CBD Media ups pricing; Levi Strauss heads lower; Tower Automotive stronger on amendment proposal

By Sara Rosenberg

New York, Oct. 19 - CBD Media LLC increased pricing on its in-market term loan D by 25 basis points on Tuesday morning as the company's leverage multiples will increase given the recently launched bond offering and various ratings actions that have surfaced.

In secondary doings, Levi Strauss & Co.'s floating-rate bank debt continued its decline during Tuesday's session, dropping by a half a point this time as the market was still feeling the affects of Levi's decision to keep its Dockers business. Meanwhile, Tower automotive Inc.'s first-lien debt headed higher by about half a point on news that the company is looking to get extra liquidity through a new accounts receivable securitization facility.

CBD Media's $153 million term loan D is now priced at Libor plus 250 basis points, with stepdowns to Libor plus 225 basis points and Libor plus 200 basis points based on leverage, according to a market source.

Originally, the deal was launched at Libor plus 225 basis points with a stepdown to Libor plus 200 basis points based on leverage, so essentially, with this latest move, the syndicate just added another notch to the pricing grid.

"I think, without the bonds, leverage was about 5½ times. With the bonds, leverage is over seven times," the source explained. "The deal is done. Allocations should happen in the next few days."

On Tuesday, CBD Media held a conference call for its $100 million eight-year senior note offering that is expected to price later this week.

Proceeds from the loan will be used to refinance the company's term loan C. The $23 million of extra liquidity gained through this term loan D will be used in combination with the bond proceeds and cash on hand to pay a dividend to equity holders.

On Tuesday, Moody's Investors Service lowered the existing ratings for CBD Media, including the senior secured facilities to B1 from Ba3, concluding the review for possible downgrade that began on Oct. 13.

Furthermore, Standard & Poor's lowered its corporate credit rating on CBD Media LLC to B from B+, removing the ratings from CreditWatch, where they were placed on Oct. 14.

Moody's said the ratings reflect the company's high leverage and consequent thin margin for error following the equity sponsor's history of dividends, and the increased level of financial risk is only somewhat mitigated by the modest level of business risk encountered by CBD, as the incumbent directory operator in the Cincinnati area.

Pro forma for the proposed transaction, debt to EBITDA is at 8.1 times, according to Moody's. "Given the relatively good level of free cash flow, we expect CBD to be able to de-lever and the company is likely to be closer to 7.5 times debt to EBITDA by year-end 2005," Moody's added.

S&P said the downgrade reflects a more aggressive financial policy and its belief that CBD will maintain debt leverage that is substantially above previous expectations following the company's debt issuances to pay about $127 million in dividends to equity holders.

Lehman and Bank of America are the lead banks on the loan, with Lehman listed on the left.

CBD Media is a Cincinnati multimedia publisher of yellow and white page directories.

Levi fall continues

Levi's floating-rate bank debt was quoted at 108 bid, 110 offered, according to a trader, down from Monday's levels of 108½ bid, 110½ offered, which were down one point on the bid side and half a point on the offer side.

The San Francisco-based marketer of brand name apparel explained that it would be more valuable to build on the approximately $1.4 billion annual worldwide revenue generating Dockers brand than to sell it, especially based on improved year-to-date business performance.

Tower Automotive up

Tower Automotive's first-lien bank debt was quoted at 97½ bid, 98 offered, up by half a point, as the company approached lenders with an amendment proposal that would allow the company to get a $200 million accounts receivable securitization facility - a move that would obviously enhance liquidity, a trader explained.

Consents are due Oct. 26, 51% of lender approval is needed for the amendment to pass, and in return for consents lenders would get a 12.5 basis point amendment fee.

Morgan Stanley is the lead bank on the deal.

Tower Automotive is a Novi, Mich., designer and producer of structural components and assemblies used by automotive original equipment manufacturers.

Consolidated Communications should clear

Consolidated Communications Inc.'s repricing is assumed to be done now that the syndicate reworked its pricing request "to meet halfway with investors" on Monday in anticipation of Tuesday's consent deadline, according to a market source. The source explained that with the change, finalizing the deal is just a matter of actually getting all the signatures in, processing them and documentation.

Pricing on the $315 million eight-year term loan B will now be reduced to Libor plus 250 basis points from Libor plus 275 basis points, as opposed to the original request for pricing to drop to Libor plus 225 basis points.

Furthermore, there will be a stepdown provision that would allow pricing to drop to Libor plus 225 basis points if two conditions are met - one, it can only occur after first quarter 2005, and two, the company needs to be taken off of negative watch by Moody's without a downgrade in ratings, the source explained.

The 101 soft call protection for one year against a repricing was left unchanged.

Citigroup and Credit Suisse First Boston are the lead banks on the deal, with Citigroup listed on the left.

Consolidated Communications is a Mattoon, Ill., telecommunications provider.

Allegheny has good momentum

Allegheny Energy Supply Co. LLC's proposed amendment that basically provides the company with a new $1.044 billion term loan B priced at Libor plus 275 basis points is "more than halfway there" on responses from only "a dozen or so investors," according to a market source. Consents aren't due until Thursday.

The amendment, which launched last Thursday, started off strong with some commitments placed before the end of the launch day and some existing lenders expressing interest in increasing their positions.

The new term loan B would be used to combine Allegheny's existing term loan B and term loan C into one large term loan with lower pricing. Currently, the company has a total of $1.244 billion of term B and term C debt, with the term B priced at Libor plus 300 basis points and the term C priced at Libor plus 425 basis points. The $200 million that is not being refinanced under the amendment is being paid down using $50 million of cash and $150 million of equity proceeds previously raised by parent company, Allegheny Energy Inc.

After closing on the amendment, once the company pays down $200 million of the new term B tranche using cash flow, net cash proceeds from asset sales or net cash proceeds from the issuance of equity, pricing will step down to Libor plus 250 basis points.

Citigroup is the lead bank on the deal.

Allegheny Energy Supply is Greensburg, Pa., owner and operator of electric generating facilities.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.