First Data adds covenant; Allison term loan finding buyers; CW, Motion tweak deals; Neff slides

By Sara Rosenberg

New York, Sept. 10 - First Data Corp.'s mega leveraged buyout financing credit facility is now expected to come to market with a covenant as a result of talks that have been taking place between the bankers and the buyer of the company.

In other news, Allison Transmission's already funded term loan is heard to be finding some institutional buyers at a sizeable original issue discount, and CW Media Inc. and Motion Picture Distribution LP increased pricing on their credit facilities and added discounts.

Meanwhile, in the secondary, Neff Corp.'s second-lien term loan inched its way lower in sympathy with the bonds as investors continue to react to disappointing earnings results and LCDX was a touch lower in quiet trading.

First Data's $16 billion credit facility is now anticipated to have a leverage covenant, as opposed to being covenant-light, due to the recent negotiations between the bankers on the deal and Kohlberg Kravis Roberts & Co., according to market sources.

Meanwhile, last week's rumor that the facility could carry pricing that is 25 basis points higher than what was previously agreed upon has been labeled by some as "suspect," with one source adding, "I'd be skeptical about that one."

Since late August, when news of big meetings between the parties involved in the First Data credit facility hit the market, sources have been speculating that the deal could see the elimination of its covenant-light structure, higher pricing from the talk that was seen during the senior managing agents round and the addition of hefty original issue discounts.

But being that negotiations are still ongoing, details on the restructured financing have been moving around.

First Data's credit facility consists of a $2 billion six-year revolver and a $14 billion seven-year term loan B.

When the deal was launched to senior managing agent banks in late May, price talk on the two tranches was set at Libor plus 225 bps to 250 bps.

As for timing on the transaction, sources are still hearing that the retail launch could take place this week, assuming that the negotiations wrap up. A firm date for the launch, though, has yet to be announced.

It had been previously rumored that the deal could launch to retail investors as early as the Sept. 3 week, but many called that timeline too aggressive, which indeed proved to be the case.

First Data's credit facility has been a main focus for market players recently because it's viewed to be the first real test of investor appetite for leveraged buyout paper since the primary crumbled during the summer.

Credit Suisse, Citigroup, Deutsche Bank, Goldman Sachs, HSBC, Lehman Brothers and Merrill Lynch are the lead banks on the deal.

Under the buyout agreement, Kohlberg Kravis Roberts is purchasing the company for $34 in cash per share. The total value of the transaction is about $29 billion.

All required domestic and international regulatory approvals have already been obtained for the buyout.

First Data is a Greenwood Village, Colo., provider of electronic commerce and payment services for businesses.

Allison term loan selling off

Talk is that Allison Transmission is selling off pieces of its already funded $3.1 billion term loan B to some large institutional accounts and that this delayed syndication process is "getting done," according to a market source.

The term loan B is priced at Libor plus 275 bps and is being sold to investors at an original issue discount of 96, the source said.

The term loan B had originally been launched to investors with a bank meeting on July 18 but was pulled on July 23 due to poor market conditions. During the brief time that it was in the retail syndication process, price talk was Libor plus 250 bps, with an original issue discount of 991/2.

Proceeds from the term loan B were used to help fund the buyout of the company by Carlyle Group and Onex Corp. for $5.575 billion from General Motors Corp. on Aug. 7.

Allison's $3.5 billion credit facility (B1/BB-) also includes a $400 million revolver.

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

Allison Transmission is a Speedway, Ind., designer and manufacturer of automatic transmissions for on-highway trucks and buses, off-highway equipment and military vehicles.

CW Media raises pricing

CW Media increased pricing on both tranches under its C$525 million credit facility (Ba1/B+) to Libor plus 325 bps from original guidance in July of Libor plus 250 bps to 275 bps, according to a market source.

In addition, the term loan is now being offered with an original issue discount, although specifics on that are still to be determined, the source said.

Tranching on the facility is comprised of a C$50 million revolver and a C$475 million term loan.

Goldman Sachs and Credit Suisse are the lead banks on the deal, which was recently informally relaunched via the banks' sales force, with Goldman Sachs the left lead.

The facility has a net total leverage maintenance test.

Proceeds from the credit facility, which already funded, were used to help finance the acquisition of Alliance Atlantis Communications Inc. by CanWest Global Communications Corp. and GS Capital.

CW Media is a provider of specialty channels in Canada.

Motion Picture ups spread

Motion Picture Distribution raised pricing on all tranches under its C$410 million credit facility and added an original issue discount that is still to be determined to both the first- and second-lien term loans, according to a market source.

The C$50 million six-year revolver (Ba3/B) and the C$260 million 71/2-year first-lien term B (Ba3/B) are now both being talked at Libor plus 325 bps, up from original guidance in July of Libor plus 250 bps to 275 bps, and the C$100 million eight-year second-lien term loan (B3/CCC+) is now being talked at Libor plus 625 bps, up from original guidance in July of Libor plus 550 bps.

Goldman Sachs and Credit Suisse are the lead banks on the deal, which was recently informally relaunched via the banks' sales force, with Goldman Sachs the left lead.

The first-lien debt has a net total leverage maintenance test.

Proceeds from the credit facility, which already funded, were used to help finance the acquisition of the company by EdgeStone Capital Partners and GS Capital Partners.

Motion Picture Distribution is a distributor of motion pictures in Canada.

Neff trades down

Moving to the secondary, Neff's second-lien term loan was once again weaker during Monday's trading session on the heels of the company's recent none-too-positive earnings announcement, according to a trader.

The second-lien term loan ended the day at 85½ bid, 86½ offered, down from Friday's closing levels of 86½ bid, 87 offered, the trader said.

Volatility in the name has been apparent since late last week as the loan traded on Friday morning at 85, down from Thursday's levels of 87 bid, 88 offered. After the loan hit its low on Friday, some buyers stepped in, causing the paper to trade as high as 87¼ before settling in at the closing levels.

All of this action was started by a recent earnings conference call that the company held with lenders, which showed EBITDA coming in 10% below expectations.

Also, during the call, the company "couldn't really crystallize guidance going forward," the trader remarked.

"Fewer and fewer people are outright buying the second-liens and more people are doing the second-liens on a hedge basis. As you have guys that are hedging with the bonds, the bid sort of suffered as the bonds weakened up," the trader added about the loan's performance on Monday.

"It has taken the spotlight. Have a lot of calls on it," the trader added.

Neff is a Miami-based construction equipment rental company.

LCDX weakens

LCDX was a bit lower on Monday in yet another pretty quiet trading session, according to a trader.

The index went out at 94.85 bid, 94.95 offered, down from Friday's closing levels of 94.95 bid, 95.05 offered, the trader said.

Stocks were kind of a mixed bag, with Nasdaq down 6.59 points, or 0.26%, Dow Jones Industrial Average up 14.47 points, or 0.11%, S&P 500 down 1.85 points, or 0.13%, and NYSE down 28.80, or 0.30%.

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