URS adds step downs to term B; ECI Telecom, Touro up discounts; LCDX, cash fall with stocks

By Sara Rosenberg

New York, Oct. 19 - URS Corp. added two pricing step downs to its oversubscribed term loan B tranche that are based on the company meeting leverage tests.

In other primary news, ECI Telecom Ltd. and Touro University International increased the original issue discounts on their term loan debt.

In trading, LCDX and the cash market tumbled as equities got crushed, scaring investors.

URS added leverage-based step downs in pricing to its $300 million term loan B as the tranche is "substantially" oversubscribed, according to a market source.

Pricing on the term loan B is initially set at Libor plus 275 basis points, the source said.

Under the newly added grid, pricing can drop to Libor plus 250 bps if leverage is between 2.0 to 2½ times and to Libor plus 225 bps if leverage is less than 2.0 times, the source added.

URS' $2.1 billion credit facility (Ba1/BB+) also includes a $700 million revolver and a $1.1 billion term loan A, with both of these tranches priced at Libor plus 200 bps.

Under the company's original financing plans, the term loan A was going to carry a size of $300 million and the term loan B was going to carry a size of $1.1 billion, but the sizes shifted prior to launch due to market conditions.

Morgan Stanley and Wells Fargo are the lead banks on the deal.

The facility has a maximum leverage ratio and a minimum interest coverage ratio.

Proceeds will be used to help fund the acquisition of Washington Group International, Inc. in a cash and stock transaction valued at $2.6 billion. Washington Group stockholders will receive $43.80 in cash and 0.772 of a share of URS common stock per share.

However, some sources are not convinced that the acquisition will be completed since Washington's stockholders feel that the deal undervalues the company.

"URS will have to bump the price or the deal is dead," a buyside source told Prospect News.

On Friday, Washington Group announced that it reached an agreement in principle to settle the lawsuit filed on behalf of a putative class of Washington Group stockholders in the Delaware Chancery Court earlier this month regarding the company's buyout by URS.

Under the terms of the pending settlement, the company agreed to provide supplemental disclosures to stockholders.

"This is misleading. That was just a bunch of class action attorneys. The real institutional shareholders are against the deal," the buyside source added.

Washington and URS will each hold a special meeting of stockholders on Oct. 30 to vote on the transaction.

URS is a San Francisco-based engineering design services company. Washington Group is a Boise, Idaho-based provider of engineering, construction and management services for businesses and governments.

ECI raises OIDs

ECI Telecom revised the original issue discounts on its first- and second-lien term loans so as to attract more investors to the deal, according to a market source.

The $430 million six-year first-lien term loan and the $200 million 61/2-year second-lien term loan are now both being offered at a discount of 95, the source said.

Previously, the first-lien term loan discount was indicated in the 98 area and the second-lien term loan discount was indicated in the 96 area, the source added.

The first-lien term loan is priced at Libor plus 325 bps, and the second-lien term loan is priced at Libor plus 700 bps.

ECI's $805 million credit facility also includes a $75 million five-year revolver priced at Libor plus 325 bps, with a 50 bps commitment fee, and a $100 million 11/2-year asset-based revolver priced at Libor plus 325 bps.

The credit facility has a first-lien leverage covenant, an interest coverage ratio and a maximum capital expenditures requirement.

Based on $134 million in pro forma trailing EBITDA, total debt to EBITDA is 5½ times.

Credit Suisse is the lead arranger on the deal.

Proceeds from the already funded credit facility were used to help fund the buyout of the company by Swarth Group and Ashmore Investment Management Ltd. for $10.00 per share in cash. The transaction was valued at $1.24 billion.

ECI is a Petach Tikva, Israel, provider of networking infrastructure equipment.

Touro modifies discount

Touro University International increased the original issue discount on its $85 million seven-year first-lien term loan to 95 from 98, according to a syndicate document.

Pricing on the first-lien term loan was left unchanged at Libor plus 300 bps.

Touro's $130 million credit facility also includes a $10 million five-year revolver priced at Libor plus 300 bps, with a 50 bps commitment fee, and a $35 million eight-year second-lien term loan priced at 13%.

Credit Suisse and BNP Paribas are the joint lead arrangers on the deal, which will be used to help fund a leveraged buyout.

Touro is a Cypress, Calif.-based university.

CommScope pro rata guidance emerges

Price talk on CommScope Inc.'s pro rata bank debt surfaced now that the tranches were launched with a bank meeting in Charlotte, N.C., on Thursday, according to a market source.

The $400 million revolver and the $750 million term loan A are both being talked at Libor plus 225 bps, the source said.

CommScope's $2.55 billion senior secured credit facility (Ba3/BB-) also includes a $1.4 billion term loan B with price talk still to be determined because it is not set to launch until Oct. 29 when a bank meeting will take place in New York, the source added.

Previously, based on filings with the Securities and Exchange Commission, the facility was expected to consist of a $2.3 billion seven-year term loan and a $250 million six-year revolver, with pricing somewhere in the range of Libor plus 175 bps to Libor plus 275 bps, depending on the company's debt ratings.

Bank of America and Wachovia are the lead banks on the deal.

Proceeds will be used to help fund the acquisition of Andrew Corp. for $15.00 per share, comprised of $13.50 per share in cash and an additional $1.50 per share in either cash, CommScope common stock, or a combination of cash and common stock, at CommScope's option. The deal is valued at $2.6 billion.

CommScope is a Hickory, N.C., provider of infrastructure services for communication networks. Andrew is a Westchester, Ill., designer, manufacturer and deliverer of equipment and services for the communications infrastructure market.

Dex Media shifts funds

Dex Media East LLC upsized its term loan B following a downsizing to its term loan A, according to market sources.

The seven-year term loan B is now sized at $400 million, up from $350 million, and the six-year term loan A is now sized at $700 million, down from $750 million, sources said.

Pricing on the tranches was left unchanged, with the term loan B priced at Libor plus 200 bps and the term loan A priced at Libor plus 175 bps.

Dex Media East's $1.2 billion credit facility (Ba1/BB+) also includes a $100 million revolver that is priced at Libor plus 175 bps as well.

JPMorgan and Wachovia are the lead banks on the deal, which will be used to refinance the company's existing credit facility.

Dex Media is a publisher of Yellow Pages and White Pages directories.

LCDX, cash dip with equities

Moving to the secondary, LCDX and the cash market were both softer in trading on Friday as investors were nervous about the drop in the stock market, according to traders.

The LCDX 9 was quoted at 98.40 bid, 98.60 offered, down from Thursday's levels of 99.25 bid, 99.40 offered, the trader said.

LCDX 8 was quoted at 96.50 bid, 96.70 offered, down from Thursday's levels of 97.10 bid, 97.20 offered, the trader continued.

The cash market, although a bit more name by name, saw most loans fall by about a quarter of a point to half a point, the trader added.

For example, Ford Motor Co., a Dearborn, Mich.-based automaker, saw its term loan end the day at 96¾ bid, 97¼ offered, down from previous levels of 97 bid, 97½ offered.

General Motors Corp., a Detroit-based developer, producer and marketer of cars, trucks and parts, saw its term loan end the day at 98 bid, 99 offered, down on the bidside from Thursday's levels of 98¼ bid, 99 offered.

Allison Transmission, a Speedway, Ind.-based designer and manufacturer of automatic transmissions, saw its term loan B end the day at 97¾ bid, 98¼ offered, down from 97 7/8 bid, 98 3/8 offered.

As for stocks, Nasdaq ended down 74.15 points, or 2.65%, Dow Jones Industrial Average ended down 366.94 points, or 2.64%, S&P 500 ended down 39.45 points, or 2.56%, and NYSE ended down 254.34 points, or 2.50%.

Copano Energy closes

Copano Energy LLC closed on its $550 million senior revolving credit facility that was led by Bank of America, according to a company news release.

Borrowings under the revolver, along with a $335 million private placement of equity securities, were used to fund the acquisition of Cantera Natural Gas, LLC.

Copano is a Houston-based midstream natural gas company.

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