CB Richard Ellis retranches, cuts spread; Aleris upsizes, trims pricing; Hayes up; ON Semi dips

By Sara Rosenberg

New York, Dec. 11 - CB Richard Ellis Group, Inc. moved some funds out of its term loan A and into its term loan B, while lowering pricing on the upsized term loan B tranche, and Aleris International Inc. increased the size of its credit facility, reverse flexed pricing on its term loan debt and added step downs.

In the secondary market, Hayes Lemmerz International Inc. saw its bank debt rise on positive third-quarter numbers and ON Semiconductor Corp. saw its term loan B soften in reaction to paydown expectations.

CB Richard Ellis made some changes to its $2.2 billion in senior secured term loan debt, including shifting some funds between the term loan A and term loan B tranches and reverse flexing pricing on the term loan B, according to a fund manager.

With the modifications, the five-year term loan A is now sized at $1.1 billion, down from an original size at launch of $1.2 billion, the fund manager said. Pricing on the loan remained unchanged at Libor plus 150 basis points.

Meanwhile, the seven-year term loan B is now sized at $1.1 billion, up from an original size at launch of $1 billion, and pricing on the paper was officially reduced to Libor plus 150 bps from original price talk at launch of Libor plus 175 bps, the fund manager added.

Rumor of the reverse flex to term loan B pricing has been circulating around the market since last week based on the tranche being oversubscribed.

Credit Suisse is the lead bank on the deal.

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.

Proceeds from the two term loans will be used to fund the acquisition of Trammell Crow Co. for $49.51 per common share 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.

CB Richard Ellis is planning to leave its $600 million revolving credit facility in place but will amend it to allow for the acquisition and will 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.

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

Aleris tweaks deal

Aleris also came out with a number of modifications to its credit facility on Monday, including upsizing the U.S. term loan B tranche and reducing spreads and adding step downs to both the U.S. and Euro term loans, according to a market source.

The seven-year U.S. term loan B facility (B2/B+) is now sized at $825 million, up from an original size of $700 million, pricing on the tranche was lowered to Libor plus 237.5 bps from original talk at launch of Libor plus 275 bps, and a step down to Libor plus 212.5 bps was added effective upon leverage being less than 4.0 times, the source said.

The seven-year Euro term loan B (B2/B+) facility stayed at $400 million dollar equivalent but pricing was lowered to Euribor plus 250 bps from original talk at launch of Euribor plus 275 bps, and a step down to Euribor plus 225 bps was added effective upon leverage being less than 4.0 times, the source remarked.

Aleris' now $1.975 billion credit facility also includes a $750 million five-year asset-based revolver priced at Libor plus 150 bps.

The additional $125 million of term loan debt that is now being raised is a result of the company's decision to reduce its senior subordinated notes offering by $100 million to $400 million and to raise $25 million of extra capital, the source explained.

Because of the loan upsizing, senior secured leverage is increasing to 2.9 times from 2.6 times, the source added.

Deutsche Bank is the lead bank deal that will be used to help fund Texas Pacific Group's leveraged buyout of Aleris for $1.7 billion, plus the assumption or repayment of $1.6 billion of debt.

In addition, to the credit facility and the senior subordinated bonds, the company plans on getting $600 million of senior payment-in-kind toggle notes for LBO financing.

Aleris is a Beachwood, Ohio, manufacturer of aluminum rolled products and extrusions, an aluminum recycler and a producer of specification alloy.

Hayes up with numbers

Moving to the secondary market, Hayes Lemmerz's bank debt levels underwent a small pop on Monday as the company announced third-quarter results that showed improved cash flow and liquidity, inspiring more buyers to step in for the name, according to a trader.

The company's first-lien term loan closed the day at par ¾ bid, 101½ offered, and the second-lien term loan closed the day at par ¾ bid, 101¾ offered, the trader said, adding that both tranches were up about a quarter of a point from previous levels.

In the third quarter, Hayes Lemmerz reported free cash flow of $27.6 million, excluding the impact of its securitization program, up $5 million from a year earlier. Overall debt was reduced by about $24 million in the quarter. And, liquidity as of Oct. 31 was $158 million, an increase of $6 million from July 31.

Other third-quarter results included sales of $589.5 million, down 2.4% from $604 million a year earlier, loss from operations of $27.6 million, compared with earnings from operations of $16.8 million in the third quarter of 2005, adjusted EBITDA of $52.7 million, a decline of $5.3 million from a year earlier, and net loss of $59.6 million, compared to a net loss of $13.3 million in the same period a year earlier.

The net loss includes a $39 million asset impairment charge related to the company's suspension of facilities in Bristol, Ind., and Montague, Mich. Excluding the impairment charge, the company had earnings from operations of $11.4 million and a net loss of $20.6 million during the quarter.

For the full year, the company expects sales of $2.2 billion to $2.3 billion, improved adjusted EBITDA compared with 2005 and capital expenditures of $75 million to $85 million.

Hayes is a Northville, Mich.-based designer and manufacturer of aluminum and steel wheels for passenger cars and light trucks, as well as steel wheels for commercial trucks and trailers.

ON Semiconductor off on paydown

ON Semiconductor's term loan B headed lower as the company announced plans to repay $199.1 million of its senior secured term loan debt using proceeds from a proposed $400 million convertible senior subordinated notes offering, according to a trader.

Remaining proceeds from the convertibles offering will be used to repurchase up to $230 million of its common stock in privately negotiated transactions and for general corporate purposes.

In reaction to the repayment news, the term loan B fell to typical paydown levels of par bid, par ¼ offered from previous levels of par ¼ bid, par ½ offered, the trader said.

On Friday, the company alluded to its repayment plans as it announced the approval of an amendment that allows for the replacement of a significant portion of its bank debt with other debt and allows for the incurrence of additional junior debt.

The company also said that it prepaid roughly $120 million of the facility using cash on hand.

Current borrowings under the facility total about $399 million.

ON Semiconductor is a Phoenix-based designer, manufacturer and marketer of power and data management semiconductors and standard semiconductor components.

Forest Alaska closes

Forest Alaska Operating LLC closed on its new $375 million of term loan debt consisting of a $250 million four-year first-lien term loan B priced at Libor plus 350 bps and a $125 million five-year second-lien term loan priced at Libor plus 650 bps, according to a news release.

During syndication, the first-lien term loan B was upsized from $225 million and pricing was reverse flexed from original talk at launch of Libor plus 375 bps, and the second-lien term loan was downsized from $150 million and pricing was flexed up from original talk at launch of Libor plus 625 bps.

Call protection on the first-lien term loan B is 101 for one year and call protection on the second-lien term is 102 in year one and 101 in year two.

Credit Suisse and JPMorgan acted as the joint lead arrangers and joint bookrunners on the deal that was used to fund a $350 million distribution to Forest Oil Corp. and provide initial working capital for operations.

Forest Oil is using the proceeds from the distribution to reduce its outstanding borrowings under its U.S. credit facility.

The term loans are secured by Forest Alaska's assets and are non-recourse to Forest Oil.

Forest Alaska is a new subsidiary of Forest Oil that was formed to hold oil and gas interests in the Cook Inlet region of Alaska.

Total Safety closes

DLJ Merchant Banking Partners completed its acquisition of Total Safety U.S., Inc. from H.I.G. Capital Partners LLC, according to a news release.

To help fund the buyout, Total Safety got a new $130 million credit facility consisting of a $15 million five-year revolver (Ba3/B-) at Libor plus 300 bps, a $75 million six-year first-lien term loan B (Ba3/B-) at Libor plus 300 bps with a step down to Libor plus 275 bps at 4.5x leverage and a $40 million seven-year second-lien term loan (Caa1/CCC) at Libor plus 650 bps with call protection of 102 in year one and 101 in year two.

During syndication, the pricing step down was added to the term loan B and pricing on the second-lien term loan was reverse flexed from original talk at launch of Libor plus 700 bps.

Credit Suisse acted as the lead bank on the deal.

First-lien leverage is around mid-3.0 times, and total leverage is around mid-5.0 times.

Total Safety is a Houston-based provider of safety services and products to the industrial, energy and environmental markets.

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