West Corp. eight-year notes talked at 9¼%-9½%, 10 years at 11¼% area

By Paul Deckelman

New York, Oct. 13 - Price talk and final timing emerged Friday on West Corp.'s upcoming $1.1 billion two-part note offering, high yield syndicate sources said, adding that there were also changes in the notes' covenants.

The sources said that the $650 million of eight-year senior notes is expected to yield in a range of 9¼% to 9½%, while the $450 million of 10-year senior subordinated notes was talked in the 11¼% area.

The books on the deal will close Monday, the sources said, with pricing expected late Monday or early Tuesday via joint bookrunners Deutsche Bank Securities, Lehman Brothers and Banc of America Securities LLC, along with co-manager Wachovia Securities.

West Corp., an Omaha, Neb.-based provider of outsourced communications solutions, is selling the notes in conjunction with a new $2.3 billion credit facility, proceeds from both going to help fund its leveraged buyout by Thomas Lee Partners and Quadrangle Group LLC.

The syndicate sources said that there had been a number of changes made in the notes' covenants since the deal first surfaced on Sept. 28.

In the provision for an incremental secured facility, this will now just be a fixed amount of $500 million, with the removal of language giving a choice of the greater of two amounts and referencing the company's pro forma EBITDA.

For the provision setting limits on the amount of debt the company is permitted to incur in connection with an acquisition, the limit on the fixed-charge ratio is changed to 2.0 times EBITDA from 1.75 times previously. Incurrence is permitted if it improves the fixed-charge coverage ratio or if leverage is neutral to decreasing.

For the provision establishing the general restricted payments basket, the starting percentage of total assets is decreased to 5% from 7% originally, and the amount required will now be the greater of either 5% of total assets or $150 million.

Additionally, fallaway covenants will now change to suspension covenants.

The eight-year senior notes are non-callable for the first four years after issue, while the 10-year subordinated notes are non-callable for the first five years.

The deal was marketed to potential investors through a roadshow that began on Oct. 4 and which was slated to conclude Monday.

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