Dana firms OID, breaks for trading; Boise talk emerges; NCO ups pricing; Allison up on numbers

By Sara Rosenberg

New York, Feb. 7 - Dana Corp. finalized the original issue discount on its exit financing term loan B and then freed the debt up for trading around its discount price.

In other news, Boise Inc. came out with official price talk on its credit facility as the deal was launched with a bank meeting during the Thursday session, and NCO Group Inc. revised pricing on its term loan B add-on.

Meanwhile, back in trading, Allison Transmission's term loan B was better following the release of earnings, and LCDX 9 and cash seesawed, starting the day weaker and then recouping some of those losses.

Dana firmed up the original issue discount on its $1.35 billion seven-year term loan B (Ba3/BB), allocated the loan and then broke it for trading, according to a market source.

The term loan B was sold to investors at a discount of 90, the source said. Late last week, the discount on the term loan B was increased to 92 from the initially proposed 97 area, but since then orders had been coming in at the 90 to 92 range. It was then said that the discount would end up at the level needed to fill the deal out.

On the break Thursday morning, the term loan B was quoted at 90 bid, 91½ offered, but levels quickly tightened up a bit to 90 bid, 91 offered, where it closed out the day, a trader said.

The term loan B is priced at Libor plus 375 basis points, with a 3% Libor floor for two years, and carries hard call protection of 102 in year one and 101 in year two. The only time the call premiums don't apply is when it relates to cash flow sweep.

Last week, when the discount was first changed, pricing on the term loan B was flexed up from original talk at launch of Libor plus 350 bps, and the Libor floor and call premiums were added.

Dana's $2 billion exit financing credit facility also includes a $650 million five-year asset-based revolver (Ba3/BB+) that is priced at Libor plus 200 bps, with a commitment fee of 37.5 bps.

Upfront fees on the asset-based revolver were 25 bps for $25 million, 50 bps for $50 million and 75 bps for $75 million.

Citigroup, Lehman Brothers and Barclays acted as the lead banks on the deal.

The credit facility funded last week when the company emerged from Chapter 11. Proceeds are being used to repay the company's debtor-in-possession credit facility, to make other payments required upon its exit from bankruptcy and to provide liquidity to fund working capital and other general corporate purposes.

Dana is a Toledo, Ohio-based supplier of components, modules and systems to vehicle manufacturers and related aftermarkets.

Boise price talk

Boise held a well-attended bank meeting - with standing room only - on Thursday at 10 a.m. ET in New York to kick off syndication on its $1.2357 billion senior secured credit facility, and at the launch, price talk on the transaction was announced, according to a market source.

The company's $250 million five-year revolver (Ba2/BB+) and $250 million five-year term loan A (Ba2/BB+) are both being talked at Libor plus 325 bps, the source said. For commitments towards these tranches, lenders will get a two-point discount for orders of $75 million and up, a 11/2-point discount for orders of $50 million and up, and a one-point discount for orders of $25 million and up.

The $475 million six-year first-lien term loan B (Ba2/BB+) is being talked at Libor plus 350 bps, with an original issue discount of 95, a 4% Libor floor to maturity, and call protection of 102 in year one and 101 in year two, the source continued.

And, the $260.7 million seven-year second-lien term loan (B2/B) is being talked at Libor plus 700 bps, with an original issue discount in the 95 area, a 4½% Libor floor to maturity, and is non-callable for two years, then at 105 in year three, 103 in year four and 101 in five.

Covenants under the revolver, term loan A and first-lien term loan B include total leverage, interest coverage and capital expenditures. The second-lien term loan covenant package includes total leverage and capital expenditures.

Goldman Sachs and Lehman Brothers are the joint lead arrangers and joint bookrunners on the deal, with Goldman the administrative agent on the first-lien debt and Lehman the administrative agent on the second-lien debt. Goldman is the syndication agent on the entire deal.

Revolver and term loan A commitments are due Feb. 19, while first-lien term loan B and second-lien term loan commitments are being asked for on an accelerated basis. There's no firm date yet for the first-lien term loan B and second-lien term loan deadline.

Proceeds from the credit facility will be used to fund Aldabra 2 Acquisition Corp.'s acquisition of the paper, packaging and newsprint assets of Boise Cascade LLC, which includes Boise White Paper LLC, Boise Packaging & Newsprint LLC and Boise Cascade Transportation Holdings Corp., for $1.625 billion.

Originally, the second-lien term loan was expected to be sized at $200 million, but there was a built-in option under the commitment letter to increase the tranche by $60.7 million to fund an incremental cash portion of the purchase price in the event that some of Aldabra's stockholders elected to exercise their conversion rights.

Also, the maturities on all of the credit facility tranches have changed from what was previously outlined in filings with the Securities and Exchange Commission. Those filings had the revolver and term loan A going out for six years, the first-lien term loan B going out for seven years and the second-lien term loan going out for eight years.

Other terms different than what was said in public filings include pricing, discounts and call protection. The filings had the first-lien term loan B at Libor plus 350 bps, with a discount of 99 and 101 soft call protection for one year, and the second-lien term loan at Libor plus 600 bps, with a discount of 98 and call protection of non-callable for two years, then at 102 in year three and 101 in year four.

Aldabra is a special purpose acquisition corporation that was formed to acquire an unidentified operating business. It will be renamed Boise Inc. following completion of the transaction.

Boise is a Boise, Idaho-based manufacturer and seller of uncoated free sheet, market pulp and containerboard.

On Tuesday, Aldabra's stockholders approved the acquisition and the transaction is expected to close during the last week of February.

NCO tweaks deal

NCO Group flexed pricing higher on its $139 million term loan B add-on (Ba3) and increased the original issue discount as well, according to a market source, who said that the book has firmed up at the revised levels.

The term loan B add-on is now priced at Libor plus 425 bps, up from initial talk of Libor plus 400 bps, and the original issue discount widened to 96½ from 99, the source said.

RBS Securities is the lead bank on the deal that will be used to help fund the acquisition of Outsourcing Solutions Inc., a provider of business process outsourcing services, for about $325 million in cash.

Other acquisition financing will come from $210 million of PIK preferred and common equity issued to One Equity Partners, the principal shareholder of NCO, and certain co-investors.

The acquisition is a deleveraging event as the equity used for the transaction exceeds the incremental debt, thereby lowering total debt to pro forma EBITDA.

In connection with this transaction, pricing on the company's existing $465 million term loan B will be increased from Libor plus 300 bps to match the add-on pricing.

The company's existing senior secured credit facility will also be amended to allow for the new debt and the acquisition, to appoint RBS as administrative agent and to revise certain baskets.

The add-on is not being done under the accordion feature that is present in the company's existing credit facility because it only provides for up to $100 million in incremental debt and it would only allow pricing on the term loan to go up to Libor plus 350 bps.

The accordion will be removed from the credit agreement as part of this transaction.

Lenders will be paid an amendment fee of 25 bps.

The amendment was reposted on Thursday morning and consents are due on Friday.

NCO is a Horsham, Pa., provider of business process outsourcing services.

Allison Transmission gains on earnings

Moving back to the secondary market, Allison Transmission's term loan B was stronger after the company went out with earnings to lenders, according to a trader.

The term loan B ended the day at 86 bid, 87 offered, up from 84¼ bid, 85¼ offered on Wednesday, the trader said.

In the morning hours, the term loan B did drop to 83¾ bid, 84¾ offered as the rest of the market was down, but once numbers came out, things took a turn for the better, the trader added.

Allison Transmission is a Speedway, Ind., designer and manufacturer of automatic transmissions.

LCDX, cash bounce around

LCDX 9 and cash were very "choppy" on Thursday, with things starting off noticeably lower and then regaining some ground, according to a trader.

The index went out around 92 bid, 92.15 offered, down from around 92.10 bid, 92.30 offered on Wednesday, the trader said. During the session, the index traded as low as 91.80 bid, 91.90 offered.

In cash, "things started weaker on the day on general market weakness and equities were still off. Saw some buyers of size step in and things came back," the trader remarked.

For example, Texas Competitive Electric Holdings Co. LLC (TXU), a Dallas-based energy company, saw its term loan B-2 and B-3 trade as low as 88 bid, 89 offered but then levels moved back up to 89 3/8 bid, 90 3/8 offered, unchanged from Wednesday's close, the trader added.

Meanwhile, equities ended the day higher, with Nasdaq up 14.28 points, or 0.63%, Dow Jones Industrial Average up 46.90 points, or 0.38%, S&P 500 up 10.46 points, or 0.79%, and NYSE up 40.93 points, or 0.46%.

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