Georgia-Pacific B loan bounces from pars to 101s in first day of trading; Hilton breaks atop par

By Sara Rosenberg

New York, Feb. 13 - Georgia-Pacific Corp.' $11 billion-plus credit facility freed up for trading a little before noon on Monday, stealing the spotlight in secondary activity for basically the remainder of the session as the first-lien term loan B fluctuated from lows in the pars and highs in the 101s amid strong flow.

Also freeing up for trading on Monday was Hilton Hotels Corp.'s $5 billion-plus credit facility, with its term loan B seeing levels consistently quoted in the upper-par region throughout the day.

By the end of the trading, Georgia-Pacific's $5.25 billion seven-year term loan B (Ba2/BB-/BB) was quoted at par ¾ bid, 101 offered after spending a lot of time bouncing around between a low of par ½ bid, par ¾ offered and a high of 101 bid, 101¼ offered, according to traders.

Meanwhile, the company's $2.25 billion eight-year second-lien term loan (Ba3/B+/B+) ended the session quoted at 101½ bid, 102 offered, the same context in which it was seen quoted on a pretty steady basis throughout trading, traders said.

In addition, Georgia-Pacific's $2 billion five-year term loan A (Ba2/BB-/BB) closed out the day quoted at par 5/8 bid and the $1.75 billion revolver (Ba2/BB-/BB) closed out the day quoted at 98 bid, traders added.

"It took over everybody's focus," one trader remarked about Georgia-Pacific breaking into the secondary. "Before [the break] things opened up slow. Once it hit, it dominated the day."

The term loan B is priced with an interest rate of Libor plus 200 basis points and contains a step down to Libor plus 175 basis points at 4.3x leverage, the second-lien term loan is priced with an interest rate of Libor plus 300 basis points, and both the term loan A and the revolver are priced with an interest rate of Libor plus 225 basis points.

During syndication, the term loan B was upsized from $5 billion and pricing was reverse flexed from Libor plus 225 basis points with the addition of the step down. At the same time, the second-lien term loan was downsized from $2.5 billion and pricing was reverse flexed from Libor plus 350 basis points. In addition, the revolver was upsized from $1.5 billion to provide the company with additional liquidity, but pricing on the tranche was left unchanged since launch. No changes were made to the term loan A.

Citigroup acted as the administrative agent, joint bookrunner and joint lead arranger on the $11.25 billion senior secured credit facility, Bank of America acted as syndication agent, joint bookrunner and joint lead arranger on the revolver and term loan A, Deutsche Bank acted as syndication agent, joint bookrunner and joint lead arranger on the term loan B, and JPMorgan acted as syndication agent, joint bookrunner and joint lead arranger on the second-lien loan.

Proceeds from the term loan A, term loan B and second-lien loan are being used to repay a $6.356 billion bridge loan that was used to fund Koch Forest Products Inc.'s tender offer for all of Georgia-Pacific's shares, to refinance, repurchase or redeem some outstanding debt securities of Georgia-Pacific and its subsidiaries and to refinance Georgia-Pacific's existing credit facility.

Revolver borrowings will be available for general corporate purposes.

Under the merger agreement, Koch paid $48 per Georgia-Pacific share for an equity value of $13.2 billion and a total enterprise value of $21 billion, including all Georgia-Pacific debt. And, now that the tender offer was completed in December 2005, Georgia-Pacific is being operated as a privately held, wholly owned subsidiary of Koch Industries Inc.

Georgia-Pacific is an Atlanta-based manufacturer and marketer of tissue, packaging, paper, building products and related chemicals.

Hilton breaks

Hilton Hotels' multi-billion credit facility also hit the secondary during Monday's session, with the term loan B quoted at par ½ bid, par ¾ offered throughout the day, according to a trader.

The company's multi-currency revolver was being quoted on a stand-alone basis at 99½ bid, 99¾ offered, and the revolver and term loan A as a strip was being quoted at 99¾ bid, par offered, the trader said.

The $500 million term loan B is priced with an interest rate of Libor plus 137.5 basis points. During syndication, the tranche was downsized from $750 million and pricing was reverse flexed from Libor plus 162.5 basis points.

Both the $3.25 billion multi-currency revolver and the $2 billion multi-currency term loan A are priced with an interest rate of Libor plus 150 basis points. During syndication, the revolver was upsized from $2.75 billion - resulting in a $250 million increase in the total size of the credit facility - as the demand for pro rata paper had been overwhelming.

Bank of America and UBS are the lead banks on the $5.75 billion (Ba2) deal.

Proceeds from the credit facility will be used to help fund Hilton Hotels' approximately £3.3 billion, or $5.71 billion, all-cash acquisition of the lodging assets of Hilton Group plc.

The $250 million of acquisition financing removed from the company's term loan B will now be drawn under the revolving credit facility.

Hilton also plans on using $1.22 billion in cash on hand to fund the purchase and will assume $130 million of debt.

The facility is targeted to close in mid-February and the acquisition is targeted to close around mid-March.

Pro forma credit statistics for 2006 are debt to EBITDA of 4.64x, adjusted debt to EBITDAR of 4.88x, EBITDA to net interest expense of 3.3x and fixed to floating rate debt of 45% to 55%.

Hilton is a Beverly Hills, Calif., lodging company.

CCC closes

Investcorp completed its acquisition of CCC Information Services Group Inc. in a transaction valued at $496 million, according to a Friday night news release.

To help fund the transaction, CCC Information got a new $300 million senior secured credit facility consisting of a $250 million term loan and a $50 million revolver, with both tranches priced at Libor plus 275 basis points.

JPMorgan and Wachovia acted as the lead banks on the deal.

CCC is a Chicago-based supplier of advanced software, communications systems, internet and wireless-enabled technology solutions to the automotive claims and collision repair industries.

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