Skype OID emerges; Windstream amendment well received; Swift Transportation rise continues

By Sara Rosenberg

New York, Sept. 29 - Skype Technologies (Springboard Finance LLC) came out with guidance on the original issue discount on its term loan as the company held a bank meeting to launch the deal into syndication.

In other news, Windstream Corp.'s amendment and extension proposal appeared to be well received by lenders during Wednesday's conference call, and following the call, some were quoting the company's term loan B a little higher in trading while others thought it to be flat.

Also in trading, Swift Transportation Co. Inc.'s term loan B was once again with the momentum still attributed to amendment chatter.

Skype reveals OID

Skype held a bank meeting on Wednesday afternoon to kick off syndication on its credit facility, and in connection with the launch, the original issue discount on the term loan was announced, according to a fund manager.

The $600 million five-year term loan was presented to lenders with an original issue discount of 97, the source said.

As was previously reported, price talk on the term loan is Libor plus 600 basis points with a 2% Libor floor.

Skype's $630 million credit facility (B1/B) also includes a $30 million four-year revolver.

JPMorgan, Barclays and RBC Capital Markets are the lead banks on the deal.

Skype to be bought by investor group

Proceeds from Skype's credit facility will be used to help finance the purchase of a 65% stake in the company by an investor group led by Silver Lake and including Index Ventures, Andreessen Horowitz and the Canada Pension Plan Investment Board.

Other funds for the buyout will come from equity from both the buying group and the seller.

eBay Inc., the current owner of Skype, will retain a 35% interest in the company. eBay is expected to receive about $1.9 billion in cash upon the completion of the sale and a subordinated note from the buyer in the principal amount of $125 million.

The acquisition, which is not subject to a financing condition, is expected to close in the fourth quarter.

Skype is a Luxembourg-based software that enables individuals and businesses to make free video and voice calls, send instant messages and share files with other Skype users.

Windstream launches amendment

Windsteam held a conference call on Wednesday afternoon to launch its loan amendment and extension to investors, and based on the reaction from those on the call, some are already guessing that the amendment will be successful.

"At the current time, there is no reason to believe that this amendment will have any issue passing; virtually no pushback on the call," one source remarked.

Under the amendment, the company is looking to extend all or a portion of its credit facility debt, and in return, lenders would get higher pricing.

In addition, lenders are being offered a 5 bps consent fee whether or not they extend.

And, revolver lenders are being offered a 75 bps extension fee on top of the consent fee.

JPMorgan and Bank of America are the joint lead arrangers on the deal.

Windstream details

More specifically, Windstream wants to extend a portion or its entire $500 million revolver to July 17, 2013 from July 17, 2011. Pricing on the extended revolver would be Libor plus 225 bps with a 50 bps undrawn fee, as opposed to pricing on the non-extended revolver of Libor plus 125 bps with a 25 bps unused fee.

The company also wants to extend some or its entire $283.3 million term loan A to July 17, 2013 from July 17, 2011. Pricing on the extended debt would be Libor plus 225 bps versus Libor plus 125 bps on the non-extended debt.

Amortization on the extended term loan A would be 2.75% per quarter beginning on July 1, 2011 with the balance due at maturity. By comparison, current amortization on the term loan A is $8.3 million on March 31, 2011 and $275 million on July 17, 2011.

And, the company is asking to extend a portion or its entire $1.372 billion term loan B to Dec. 17, 2015 from July 17, 2013. Pricing on the extended B loan would be Libor plus 275 bps versus Libor plus 150 on the non-extended.

Amortization on the term loan B would remain unchanged at 1% per annum, with the rest due at maturity.

Windstream requesting permission for notes

Windstream's amendment proposal is also asking lenders to allow for the issuance of senior secured notes in place of the incremental facility.

Other terms of the amendment include revising the definition of available distributable cash, changing the debt incurrence provision to allow the borrower to incur debt in lieu of acquired subsidiary debt and increasing the annual limitation on capital expenditures by an amount equal to 20% of acquired EBITDA.

Financial covenants contained in the existing credit facility, which include maximum total leverage and minimum interest coverage, will remain unchanged.

Consents on the amendment and commitments towards the extended debt are due on Oct. 7, with closing targeted for Oct. 19.

Windstream B loan firm

Following the lender call, Windstream's term loan B was unchanged to a little higher on the day, depending on which trader was asked.

One trader had the term loan B quoted at 97¼ bid, 98 offered, up from Tuesday's levels of 97 1/8 bid, 97 7/8 offered.

Meanwhile, a second trader had the loan quoted at 97½ bid, 98 offered, unchanged from previous levels.

Windstream is a Little Rock, Ark.-based provider of phone, high-speed internet and high-definition digital TV services.

Swift term loan going strong

Swift Transportation's term loan B continued to head higher during Wednesday's trading session on the back of amendment speculation, according to a trader.

The term loan B was quoted at 92 bid, 92½ offered, up from around 90 bid, 91 offered on Tuesday and 85 bid, 88 offered on Monday, the trader said.

Swift Transportation is a Phoenix-based truckload carrier.

Barnes & Noble closes

Barnes & Noble Inc. completed its $1 billion four-year asset-based revolving that was done in conjunction with the acquisition of Barnes & Noble College Booksellers Inc.

The revolver was used to refinance the credit facilities of both Barnes & Noble and Barnes & Noble College Booksellers, according to a news release.

The revolver is priced at Libor plus 375 bps.

During syndication, pricing was reduced from Libor plus 400 bps as a result of strong demand.

Bank of America, JPMorgan and Wells Fargo Retail Finance acted as the joint lead arrangers and bookrunners on the deal, with Bank of America the administrative agent.

Barnes & Noble is a New York-based bookseller.

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