SunGard, West, Education Management seek 50 bps cuts in hot market; Seminole to launch $700 million

By Paul A. Harris

St. Louis, Feb. 1 - In a leveraged loan market that continues to see interest rates tighten because of phenomenal demand on the part of investors, three issuers were seeking to lower their rates - each by a whopping 50 basis points - on Thursday, according to sources.

"The market is definitely hot right now so people are looking to reprice," said a syndicate source who confirmed information on one of the deals.

Seeking 50 bps cuts

Education Management Corp. is seeking to lower the interest rate on its term loan B to Libor plus 200 basis points from Libor plus 250 bps, via Goldman Sachs.

The Pittsburgh-based provider of private post-secondary education priced the original $1.185 billion term loan in June 2006, with proceeds to fund the LBO by Providence Equity and Goldman Sachs Capital Partners.

Also Thursday, SunGard Data Systems Inc. was heard to be attempting to lower the rate on its term loan B to Libor plus 200 basis points from Libor plus 250 basis points.

The repricing has been launched via JP Morgan.

The Wayne, Pa.-based software company priced its $4.0 billion 7.5-year term loan B in August 2005.

Finally West Corp. held a lender call on Thursday seeking to lower the rate on its term loan to Libor plus 225 bps from Libor plus 275 bps.

Lehman Brothers has the lead on that repricing.

The Omaha, Neb.-based outsourced communications solutions provider priced its $2.10 billion six-year term loan in late October 2006.

The pricing on the original deal was flexed up by 25 bps.

50 bps 'accepted'

A syndicate official, commenting on Thursday's news that the above-mentioned issuers are attempting to reprice their deals by 50 basis points, said that the market is very strong right now.

"Fifty is a little wide," the official conceded. "But it has been accepted into this market."

The source recounted that Netherlands-based market research company VNU NV succeeded in lowering the interest on its dollar-denominated tranche by 50 bps and PanAmSat did likewise for its term loan A.

Hedge funds crowding

Meanwhile a bank loan trader told Prospect News that the repricings are further evidence of technical forces that are continuing to drive up prices for investors in the leveraged loan market.

"Right now there are a lot of the negative basis trades and a lot of leveraged money at play in bank loans," the trader said, adding that CLOs are not as active at present just because prices are so high.

"The hedge funds and the leveraged money are really crowding out a lot of the traditional buyers, making it uneconomical for people," the trader added.

"Even with big deals coming there is not enough paper to satisfy demand."

The trader said that the secondary market had not been as active on Thursday as had been the case on Tuesday and Wednesday.

UAL DIP breaks

The source said that the UAL Corp. DIP loan broke for trading and was seen changing hands 100.375 bid, 100.625 offered.

Earlier in the week UAL cut the spread on the $1.8 billion term loan B to Libor plus 200 bps from original talk at launch of Libor plus 225 bps.

The source notes that this compares with Libor plus 375 bps on the existing DIP that is being refinanced.

The company's $2.1 billion credit facility (B1/B+) also includes a $300 million five-year revolver.

The overall size is smaller than the old $2.2 billion DIP.

JPMorgan is the lead bank on the deal that will be used to refinance the Elk Grove Township, Ill., airline's existing credit facility.

New deals

Among Thursday's new deal announcements, mattress-maker Simmons Holdco, Inc. talked its five-year senior unsecured PIK toggle loan to price at 99.00 with an interest rate of Libor plus 575 basis points on Thursday, according to market sources.

Pricing is expected on Friday.

Deutsche Bank Securities, Goldman Sachs & Co. and Citigroup are joint bookrunners.

The notes will feature a 75 basis points coupon step-up in the event the issuer elects to make an in-kind interest payment, as opposed to cash.

Proceeds will be used to fund a dividend.

And Seminole Hard Rock Entertainment Corp., a financing unit of Florida's Seminole tribe, will hold a bank meeting on Tuesday for a $700 million term loan, via Merrill Lynch.

Proceeds will be used to fund the acquisition of the Hard Rock business form The Rank Group.

In follow-up news, MidOcean Partners and Wasserstein & Co., LP announced the completion of the purchase of Penton Media, Inc. and the simultaneous acquisition by MidOcean of 50% of the combined businesses of Prism Business Media Holdings, Inc. and Penton Media, Inc.

To help finance the transaction, Prism obtained a $966 million senior secured credit facility via UBS, JPMorgan and General Electric Capital Corp., with UBS as left lead.

The package includes a $620 million six-year first-lien term loan B (B1/B+) at Libor plus 225 bps, an $80 million six-year revolver (B1/B+) at Libor plus 225 bps and a $266 million seven-year second-lien term loan (Caa1/CCC+) at Libor plus 500 bps, with call protection at 102, then 101.

Prism is an Overland Park, Kan., business-to-business media company.

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