DaVita, RCN Cable free to trade; SuperMedia, Dex West/East, R.H. Donnelly up on merger

By Sara Rosenberg

New York, Aug. 21 - DaVita Inc. allocated its term loans on Tuesday morning, and the debt then hit the secondary market with the B-2 tranche quoted above its original issue discount price. RCN Cable broke for trading, too.

In more secondary happenings, SuperMedia Inc.'s term loan was stronger as news emerged that the company will be merging with Dex One Corp. in a stock-for-stock transaction, and bank debt at Dex One's subsidiaries was also better.

DaVita starts trading

DaVita's term loans freed up for trading on Tuesday with the $1.65 billion seven-year term loan B-2 quoted at 99½ bid, par offered on the break, then it moved to 99 5/8 bid, par 1/8 offered, according to a trader.

The company's $3 billion of debt (Ba2/BB-) also includes a $1.35 billion five-year term loan A-3 that was seen by another trader at 98½ bid, 99 offered.

Pricing on the B-2 loan is Libor plus 300 bps, after flexing earlier from talk of Libor plus 325 bps to 350 bps. There is a 1% Libor floor as well as 101 soft call protection for one year, and it was sold at an original issue discount of 99.

Meanwhile, the term loan A-3 is priced at Libor plus 250 bps.

J.P. Morgan Securities LLC, Bank of America Merrill Lynch, Barclays, Credit Suisse Securities (USA) LLC, Goldman Sachs & Co., Morgan Stanley Senior Funding Inc., SunTrust Robinson Humphrey Inc. and Wells Fargo Securities LLC are leading the loans.

DaVita funding acquisition

DaVita will use its new term loans and $1.25 billion of 5¾% senior notes to finance the purchase of HealthCare Partners for about $4.42 billion, consisting of $3.66 billion in cash and roughly 9.38 million shares of DaVita common stock, as well as for general corporate purposes.

Closing is expected early in the fourth quarter, subject to receipt of Hart-Scott-Rodino approval, obtaining the approval of HealthCare Partners' owners and other customary conditions.

At close, the combined company will be named DaVita HealthCare Partners Inc.

DaVita is a Denver-based provider of kidney care services for those diagnosed with chronic kidney disease. HealthCare Partners is a Torrance, Calif.-based operator of medical groups and physician networks.

RCN tops par

Another deal to begin trading was RCN Cable, with its $585 million four-year term loan B quoted at par bid, par ½ offered on the open, and then it rose to par ¼ bid, par ¾ offered, according to a market source.

Pricing on the B loan is Libor plus 400 bps with a 1.25% Libor floor, and it was sold at an original issue discount of 991/2. There is 101 soft call protection for one year.

During syndication, the spread on the term loan B was reduced from Libor plus 425 bps.

The company's $672 million credit facility also provides for a $40 million three-year revolver and an about $47 million four-year term loan A, both priced at Libor plus 400 bps with no Libor floor.

SunTrust Robinson Humphrey Inc., GE Capital Markets and TD Securities (USA) LLC are leading the deal that is being used by the broadband services provider to refinance existing bank debt.

SuperMedia strengthens

Also in trading, SuperMedia's term loan got a sizeable lift on Tuesday after the company announced that it will be merging with Dex One, according to a trader.

The term loan was quoted at 68½ bid, 70½ offered, up from 60 bid, 62 offered, the trader said.

Under the agreement, Dex One shareholders will receive 0.20 shares in Dex Media per Dex One share and SuperMedia shareholders will receive 0.4386 shares in Dex Media per SuperMedia share.

At closing, which is expected in the fourth quarter, Dex One shareholders are expected to own about 60% and SuperMedia shareholders are expected to own around 40% of the combined company.

Dex subsidiary debt gains

Dex One's subsidiaries Dex West, Dex East and R.H. Donnelley Inc. also saw improvements in secondary levels with the merger news, other traders remarked.

The Dex West term loan was quoted by one trader at 64 bid, 66 offered, up from around 61 bid, 63 offered, by a second trader at 63 bid, 65 offered, by a third trader at 64 bid and by a fourth trader at 63 bid, 64 offered, up from 60 bid, 62 offered.

The Dex East term loan was seen by a trader at 61¼ bid, 63¼ offered, up from 56 bid, 58 offered, while a different trader was quoting it at 61 bid, and a third trader was quoting it at 60 bid, 62 offered, up from 55½ bid, 57½ offered.

And, the R.H. Donnelley term loan was quoted by two traders at 57 bid, 59 offered, up from 51 bid, 53 offered, and by a third trader at 54 bid, 56 offered, up from 51 bid, 53 offered.

SuperMedia/Dex amendments

Completion of the merger is subject to SuperMedia and Dex One amending their credit facilities as well as approval by both companies' shareholders. The companies anticipate that the new Dex Media will be better positioned to retire debt with amended and extended lender agreements, a news release said.

On a pro-forma basis for the full year 2011, the combined company would have reported $3.1 billion of revenue, $778 million of non-GAAP operating income, $1.2 billion of non-GAAP adjusted EBITDA, cash from operations of $657 million and non-GAAP free cash flow of $610 million.

For the first half of 2012, the combined company would have reported pro-forma revenue of around $1.4 billion, operating income of $290 million, non-GAAP adjusted EBITDA of $586 million, cash flow from operations of $340 million and non-GAAP free cash flow of $322 million.

SuperMedia is a Dallas-based directory publisher. Dex One is a Cary, N.C.-based marketing services provider.

Travelport BWIC

A Bid-Wanted-In-Competition (BWIC) on about $10 million of Travelport Ltd.'s holdco A loan surfaced in the morning, with market players being asked to get their bids in by 11 a.m. ET on Wednesday, according to a trader.

The A loan was being quoted between 30 bid, 40 offered, the trader added.

Travelport is an Atlanta-based provider of transaction processing services to the travel industry.

Warner Chilcott closes

Warner Chilcott plc, a Dublin-based specialty pharmaceutical company, completed its $600 million of new senior secured term loans (Ba3/BBB-) consisting of a $300 million term loan B-4/5 due August 2017 and a $300 million term loan B-1 due March 2018, according to a news release.

Pricing on the term B-4/5 is Libor plus 300 bps, and it was sold at an original issue discount of 99½ after firming during syndication at the tight end of talk of Libor plus 300 bps to 325 bps with a discount of 99 to 991/2. There is no Libor floor and 101 soft call protection for one year.

The term B-1 is priced at Libor plus 325 bps with a 1% Libor floor, and it was sold at a discount of 991/4, after tightening from initial talk of 99. This debt also has 101 soft call protection for one year.

Bank of America Merrill Lynch and Goldman Sachs & Co. led the deal that will be used with cash on hand to pay a special dividend to ordinary shareholders of $4 per share, or about $1 billion in total.

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