Freescale, RSC, Energy Transfer set talk; Greenwood cuts pricing; Per-Se softer on buyout news

By Sara Rosenberg

New York, Nov. 6 - Freescale Semiconductor Inc. and Rental Service Corp. (RSC) released priced talk on their credit facilities as both deals were launched with bank meetings Monday, and Energy Transfer Equity LP came out with price talk on its term loan B as the deal is getting ready for its Tuesday launch.

In other primary news, Greenwood Racing Inc. lowered pricing on its term loan and added a step down based on leverage due to strong market demand.

Meanwhile, in trading news, Per-Se Technologies Inc.'s bank debt headed lower as the announcement of a buyout deal sparked expectations of a paydown.

Freescale Semiconductor held a bank meeting on Monday morning to present its proposed $4.25 billion covenant-light senior secured credit facility (Baa3/BB) to investors, and concurrently with the launch, price talk on the deal was announced, according to a market source.

Both the $3.5 billion seven-year term loan B and the $750 million six-year revolver were launched with opening spreads of Libor plus 225 basis points, the source said.

The two tranches contain only incurrence-based covenants.

Citigroup, Credit Suisse, JPMorgan, Lehman Brothers and UBS are joint bookrunners on the credit facility, and Citigroup and Credit Suisse are joint lead arrangers. Citigroup is administrative agent, Credit Suisse is syndication agent and JPMorgan is documentation agent.

Proceeds from the credit facility will be used to help fund the leveraged buyout of Freescale by a private equity consortium, which is led by The Blackstone Group and includes The Carlyle Group, Permira Funds and Texas Pacific Group, for $40.00 per share in cash. The total equity value of the transaction is $17.6 billion.

Other LBO financing will come from $5.95 billion of high-yield bonds and equity.

Leverage through the secured debt is 1.6 times and total leverage is 4.9 times, the source added.

Freescale is an Austin, Texas, designer and manufacturer of embedded semiconductors for the automotive, consumer, industrial, networking and wireless markets.

RSC spread guidance

Rental Service also released price talk on its $2.83 billion credit facility as it began its syndication process through a bank meeting that was held in the afternoon, according to a market source.

The $1.3 billion asset-based revolver (BB-) and $400 million asset-based term loan (BB-) were launched with price talk of Libor plus 175 bps, and the $1.13 billion second-lien term loan (B-) was launched with price talk of Libor plus 375 bps, the source said.

Deutsche Bank and Citigroup are the lead banks on the deal, with Deutsche the left lead.

Proceeds from the credit facility, along with $620 million of senior notes and $585 million of equity, will be used to help fund the acquisition of RSC by Ripplewood Holdings and Oak Hill Capital Management from Atlas Copco for $3.4 billion, plus up to $400 million of additional consideration in the form of notes, based on the achievement of profitability targets through 2008. Atlas Copco will retain a 14.5% stake in RSC.

Scottsdale, Ariz.-based RSC is the second-largest heavy equipment rental company in the United States.

Energy Transfer floats talk

Energy Transfer Equity started whispering around the market opening price talk of Libor plus 200 bps on its $1.3 billion term loan B (Ba2//BB) as syndication on the transaction is ready to kick off with a bank meeting on Tuesday, according to a market source.

UBS and Wachovia are the lead banks on the deal, with UBS the left lead.

Proceeds from the term loan B, which was already funded but not yet syndicated, were used to fund the acquisition of about 26.1 million new class G units of Energy Transfer Partners, LP for $1.2 billion.

Energy Transfer Equity is the Dallas-based owner of all the general partner interests in Energy Transfer Partners, an owner and operator of energy assets.

Greenwood flexes

Greenwood Racing reverse flexed pricing on its $265 million first-lien senior secured term loan (B2/B+) and added a leverage-based step down as the book was well-oversubscribed by Friday's commitment deadline, according to a market source.

The term loan is now priced at Libor plus 225 bps, down from most recent price talk of Libor plus 250 bps and original price talk at launch of Libor plus 250 to 275 bps, the source said. Earlier on in the syndication process, price talk on the deal had been narrowed down to Libor plus 250 bps because of the amount of commitments coming in from investors.

In addition, under the changes, pricing on the term loan can now drop to Libor plus 200 bps if leverage is less than 2.0 times; however, this step cannot take effect until the company has delivered its Dec 31, 2007 financials, so lenders are protected for about 18 months or so, the source explained.

The term loan has a $200 million accordion feature.

Starting in 2008, the loan will be subject to a 3.5 times leverage test, dropping down to 3.0 times by the end of 2008.

There also will be an EBITDA to interest coverage test of 2.5 times starting in 2008, the source said.

Bear Stearns is the lead bank on the deal that will be used to repay existing debt, fund renovation costs, purchase slot machines, furniture, fixtures and other equipment and provide initial liquidity.

Greenwood Racing is Bensalem, Pa., owner and operator of racetracks and wagering facilities.

Per-Se weaker on buyout

Switching over to the secondary, Per-Se Technologies' term loan B came in closer to par as news surfaced that the company is being bought by McKesson Corp., an investment-grade health care services and information technology company, according to a trader.

The term loan B closed the day at par 1/8 bid, par 3/8 offered, down from previous levels of par 5/8 bid, par 7/8 offered, the trader said, adding that with the buyout, loan investors are expecting to be taken out at par.

Under the purchase agreement, McKesson is buying Per-Se for $28.00 per share in cash in a transaction valued at $1.8 billion.

The acquisition is expected to close in the first quarter of 2007, subject to customary conditions, including regulatory review.

Per-Se is an Alpharetta, Ga., provider of connective health care solutions to physicians and hospitals.

Watson closes

Watson Pharmaceuticals, Inc. closed on its new $1.15 billion credit facility (Ba1/BBB-), according to a company news release. CIBC and Wachovia acted as the lead banks on the deal, with CIBC the left lead.

The facility consists of a $500 million five-year revolver and a $650 million five-year term loan, with both tranches priced at Libor plus 75 bps.

Proceeds were used to fund the acquisition of Andrx Corp. for $1.9 billion.

Watson is a Corona, Calif., generic pharmaceutical company.

Matria closes

Matria Healthcare, Inc. closed on its $65 million first-lien term loan add-on, which was priced in line with the existing first-lien debt, according to a company news release.

Bank of America acted as the lead bank on the deal.

Proceeds from the add-on were used to prepay the company's second-lien loan.

Matria Healthcare is a Marietta, Ga.-based provider of comprehensive health enhancement programs to health plans, employers and government agencies.

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