CB Richard Ellis outlines expected pricing on $2.2 billion of term loan debt

By Sara Rosenberg

New York, Nov. 31 - CB Richard Ellis Group, Inc. detailed expected pricing on its proposed $2.2 billion in senior secured term loan debt as it filed the loan commitment letter in an 8-K with the Securities and Exchange Commission on Wednesday.

The $1.2 billion five-year term loan A is expected to price at Libor plus 150 basis points and the $1 billion seven-year term loan B is expected to price at Libor plus 175 bps, the filing said.

Credit Suisse is the lead bank on the deal.

CB Richard Ellis is planning to leave its $600 million revolving credit facility in place, but amend it to allow for the acquisition and raise pricing to Libor plus 150 bps to reflect the increased debt levels. However, the company does have a commitment for a replacement $600 million revolver as a cautionary measure.

Financial covenants will include a maximum leverage ratio of 3.75 to 1.00 and a minimum interest coverage ratio of 2.25 to 1.00.

There is a $300 million accordion feature.

Proceeds will be used to fund the acquisition of Trammell Crow Co. for $49.51 per share of common stock in cash. The transaction is valued at $2.2 billion, including the assumption of Trammell's corporate debt as well as transaction and integration costs.

The acquisition is expected to increase the company's net debt/EBITDA ratio to 2.4 times, with an interest coverage ratio of 6.0 times on a pro forma 2006 basis.

Upon completion of the transaction, the company will have combined pro-forma 2006 revenues of $4.4 billion and 21,000 employees.

The acquisition is expected to close either in late 2006 or early 2007, subject to approval by Trammell's shareholders and federal regulatory agencies as well as other customary conditions.

CB Richard Ellis is a Los Angeles-based commercial real estate services firm. Trammell is a Dallas-based provider of commercial real estate services.

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