Tallgrass, Warner Music break; Dex One debt rises; P2 Energy, Windsor Financing set talk

By Sara Rosenberg

New York, Oct. 25 - Tallgrass Energy Partners LP's credit facility made it way into the secondary market on Thursday, and Warner Music Group Corp. (WMG Acquisition Corp.) freed up after reducing the spread on its term loan.

Also in trading, Dex One Corp. saw its Dex West, Dex East and R.H. Donnelley Inc. bank debt head higher with the release of third-quarter numbers.

Moving to the primary, P2 Energy Solutions Inc. and Windsor Financing LLC came out with guidance on their new deals, and Walter Investment Management Corp. announced loan plans and began floating price talk ahead of its launch.

Tallgrass frees up

Tallgrass Energy's credit facility began trading on Thursday, with the $875 million six-year term loan B quoted at 99¼ bid, par ¼ offered on the open and then it moved up to 99¾ bid, par ½ offered, according to a market source.

Pricing on the B loan is Libor plus 400 basis points with a 1.25% Libor floor, and it was sold at an original issue discount of 99. There is 101 soft call protection for one year.

The company's senior secured credit facility (Ba3/BB+) also includes a $150 million five-year revolver priced at Libor plus 400 bps with a 50 bps undrawn fee and sold at a discount of 99.

In addition, there is a five-year, delayed-draw for 18 months term loan of which about $150 million was allocated with the ability for that size to increase, another source said. Pricing is Libor plus 400 bps with a 0.75% Libor floor and a 100 bps undrawn fee, and the debt was sold at a discount of 99.

Recently, the delayed-draw loan saw the addition of the Libor floor and the undrawn fee was increased from 50 bps. Also, at launch, the size was outlined at $250 million, but it is now still to be determined.

Tallgrass lead banks

Barclays is the bookrunner on Tallgrass' credit facility and a joint lead arranger with Bank of America Merrill Lynch, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc. and RBC Capital Markets LLC.

Proceeds will be used to fund the purchase of assets from Kinder Morgan Energy Partners LP for a total cash consideration of about $1.8 billion and for working capital purposes.

The assets being acquired include Kinder Morgan Interstate Gas Transmission, Trailblazer Pipeline Co., the Casper-Douglas natural gas processing and West Frenchie Draw treating facilities in Wyoming and Kinder Morgan's 50% interest in the Rockies Express Pipeline.

Closing is expected in the fourth quarter, subject to Federal Trade Commission approval.

Senior secured and total leverage is 3 times, and equity to total capitalization is about 53%.

Tallgrass, a midstream gas pipeline system, is owned by management, Kelso & Co. and a limited group of investors led by the Energy & Minerals Group, including Magnetar Capital.

Warner hits secondary

Warner Music also broke, with its $600 million six-year first-lien covenant-light term loan quoted at par bid, par ½ offered, according to a trader.

Pricing on the loan is Libor plus 400 bps, after flexing from talk of Libor plus 475 bps to 500 bps, a source remarked. The 1.25% Libor floor, original issue discount of 99 and 101 soft call protection for one year were left intact.

The company's $750 million credit facility (Ba2/BB-) also includes a $150 million revolver.

Credit Suisse Securities (USA) LLC, UBS Securities LLC, Barclays, Macquarie and Nomura are leading the deal that will be used with $727 million of senior secured notes to refinance existing debt.

On Wednesday, the notes were increased from $635 million and the term loan was decreased from $630 million, resulting in about $60 million of additional debt being raised. That debt will reduce the amount of cash used for the refinancing.

Warner Music is a New York-based music content company.

Dex debt strengthens

Dex One's subsidiaries Dex West, Dex East and R.H. Donnelley Inc. saw trading levels rise as third quarter financial results were announced, according to a trader.

Dex West was quoted at 67 bid, 68½ offered, up from 66½ bid, 67½ offered, Dex East was quoted at 65½ bid, 67 offered, up from 65 bid, 66½ offered, and R.H. Donnelley was quoted at 62½ bid, 64 offered, up from 62 bid, 63½ offered, the trader said.

For the third quarter, Dex One reported a net loss of $12.7 million, or $0.25 per share, compared to net income of $22.2 million, or $0.44 per share, in the prior year.

Net revenue for the quarter was $319.7 million, down from $360.1 million in the third quarter of 2011.

Furthermore, adjusted EBITDA for the quarter was $137.1 million, versus $145.7 million last year.

Dex updates outlook

With third-quarter numbers, Dex One narrowed the range on full-year guidance for net revenue, adjusted EBITDA and adjusted free cash flow.

Net revenue is now estimated at $1.275 billion to $1.3 billion, versus prior guidance of $1.25 billion to $1.3 billion.

Adjusted EBITDA is expected at $535 million to $565 million, compared to prior estimates of $525 million to $575 million.

And, adjusted free cash flow for the year is guided at $320 million to $350 million, versus $310 million to $360 million previously.

Dex amendments in works

Dex One also said that the credit facilities amendments being proposed in connection with its merger with SuperMedia Inc. are still being negotiated with the steering committee.

However, it is currently thought that the parties may not be able to obtain sufficient approval from the senior secured lenders to any proposed amendments, and therefore, alternatives are being considered to the current transaction structure to obtain the necessary lender consents, the company disclosed in an 8-K filed with the Securities and Exchange Commission.

These alternatives include a prepackaged restructuring of the parties' senior secured debt through a Chapter 11 filing,

The expectation is that a bankruptcy proceeding may result in the implementation of possible amendments that may garner sufficient, though not unanimous, support from lenders, while otherwise maintaining the basic economic terms of the merger agreement.

Dex amendment details

Under the amendment launched in September, R.H. Donnelley's loan due Oct. 24, 2016 would be extended to Dec. 31, 2016 at pricing of Libor plus 625 bps with a 3% floor initially, stepping up to Libor plus 650 bps with a 3% floor. Current pricing is Libor plus 600 bps with a 3% floor.

Dex East's loan due Oct. 24, 2014 would be extended to Dec. 31, 2016 at pricing of Libor plus Libor plus 250 bps with a 3% Libor floor, versus current pricing of Libor plus 250 bps with no floor. The spread on the extended debt will then step up to Libor plus 300 bps with a 3% floor.

Dex West's loan due Oct. 24, 2014 would be extended to Dec. 31, 2016 at pricing of Libor plus 425 bps with a 3% Libor floor initially, stepping up to Libor plus 450 bps with a 3% floor. Current pricing is Libor plus 400 bps with a 3% floor.

And, SuperMedia's loan due Dec. 31, 2015 would be extended to Dec. 31, 2016 at pricing of Libor plus 800 bps with a 3% floor, unchanged form current pricing.

SuperMedia steady

Despite the amendment update, SuperMedia's term loan was flat at 64½ bid, 65½ offered, the trader continued.

Through the proposed merger, Dex One and SuperMedia shareholders will exchange their shares for shares in the new company, Dex Media. Dex One shareholders will get 0.2 share for each Dex One share they own, and SuperMedia shareholders will get 0.4386 share for each SuperMedia share they own.

Dex One shareholders are anticipated to own about 60% and SuperMedia shareholders will own about 40% of the combined company.

Closing is expected this quarter, subject to the amendment of the credit facilities.

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

P2 reveals talk

Over in the primary, P2 Energy held a bank meeting on Thursday morning and announced price talk on its first- and second-lien term loans, according to a market source.

The $220 million first-lien term loan is talked at Libor plus 475 bps with a 1.25% Libor floor, an original issue discount of 99 and 101 soft call protection for one year, the source said.

And, the $110 million second-lien term loan is talked at Libor plus 875 bps with a 1.25% Libor floor, a discount of 98½ and call protection of 103 in year one, 102 in year two and 101 in year three.

Commitments for the $355 million credit facility, which also includes a $25 million revolver, are due on Nov. 8.

Jefferies & Co. is leading the deal that will be used to refinance an existing credit facility and pay a distribution to shareholders.

Total leverage is 5.7 times.

P2 is a provider of software and data solutions for the upstream oil and gas industry.

Windsor discloses guidance

Windsor Financing also held a bank meeting, and its $246 million term loan B (Ba2/BB+) was launched with talk of Libor plus 375 bps to 400 bps with a 1% Libor floor, an original issue discount of 99 and 101 soft call protection for one year, according to a market source.

Commitments are due at

Lead bank, Morgan Stanley Senior Funding Inc., is seeking commitment for the loan by 10 a.m. ET on Nov. 8, the source said.

Proceeds will be used to refinance senior secured notes and subordinated secured notes and fund reserve accounts.

Windsor is a Charlotte, N.C.-based limited liability company that finances the operations of some electric and steam generating plants.

Walter readies deal

Walter Investment scheduled a conference call for 10 a.m. ET on Friday to launch a $700 million five-year senior secured credit facility that is being led by Credit Suisse Securities (USA) LLC and Morgan Stanley Senior Funding Inc., according to a market source.

The facility consists of a $100 million revolver, and a $600 million first-lien term loan talked at Libor plus 475 bps to 500 bps with a 1.25% Libor floor, an original issue discount of 99 and 101 repricing protection for one year, the source remarked.

Proceeds will be used to repay a roughly $444 million first-lien term loan, and for working capital and general corporate purposes.

Walter Investment is a Tampa, Fla.-based asset manager, mortgage servicer and mortgage portfolio owner specializing in less-than-prime, non-conforming and other credit-challenged mortgage assets.

Progressive Waste closes

In other news, Progressive Waste Solutions Ltd. completed its $2.35 billion credit facility (Ba1/BBB-) that consists of a $1.85 billion revolver due 2017 and a $500 million term loan B due 2019, according to a 6-K filed with the Securities and Exchange Commission on Thursday.

Pricing on the B loan is Libor plus 275 bps with a 0.75% 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 revolver was upsized from $1.75 billion, the Libor floor on the term loan B was reduced from 1% and the discount on the B tranche came at the tight end of the 99 to 99½ guidance.

Bank of America Merrill Lynch, TD Securities, CIBC World Markets Corp. and J.P. Morgan Securities LLC led the deal that was used to refinance existing debt.

Progressive Waste is Vaughan, Ont.-based full-service, vertically integrated waste management company.

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