CDW extends deadline, OID expected to widen; LBO deals still sliding; LCDX heads lower

By Sara Rosenberg

New York, Jan. 18 - CDW Corp. decided to keep the books open on its institutional term loan past the Friday commitment deadline and is anticipating coming out with changes, primarily to the original issue discount.

In the secondary, leveraged buyout financing deals, such as Texas Competitive Electric Holdings Co. LLC (TXU), First Data Corp., Alltel Communications Inc., Freescale Semiconductor Inc. and HCA Inc., continued to see selling pressure on Friday, and LCDX 9 was weaker as well.

CDW extended the commitment deadline on its $2.2 billion institutional term loan (B2/BB-) from Friday to an undetermined date as the banks are still working with accounts to get the deal wrapped up, according to market sources.

In addition, it is anticipated that modifications to the transaction will be announced during the week of Jan. 21, with the original issue discount being the main target, sources said.

The expectation is that investors will be given a larger original issue discount compared to the current guidance that is in the 96 context, but that the actual spread over Libor - which is 300 basis points - will not change, sources added.

Lehman Brothers, JPMorgan, Deutsche Bank and Morgan Stanley are the lead banks on the term loan, with Lehman the left lead.

Proceeds from the deal, which already funded back in October, were used to help back the leveraged buyout of the company by Madison Dearborn Partners LLC and Providence Equity Partners Inc. for $87.75 in cash per share. The transaction was valued at $7.3 billion.

In connection with the LBO, the company also got an $800 million ABL revolving credit facility that was syndicated late last year at pricing of Libor plus 150 bps.

Based on Sept. 30 financials, senior secured leverage is just under 5.0 times. By comparison, when the ABL was being marketed, based on June 30, 2007 financials, senior secured leverage was at 5.0 times even.

Other financing for the LBO came from bridge loans that are expected to be taken out with bonds. The contemplated high-yield offering totals $1.94 billion, consisting of $890 million senior unsecured cash-pay notes, $300 million senior unsecured PIK toggle notes and $750 million senior subordinated notes.

CDW is a Vernon Hills, Ill., provider of technology products and services to business, government and education customers.

LBO names continue to weaken

Switching to trading news, the large leveraged buyout financing deals were still inching lower during Friday's session, continuing a trend that has been apparent for a little while now, according to traders.

For example, Texas Competitive Electric, a Dallas-based energy company, saw its term loan B-2 quoted at 95 7/8 bid, 96½ offered, down from 96 bid, 96¾ offered, one trader said.

First Data, a Greenwood Village, Colo., provider of electronic commerce and payment services, saw its term loan B-2 quoted at 91 7/8 bid, 92 5/8 offered, down from 92¼ bid, 93 offered, the trader continued.

Alltel, a Little Rock, Ark., provider of wireless voice and data communications services, saw its term loan B-3 quoted at 93¾ bid, 94½ offered, down from 94 1/8 bid, 94 3/8 offered, the trader added.

Freescale Semiconductor, an Austin, Texas, designer and manufacturer of embedded semiconductors, saw its term loan quoted at 87¼ bid, 88¼ offered, down from 87¾ bid, 88¾ offered, a second trader remarked.

HCA, a Nashville, Tenn., health care services company, saw its term loan quoted at 93 1/8 bid, 94 1/8 offered, down from 93¾ bid, 94½ offered, the second trader said.

According to the second trader, the cash market felt a little stronger in the morning but "any time there's positive strength guys show up with a bid and as things get hit the market adjusts."

Basically, one bid gets hit so more sellers come into the market and because there aren't enough buyers out there, the market moves back down, the trader explained.

LCDX dips

LCDX 9 moved down on Friday afternoon after feeling slightly stronger in the morning hours, according to a trader.

The index went out around 94.25 bid, 94.50 offered, down from 94.75 bid, 95 offered, the trader said.

"Bush came on and reiterated the need for an economic stimulus and things started trailing from there," the trader explained.

On Friday, President Bush announced a plan for about $145 billion in tax relief to help the economy. The tax incentives would be for businesses as well as for individuals.

Wyle closes

Wyle Laboratories Inc. completed its acquisition of RS Information Systems, according to a news release.

To help fund the transaction, Wyle got a new $230 million credit facility (Ba3/BB) consisting of a $30 million revolver and a $200 million term loan B, with both tranches priced at Libor plus 400 bps.

The term loan B was sold at an original issue discount of 99.

During syndication, the discount on the term loan B firmed up at the wide end of original guidance of 99 to 991/2.

Wachovia and CIT Group acted as the lead banks on the deal, which was also used to refinance some debt.

Wyle is an El Segundo, Calif.-based provider of specialized engineering, scientific and technical services.

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