Aspect shifts funds, cuts first-lien spreads; Cendant Marketing sets price talk; Delphi revolver grinds higher

By Sara Rosenberg

New York, Sept. 19 - Aspect Software moved some funds out of its second-lien term loan and into its first-lien term loan, while at the same time reducing pricing on first-lien tranches. And, Cendant Marketing came out with price talk on its credit facility as the deal launched via a bank meeting on Monday.

Delphi Corp.'s revolver ticked up another quarter of a point during Monday's session as market players are starting to lean toward the expectation of a bankruptcy filing, which would most probably result in the debt being taken out at par.

Aspect Software decided to shift some funds into its first-lien term loan from its second-lien term loan but kept the overall size of the facility intact. At the same time, pricing on the first-lien term loan and the revolver was reverse flexed by 25 basis points.

The five-year first-lien term loan B (B1/B) is now sized at $475 million as compared to an original size at launch of $425 million, and pricing on the tranche came down to Libor plus 250 basis points from initial price talk at launch of Libor plus 275 basis points, according to a market source.

On the flip side, the 51/2-year second-lien term loan is now sized at $200 million as compared to an originally expected size of $250 million, the source said. Pricing on the second-lien tranche was left unchanged at Libor plus 775 basis points.

As for the $50 million five-year revolver (B1/B), the size was left untouched but pricing on the tranche came down to Libor plus 250 basis points as well from initial price talk at launch of Libor plus 275 basis points, the source added.

JP Morgan and Deutsche Bank Securities are the lead banks on the term loan B and the revolver, with Wells Fargo Foothill acting as documentation agent.

JP Morgan and Lehman Brothers are the lead banks on the second-lien term loan, with D.B. Zwirn Finance acting as administrative agent.

This second-lien tranche was pre-syndicated to various investors so there has been no further marketing effort on that front, a company spokesman previously told Prospect News.

Proceeds from the credit facility will be used to help fund the acquisition of Aspect Communications Corp.

Concerto, a Westford, Mass.,-based portfolio company of Golden Gate Capital that provides contact center software and services, is purchasing Aspect for $1 billion. Golden Gate and Oak Investment will contribute equity toward the deal.

Cendant Marketing price talk

Cendant Marketing launched its proposed credit facility Monday with opening price talk of Libor plus 225 to 250 basis points on both the $125 million six-year revolver and the $760 million seven-year term loan B, according to a market source.

Credit Suisse First Boston and Deutsche Bank are the joint lead arrangers on the deal, with CSFB the left lead.

Proceeds from the $885 million credit facility (B+) will be used to help fund Apollo Management LP's acquisition of Cendant Corp.'s Marketing Services Division for about $1.83 billion.

Under the acquisition agreement, Affinity Acquisition, an affiliate of Apollo, will pay about $1.7 billion of cash, net of estimated closing adjustments, with the remaining $125 million to come in the form of newly issued preferred stock of the purchaser.

The transaction, which is expected to close in the fall, is subject to certain closing conditions, including receipt of financing and regulatory approvals.

Cendant's Marketing Services Division is a Norwalk, Conn., direct marketer of membership clubs and insurance products.

Delta timing

Delta Air Lines Inc. will likely be holding a bank meeting on Sept. 27 to launch its proposed $1.7 billion 30-month debtor-in-possession financing facility into syndication, although the date "is not set in stone" just yet, according to a market source.

Previously it was known that the syndicate was planning the launch for next week, but a specific targeted date was unavailable.

The facility consists of a $600 million term loan A with an interest rate of Libor plus 500 basis points, a $600 million term loan B with an interest rate of Libor plus 700 basis points and a $500 million term loan C with an interest rate of Libor plus 900 basis points.

GE Capital Markets is the lead arranger and bookrunner on the facility, and Morgan Stanley has signed on as co-arranger on the term loan C tranche.

The DIP is secured by a super-priority lien on all unencumbered assets of the company, including unrestricted cash, certain aircraft, real estate, spare parts, ground service equipment, tooling, simulators, routes, slots and stocks of subsidiaries.

The Atlanta-based airline's DIP will refinance $630 million of financing provided by GE Commercial Finance and $500 million of financing provided by American Express in November 2004.

Additionally, Delta has an agreement in principle with American Express to provide the airline with an additional $350 million of secured financing which will be secured by liens junior to the DIP facility.

Altogether, Delta's post-petition financing arrangements now total up to $2.05 billion, an increase of about $1.07 billion from the company's pre-petition secured credit facilities.

Walter/Mueller fills up

Walter Industries Inc.'s jumbo two-part credit facility is "going extremely well" with the deals' fully subscribed ahead of Friday's commitment deadline, a market source told Prospect News on Monday.

The $1.8 billion credit facilities are being obtained in connection with Walter's proposed acquisition of Mueller Water Products Inc.

The company is dividing into two separate entities - one comprised of its water group (Mueller), which will include Mueller and U.S. Pipe, and the other (Walter) comprised of its energy, homebuilding and financing groups.

The Mueller $1.175 billion credit facility (B2/B+) consists of a $1.05 billion term loan B talked at Libor plus 250 basis points and a $125 million revolver.

The Walter $625 million credit facility (Ba3/B+) consists of a $425 million term loan B talked at Libor plus 225 basis points and a $200 million revolver.

Both term loan B's are being offered to investors at par.

Mueller's term loan, revolver borrowings and super holdco notes will be used to fund a dividend to U.S. Pipe, a dividend to Walter and refinance existing debt.

Walter's term loan, revolver borrowings, some U.S. Pipe proceeds and super holdco notes will be used to fund the acquisition of Mueller and refinance existing revolver debt.

Banc of America Securities LLC and Morgan Stanley & Co. are joint lead banks on the deal, with Bank of America the left lead.

Under the acquisition agreement, Walter has agreed to purchase Mueller for $1.91 billion, consisting of about $860 million in cash and the assumption of about $1.05 billion in Mueller debt. The transaction is expected to be accretive by $0.20 to $0.24 per fully diluted share in the first full year after closing.

Walter Industries is a Tampa, Fla.-based diversified company that operates in homebuilding, related financing, and water transmission products, and is also a producer of high-quality metallurgical coal. Mueller is a Decatur, Ill.-based supplier of water infrastructure and delivery systems.

Delphi revolver trades up

Delphi's revolver inched higher as bankruptcy buzz continues to float through the markets, and with this buzz comes the expectation of a par pay down of the revolver debt.

The revolver was quoted at 98¼ bid, 98½ offered, according to a trader. On Friday, The revolver traded around at 98 1/8 and closed out the week quoted around 98 bid, 98½ offered.

"People are considering a Chapter 11 filing more and more likely. They think [the revolver] will be rolled into a DIP facility," the trader explained.

As for the term loan, that remained quoted at 101¾ bid, 102¼ offered and is pretty much expected to hang out in that context being that the debt is currently repayable at a call premium of 102, the trader added.

Delphi is looking to former corporate parent General Motors Corp. for some sort of financial bailout and has warned that it could be forced into Chapter 11 if it does not get concessions from the United Auto Workers union and help from GM.

The company has said that a filing would come before Oct. 17 when federal bankruptcy laws will change, becoming less friendly to debtor companies as they will be given less time to come up with a reorganization plan.

Delphi is a Troy, Mich., supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology to vehicle manufacturers.

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