TransDigm's B loan expected to come inside of price talk as deal reaches oversubscription on launch date

By Sara Rosenberg

New York, July 1 - TransDigm Holding Co.'s $440 million credit facility (B1/B+), which launched Tuesday, is already sailing along through the syndication process with the term loan B reported to be oversubscribed on the day of the bank meeting.

The facility consists of a $360 million seven-year term loan B with price talk of Libor plus 375 basis points and an $80 million six-year revolver with price talk of Libor plus 350 basis points. There are no upfront fees on the term loan B. Commitments are due by July 15.

"I heard they already had $450 million in orders for the term loan and this was pretty much right after the meeting," a fund manager told Prospect News. "I'm guessing that it will come in from 375. The way things are going in the market it seems pretty logical that they'll [flex down].

"It's pretty interesting," the fund manager continued. "There's a really solid management team that's done a good job growing revenues, growing EBITDA. In this kind of environment when everyone is scared of airlines it's kind of good to see that this is replacement parts that gets consumed. An airplane and an engine can last 30 something years and over that time they will need to replace a lot of those parts. TransDigm makes those parts. They're not as involved as an original equipment manufacturer. Major business comes from selling existing parts to existing airplanes.

"We committed," the fund manager concluded.

Credit Suisse First Boston is the lead bank on the deal that will be used to help fund the company's leveraged buyout by an affiliate of Warburg Pincus and senior members of management from Odyssey Investment Partners LLC.

TransDigm is a Richmond Heights, Ohio supplier of proprietary aerospace components.

Rockwood Specialties Group Inc. also launched a deal on Tuesday. The company held a bank meeting for a $535 million senior secured credit facility (B1/B+), according to a source close to the deal. JPMorgan, Merrill Lynch and Goldman Sachs are leading the facility.

The facility consists of a $100 million six-year revolver with an interest rate of Libor plus 350 basis points, a $100 million six-year term loan A with an interest rate of Libor plus 350 basis points and a $335 million seven-year term loan B with an interest rate of Libor plus 375 basis points, the source said.

The Princeton, N.J. chemical company is seeking this new credit facility as part of a recapitalization plan that also includes the issuance of $375 million senior subordinated notes due 2011 and a $25 million equity infusion from Kohlberg Kravis Roberts & Co. This new capital structure of bank debt, bonds and equity will replace the existing capital structure, which consists of only bank and bond debt.

The company is currently seeking a recapitalization since the market is presently receptive to high yield deals, which will give Rockwood more flexibility and breathing room in terms of covenants.

Closing on both the credit facility and the bond offering is expected to occur around July 23.

Market talk is that Infinity Property & Casualty Corp.'s $180 million seven-year term loan (BBB/Baa3) may be flexed down to Libor plus 250 basis points from price talk of Libor plus 300 basis points, according to a market source. Lehman and Bear Stearns are the lead banks on the deal.

The books on the deal closed on Monday since the deal was well oversubscribed.

The term loan has an amortization schedule of 5% in year one, 5% in year two, 7 ½% in year three, 10% in year four, 17 ½% in year five, 25% in year six and 30% in the final year.

Proceeds from the term loan will be used to repay the $55 million 10-year note payable to American Financial Group Inc. (the ex-parent company), for working capital and general corporate purposes.

Infinity Property & Casualty is a Birmingham, Ala. auto insurance policy provider.

In follow-up news, Regent Communications Inc. closed on its $150 million credit facility due Dec. 31, 2010, consisting of a $65 million term loan and an $85 million revolver, both priced with an interest rate of Libor plus 175 basis points. Fleet Securities served as lead arranger, US Bank served as syndication agent and Wachovia Bank was a co-documentation agent together with SunTrust Bank.

The bank syndicate has also committed to issue up to $35 million in letters of credit, subject to the maximum revolving commitment amount then available.

Under the credit agreement, the Covington, Ky. radio broadcasting company has the ability to enter into an incremental revolver of up to $100 million for a three-year period, which must mature at least six months after the maturity date of the primary facility.

Security for the facility is liens on substantially all of the assets of Regent Communications and its direct and indirect subsidiaries and by a pledge of Regent's operating and license subsidiaries' stock.

Proceeds from the term loan combined with a portion of the revolver will be used to pay amounts outstanding under the existing credit facility. The revolver is available for working capital and acquisitions, including related acquisition expenses.

"Today's announcement increases our financial flexibility, providing us with access to up to $250 million in capital. Combined with Regent's solid balance sheet and portfolio of stations in the early stages of growth, we are in an excellent position to grow through both acquisition and internal improvements. Finally, I would like to thank the members of our syndicate group, who are all significant lenders in the media industry, for their support, said Tony Vasconcellos, senior vice president and chief financial officer, in a news release.

Worldspan LP closed on its $175 million credit facility, consisting of a $125 million term loan and a $50 million revolver, both with a term of four years and both priced at Libor plus 375 basis points.

The deal allocated and broke for trading last Friday with the term loan B immediately moving up to par ¼ bid, par ½ offered. On Tuesday, the B loan was quoted at par 3/8 bid, par 5/8 offered, according to a market osurce.

The B loan was upsized by $25 million during the syndication process and pricing on the tranche as well as on the revolver was reverse flexed from price talk of Libor plus 450 to 500 basis points due to strong demand.

The extra funds transferred to the bank deal came from the company's bond offering, which was downsized to $280 million from $315 million. Furthermore, the company increased its capitalized lease deal by $10 million.

As part of the deal structure, there was an option to commit $15 million, with $10 million going towards the term loan, which was offered at 99, and $5 million going towards the revolver, which gave 150 basis points upfront. In return for committing to both tranches in this fashion, the investor got 2% bond economics.

Some positive factors cited as influencing the deal included lack of new issuance, relatively decent yield for a B1/BB- credit and decent economic performance in one of the worst possible markets for the travel industry.

Lehman Brothers and Deutsche Bank are the lead banks on the deal, which is targeted to close on Monday.

Proceeds were used to help fund the previously announced leveraged buyout of Worldspan from its three airline owners by Travel Transaction Processing Corp., a company formed by Citigroup Venture Capital Equity Partners LP and Teachers' Merchant Bank.

American Airlines received $180 million in cash and a $39 million promissory note for its equity stake in Worldspan. The cash infusion will bolster American's cash position, but it will not alter the airline's need to fully implement its Turnaround Plan, which includes the removal of $4 billion of annual costs, according to a news release.

Northwest Airlines Corp. received cash proceeds of approximately $280 million at the closing, plus additional credits for future services from Worldspan.

And, Delta Air Lines Inc. received an immediate cash payment of approximately $285 million, credits totaling approximately $125 million over nine years against future Worldspan-provided services and a $45 million subordinated promissory note, which matures in 2012.

"This transaction provides incremental liquidity to bolster our balance sheet. Delta continues to seek out every opportunity to strengthen our company," said M. Michele Burns, executive vice president and chief financial officer, in a news release. "Delta looks forward to continuing to receive the same high level of technical services from Worldspan."

Worldspan is an Atlanta travel technology resource for travel suppliers, travel agencies, e-commerce sites and corporations.

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