period ended June 30.

Hexion is a Columbus, Ohio-based thermoset resins company.

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