CB Richard Ellis term loan B lenders expected to recommit to new lower priced term loan C

By Sara Rosenberg

New York, April 14 - CB Richard Ellis Services' proposed term loan C, which essentially launched via a conference call on Wednesday to existing lenders, is expected to hold the interest of existing term loan B investors as the company is seen by some as a solid performer that would be hard to replace in investment portfolios.

Basically, the company is looking to amend its credit facility to allow for the issuance of this $295 million term loan C that will be used to replace the existing approximately $297 million term loan B at a cheaper rate to the company, a fund manager explained. Credit Suisse First Boston is the lead bank on the deal.

The term loan C, which is being offered at par, is priced with an interest rate of Libor plus 250 basis points, 75 basis points lower than the existing term loan B.

Furthermore, the company is looking to increase its $90 million revolver by $60 million to $150 million "for added liquidity given that they've grown so much," the fund manager said.

The new term loan C would mature on March 31, 2010, and the expanded revolver would mature on March 31, 2009. The existing term loan B is due on Dec. 31, 2008, and the existing revolver is due on July 20, 2007.

Investor responses on the amendment are due April 21, recommitments are due on April 28 and closing is expected around May 3.

"I'm sure we will [recommit]," the fund manager said. "I hate to see them take pricing down by all that much. But with not a lot of high quality, decent names out there with low senior leverage and decent cash flow, I'd hate to lose this.

"My guess is that everyone will recommit. The loan has been trading above 101 since they did the revised deal in September so it was looking for a repricing."

In September, the company launched an amendment and restatement of its credit facility (closing occurred in October) that called for the $300 million term loan B and the $90 million revolver, lowering pricing on its previous facility, making this the company's second repricing effort.

CB Richard Ellis is a Los Angeles real estate services company.

Juno sparks enthusiasm

Juno Lighting Inc.'s proposed $210 million credit facility, which launched via a bank meeting on Wednesday, is expected to syndicate smoothly as the business seems solid, enhanced by the anticipation that a new product will be released soon that could do quite well and leverage will eventually be reduced.

"It's kind of a neat little company," a buyside source said. "They have a neat new little lighting product that once they get out there the customers should make them a ton of money.

"It sounds pretty positive. [The] management team is decent. Earnings, topline, have been stable for five years. [It] looks pretty solid.

"Leverage isn't great. It's 3.2 times through the first lien and 4.5 times through the second lien. But, the company has low capex requirement. [The company is] generating $25 to $30 million of free cash flow per year that could be used for debt reduction, so it looks pretty safe," the source continued.

"Interest coverage is pretty solid at just over four times. As that leverage goes down that interest coverage will get better and better," the source said.

The facility consists of a $150 million first lien term loan with an interest rate of Libor plus 300 basis points and a $60 million second lien term loan with an interest rate of Libor plus 575 basis points. The second lien tranche has call protection of 102 in year one and 101 in year two.

Proceeds would be used to retire $160 million of long-term debt and pay a $50 to $60 million dividend to its preferred and common stockholders.

"Some existing bondholders will probably look to play around with this since they're losing the bonds," the source said. "I would imagine institutional investors would be pretty comfortable with it, too.

"I can't imagine on the second lien they'll flex that down but they might be able to on the first lien piece depending on how quickly the book fills up," the source speculated.

Wachovia is the lead bank on the deal.

Juno is a Des Plaines, Ill., lighting fixtures manufacturer.

Adesa sees no institutional launch

Adesa Inc.'s $150 million term loan B looks like it won't be distributed to institutional investors. However, the B loan is not expected to disappear from the credit facility structure but rather appears to have been spoken for by a lot of pro rata guys who have already committed to the tranche, according to a market source.

"They've committed enough where a slight modification might make it work," the source explained. "No need to do anything on pricing but there might be some size shifting. Commitment deadline is tomorrow so that's when they'll see where everything works out. Maybe by the end of the week things will get sorted out."

The $350 million of pro rata bank debt that launched via a bank meeting toward the end of March was already oversubscribed by the end of the launch day mostly on strong interest from relationship banks. It was at that time that the company started considering not launching its $150 million term loan B but rather just settling with an all pro rata credit facility.

The $150 million term loan B was not launched at the pro rata bank meeting primarily because institutional tranches are usually launched closer to the bond deal and the bond deal isn't expected to hit the high-yield market until May, a source previously explained.

The pro rata portion of the facility consists of a $150 million five-year revolver with an interest rate of Libor plus 225 basis points and a $200 million five-year term loan A with an interest rate of Libor plus 225 basis points.

Upfront fees on the allocated amount are 62.5 basis points for a $50 million commitment, 50 basis points for a $35 million commitment and 37.5 basis points for a $25 million commitment.

The $150 million six-year term loan B is priced with an interest rate of Libor plus 250 basis points.

UBS and Merrill Lynch are the joint lead arrangers on the deal, with UBS listed on the left.

Security for the credit facility is expected to be a lien on some of the assets.

Proceeds from the loan combined with proceeds from a $150 million senior subordinated notes offering and an initial public offering of Adesa's common stock will be used to help support Adesa's spin-off from Allete Inc.

More specifically, Adesa will replace and repay its existing credit facility, pay a $100 million dividend to Allete, repay $200.2 million of outstanding debt owed to unaffiliated third parties and repay all outstanding intercompany debt owed to Allete and its subsidiaries, which totaled $136.1 million as of Dec. 31, 2003.

The IPO is expected to be completed in the second quarter of 2004. After the IPO, Allete will own at least 80% of the equity of Adesa. The company anticipates completing the subsequent spin-off within four months of the IPO, according to an Allete news release.

Adesa is a Carmel, Ind., operator of used vehicle and auto salvage auctions.

NTL launch early next week

NTL Cable is expected to launch an approximately $300 million credit facility to retail investors early next week now that a senior managing agents call took place this week, according to an informed source.

The $300 million facility, which is expected to carry an interest rate in the range of Libor plus 300 basis points, will be carved out of the company's newly closed £2.425 billion senior credit facility, the source explained.

Credit Suisse First Boston, Goldman Sachs & Co., Deutsche Bank, and Morgan Stanley are the lead banks on the deal.

The structure of the U.S. loan remains to be determined.

On Wednesday, NTL announced that it obtained a £2.425 billion senior credit facility consisting of a £1.275 billion tranche A loan bearing interest of Libor plus 225 basis points, a £900 million equivalent tranche B loan bearing interest at Libor plus 275 basis points and a £250 million revolver bearing interest at Libor plus 225 basis points.

Proceeds from the credit facility, combined with proceeds from a bond offering, were used to repay in full the existing senior credit facility, most of which had been due in 2005, as well as to redeem the outstanding Triangle debentures due 2007 and the Diamond Holdings notes due 2008 in May 2004.

NTL Cable is a New York City-based cable television company.

American Safety gains speed

American Safety Razor Co.'s proposed term loans have gained momentum as a number of commitments flew into the books on Tuesday leaving the first-lien term loan basically oversubscribed and the second lien term loan pretty much done as well, according to a fund manager.

The deal seemed to have gotten off to a slow start following its beginning of April bank meeting, but speculation is that the "sluggishness" may just have been the result of investors being backed up and holidays, the fund manager continued.

The $150 million seven-year first lien term loan (B2/B) is priced with an interest rate of Libor plus 350 basis points, and the $50 million 71/2-year second lien term loan (B3/CCC+) is priced with an interest rate of Libor plus 650 basis points. There is call protection of 102 in year one and 101 in year two on the second lien tranche.

The facility also contains a $25 million five-year revolver (B2/B) priced with an interest rate of Libor plus 350 basis points.

UBS is the lead bank on the deal.

Proceeds will be used to refinance existing debt.

Following completion of the transaction, first lien leverage will be 3.2 times and total leverage will be 4.3 times, according to the source.

American Razor, a J.W. Childs Associates LP portfolio company, is a Verona, Va., manufacturer of personal care consumer products primarily consisting of shaving razors and blades.

Premcor closes

Premcor Inc. closed on its new $1 billion senior secured revolver due in April 2009, according to a company news release. Citigroup Global Markets Inc. acted as the sole lead arranger and book running manager for the new deal, Fleet National Bank acted as syndication agent, and Bank One, and SunTrust were co-documentation agents.

The facility consists of a $900 million asset-based revolver (Ba2/BB+) with grid-based pricing that can range from Libor plus 200 to 250 basis points depending on utilization and a $100 million synthetic term loan with an interest rate of Libor plus 225 basis points.

The new facility replaces the company's existing $785 million credit facility. With this new deal Premcor managed to extend the maturity date of the facility, reduce the cost of issuing letters of credit, obtain less restrictive covenants and expand the cash borrowing ability of the company, according to the release.

Proceeds from the new revolver will be used to provide letters of credit in support of crude oil and feedstock purchases for the company's refinery operations, and to provide for other working capital needs.

Premcor is an Old Greenwich, Conn., petroleum company.

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