West, Spansion price talk emerges; ValleyCrest breaks; Neiman dips on repricing; secondary improves

By Sara Rosenberg

New York, Oct. 3 - West Corp. and Spansion Inc. came out with price talk on their new deals as both transactions were launched with bank meetings during the Tuesday session.

In secondary happenings, ValleyCrest Cos.' credit facility freed for trading, with the first-lien term loan quoted in the upper par's, and The Neiman Marcus Group Inc.'s term loan B was softer as the company launched a repricing effort.

Overall, the secondary market on Tuesday was stronger, with many names up by about an eighth of a point and some even gaining as much as a quarter of a point. Examples of the strengthening included the term loan B's of SunGard Data Systems Inc., Eastman Kodak Co., Charter Communications Inc. and UAL Corp.

West released official price on its proposed $2.1 billion seven-year term loan as syndication on the facility kicked off with a Tuesday bank meeting, according to a market source.

The term loan was launched to investors with opening talk of Libor plus 250 basis points, the source said.

The company's $2.35 billion credit facility (Ba3/B+) also includes a $250 million revolver with a 50 bps commitment fee. The revolver pricing grid has not yet been released to investors, the source added.

Prior to the release of official talk, the only indication of pricing was given in various filings with the Securities and Exchange Commission, which had both tranches expected at Libor plus 225 bps.

In addition, according to these filings, the term loan was anticipated to be sized at $2.05 billion, but the syndicate decided to up that to $2.1 billion before the meeting took place.

Lehman, Deutsche and Bank of America are joint bookrunners on the credit facility, and Lehman and Deutsche are joint lead arrangers. Lehman is also acting as administrative agent, and Deutsche and Bank of America are acting as syndication agents. Wachovia is documentation agent.

There is a $450 million accordion feature under the credit facility.

Proceeds from the credit facility, along with $1.1 billion in proposed high-yield bonds, will be used to help fund the leveraged buyout of West by an investor group led by Thomas H. Lee Partners and Quadrangle Group LLC.

Under the agreement, all stockholders except Gary West, chairman of the board, and Mary West, vice chairman of the board, will receive $48.75 per share in cash. Gary and Mary West will receive $42.83 per share in cash for about 85% of their current ownership and about 15% of their current ownership will convert into shares of the corporation surviving the merger.

The transaction values the company at $4.1 billion, including debt as of the date of the definitive agreement.

West is an Omaha, Neb., provider of outsourced communication services.

Spansion sets talk

Spansion announced price talk of Libor plus 325 bps on its proposed $400 million term loan B as it too held a bank meeting during market hours to get the syndication process rolling, according to a market source.

Bank of America is the lead bank on the deal.

Spansion is a Sunnyvale, Calif., flash memory devices company.

Boart first lien fills up

Boart Longyear Co.'s first-lien term loan B is significantly oversubscribed, while the second-lien term loan and unsecured holding company loan are still being worked on, according to a market source.

The syndicate is expected to accept lender commitments toward the deal throughout this week, the source said. Originally, the commitment deadline had been set for last Friday, but since the unsecured loan had just been added five days earlier, along with various other changes to the deal, lenders were given more time to do their credit work.

The $1.395 billion facility consists of a $770 million six-year first-lien term loan B talked at Libor plus 325 bps, a $125 million five-year revolver talked at Libor plus 325 bps, a $300 million seven-year second-lien term loan talked at Libor plus 700 bps and a $200 million senior unsecured 18-month holdco term loan talked at Libor plus 850 bps cash pay.

The first-lien term loan B requires that the company amortize $120 million of the debt within the first 18 months.

The second-lien term loan contains call premiums of 102 in year one and 101 in year two.

Originally, the facility contained a $650 million first-lien term loan B and a $320 million 18-month first-lien capital markets term loan that was being talked at Libor plus 325 bps, in addition to the $125 million revolver and $300 million second lien.

However, on Sept. 25, the syndicate decided to upsize the first-lien term loan B by $120 million, eliminate the 18-month first-lien capital markets term loan from the capital structure and add the holdco unsecured term loan.

These modifications reduced operating company leverage to 4.8 times total from 5.7 times under the original structure and first-lien leverage to 3.4 times from 4.4 times, addressing existing Boart investor concerns of the deal being over levered and the dislike toward the capital markets term loan.

Credit Suisse is bookrunner on the deal that will be used to help fund the acquisition of a majority interest in Boart Longyear by an investor group led by Macquarie Bank Ltd.

Macquarie's investor group will own a 51% stake in the business, while existing sponsors Advent International, Bain Capital and management will roll over $200-plus million and retain a 49% stake in the company.

Concurrently, Boart Longyear is acquiring two businesses, Northwest Drilling and Drillcorp, increasing Sept. 30 last-12-month EBITDA to $225 million.

Boart Longyear is a Salt Lake City-based drilling-services provider.

ValleyCrest frees to trade

Switching to the secondary, ValleyCrest's credit facility broke for trading, with the $235 million seven-year first-lien term loan quoted at par ½ bid, par ¾ offered, according to a trader.

The term loan is priced with an interest rate of Libor plus 250 bps, in line with original price talk.

ValleyCrest's $345 million credit facility, which is scheduled to close on Wednesday, also contains a $60 million six-year revolver at Libor plus 250 bps and a $50 million 71/2-year second-lien term loan at Libor plus 550 bps. Both of these tranches priced in line with original talk as well.

Call premiums on the second-lien term loan are 102 in year one and 101 in year two, the source added.

Goldman Sachs and UBS are joint bookrunners on the deal that will be used to help fund the leveraged buyout of ValleyCrest by MSD Capital.

ValleyCrest is a Calabasas, Calif., provider of landscape services.

Neiman slips on repricing

Neiman Marcus' term loan B fell by about a quarter of a point in trading as the company asked lenders on Tuesday to reduce pricing by 25 bps, while at the same time adding a step down based on leverage, according to a trader.

The term loan B closed the day at par ½ bid, par ¾ offered, down from previous levels of par ¾ bid, 101 offered, the trader said.

Under the repricing, Neiman Marcus is looking to lower the spread on the term loan B to Libor plus 225 bps from Libor plus 250 bps and add a step down to Libor plus 200 bps effective when total leverage is below 4.5 times.

Credit Suisse is the lead on the Dallas-based high-end specialty retailer's repricing deal.

Transeastern active

Transeastern's bank debt was very active on Tuesday at unchanged levels of 70 bid, 71 offered, with no new information seen sparking the flow, according to a trader.

All last week, the bank debt had been tumbling, dropping from trading levels around the 98/99 context to as low as 66 bid, 68 offered this past Friday due to worries over the company's financials.

Then finally, on Monday, the trend reversed slightly with levels moving up to 70 bid, 71 offered, where they remained throughout Tuesday's trading session, the trader remarked, saying that nothing in particular was seen sparking the couple of points gain.

Transeastern, a joint venture between Technical Olympic USA, Inc. and Falcone Group, announced last week that because of weak demand, an over supply of new and existing inventory homes and increased competition in the Florida housing market, it can not support its existing capital structure.

The company is exploring various options to fix the liquidity problem, including requesting waivers from its lenders regarding potential defaults and permitting future advances under the revolver, and restructuring land bank obligations.

Technical Olympic is a Hollywood, Fla.-based builder and seller of single family homes.

Secondary stronger

The overall secondary loan market on Tuesday was noticeably stronger as most names climbed by about an eighth of a point, like SunGard, Kodak and Charter, and some moving up as much as a quarter of a point, like UAL, according to a trader.

SunGard, a Wayne, Pa.-based provider of integrated software and processing solutions, saw its term loan B close the day at par 7/8 bid, 101 1/8 offered, the trader said.

Kodak, a Rochester, N.Y.-based digital imaging products, services and solutions company, saw its term loan B close the day at par ¼ bid, par ½ offered, the trader continued.

Charter, a St. Louis-based broadband communications company, saw its term loan B close the day at par 5/8 bid, par 7/8 offered, the trader said.

And, lastly, UAL, an Elk Grove Township, Ill., airline, saw its term loan B close the day at 101½ bid, 102 offered, the trader added.

As for why the market tone was better on Tuesday, the trader remarked, "couldn't pinpoint anything. Nothing to really classify why people picked today to start buying but I guess everything has been feeling healthy the past few days."

Lord & Taylor closes

NRDC Equity Partners completed its leveraged buyout of Lord & Taylor from Federated Department Stores, Inc. for $1.083 billion, according to a news release.

To help fund the transaction, Lord & Taylor got a new $350 million ABL revolving credit.

Of the total revolver amount, $325 million is priced at Libor plus 175 bps with a 25 bps undrawn fee and $25 million, which is in the form of a first-in, last-out tranche, is priced at Libor plus 375 bps with a 25 bps undrawn fee.

More than 15 accounts committed to the ABL facility, according to a market source.

Bear Stearns and CIT acted as the joint lead arrangers and joint bookrunners on the fashion retailer's deal.

Other buyout financing is coming from a CMBS transaction.

Georgia Gulf closes

Georgia Gulf Corp. completed its acquisition of Royal Group Technologies for C$13.00 per share in cash, according to a company news release.

To help fund the transaction, Georgia Gulf got a new $1.05 billion credit facility (Ba2/BB/BB+) consisting of a $750 million term loan and a $300 million revolver, with both tranches priced at Libor plus 200 bps.

Bank of America, Merrill Lynch and Lehman acted as the lead banks on the deal, with Bank of America the left lead.

Georgia Gulf is an Atlanta-based manufacturer of commodity chemicals, vinyl resins and vinyl compounds.

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