Dex Media East may trade lower as investors make room for R.H. Donnelley

By Sara Rosenberg

New York, Nov. 6 - Dex Media East LLC bank paper felt slightly weaker to some market participants on Wednesday in the secondary market ahead of Thursday's R.H. Donnelley launch, according to some market sources. However, one trader said that he didn't see much of a change as he traded the paper over par during the day.

Basically, since the Dex Media East loan broke in the secondary it has been at par plus levels. On Wednesday the loan was settling in around 99¾ bid, par offered, according to a second trader. "It's probably a little weaker than it was yesterday. It feels a little heavier."

One fund manager speculated that it's possible that people are clearing out some of their Dex paper in order to make room for the new Donnelley paper, which may give people a chance to pick up the Dex paper at a discount. The trader admitted that he "wouldn't be surprised" if people were selling some of the new to make room for the newer.

The Donnelley $1.55 billion credit facility consists of a $125 million six-year revolver with an interest rate of Libor plus 350 basis points, a $575 million six-year term loan A with an interest rate of Libor plus 350 basis points and an $850 million 71/2-year term loan B with an interest rate of Libor plus 400 basis points, according to market sources.

"The buy side has the negotiating power right now," the trader said. "We'll see where Donnelley clears." If for some reason Donnelley doesn't clear at Libor plus 400 on the institutional side, than investors may be able to pick up a little extra return on their investment compared to Dex, which did clear at a spread of 400 basis points.

According to a syndicate source though, the Donnelley has "been structured to clear the market."

The Dex Media East $1.49 billion credit facility consists of a $100 million revolver with an interest rate of Libor plus 300 basis points, a $690 million term loan A with an interest rate of Libor plus 300 basis points and a $700 million term loan B with an interest rate of Libor plus 400 basis points.

JPMorgan, Bank of America, Deutsche Bank, Lehman Brothers and Wachovia Securities are the lead banks on the Dex deal, which is being used to fund the leveraged buyout of the directory services business by The Carlyle Group and Welsh, Carson, Anderson & Stowe.

Bear Stearns, Deutsche and Salomon Smith Barney are the lead banks on the R.H. Donnelley deal, which will be used to help fund the acquisition of Sprint Corp.'s directory publishing business and refinance debt.

R.H. Donnelley is a Purchase, N.Y. marketer of yellow pages advertising.

Charter Communications Inc. seemed "to have a caught a bid" late in the day, with trades taking place "north of 81", a trader told Prospect News. Previously the St. Louis cable company's bank debt was bid in the 801/4, 80 3/8 type level.

When asked what prompted this late-day bid, the trader responded that he was trying to figure that out as well. "The bonds were better bid today. The stock is steady," the trader added.

In primary news, CenterPoint Energy Houston Electric's $420 million three-year senior secured term loan, which underwent a 300 basis point change in price to Libor plus 750 basis points on Tuesday, is now being talked at Libor plus 900 basis points, according to a fund manager. However, no official flex up from the 750 basis point spread has taken place, the fund manager added.

Credit Suisse First Boston, Deutsche Bank and Bank of America are the lead banks on Houston Electric's $420 million deal.

Proceeds from the loan will be used to refinance senior debentures that are coming due in November.

CenterPoint Energy Houston Electric is an electric transmission and distribution subsidiary of Houston-based domestic energy delivery company, CenterPoint Energy Inc.

DigitalNet held a bank meeting on Wednesday regarding a new $125 million senior secured credit facility. Bank of America is the lead bank on the deal.

The loan consists of a $25 million four-year revolver with an interest rate of Libor plus 250 basis points and a $100 million term loan with an interest rate of Libor plus 300 basis points, according to a fund manager.

"It's better suited to a private mezzanine financing than a senior secured loan," one fund manager who was unimpressed with the offering said. "[The company operates in] a highly competitive sector and it's a fairly small company. They're trying to access the bank market when it should be a high yield or private mezzanine deal. There is a $34 million piece of mezzanine debt - 13% cash plus 2% PIK, six-year maturity. People thought it should be $25 million revolver and $134 million of mezzanine debt."

Proceeds will be used to help fund acquisition of Getronics Government Solutions (GGS) from a subsidiary of Getronics NV.

DigitalNet is a private enterprise network solutions company backed by GTCR Golder Rauner, LLC.

Genesis Health Ventures Inc.'s credit facility has been restructured and is now a maximum of $100 million 18-month add-on term loan C with an interest rate of Libor plus 450 basis points, according to market sources.

Originally, the deal was launched as a $200 million add-on five-year term loan B with an interest rate of Libor plus 375 basis points.

Goldman Sachs and Wachovia are the lead banks on the deal, which will be used to help fund the acquisition of NCS Healthcare Inc.

Genesis Health Ventures is a Kennett Square, Pa. owner and manager of geriatric care facilities.

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