American Safety Razor breaks with little activity; Telcordia re-ups term loan B pricing

By Sara Rosenberg

New York, March 11 - American Safety Razor Co. allocated its $327.5 million credit facility on Friday afternoon, with the first-lien term loan offered in the mid-102 context but no real bids. Meanwhile, Telcordia Technologies Inc. once again raised pricing on its term loan B - this time doing it on the day of the recommitment deadline - with some pointing to the relatively high bond pricing level as somewhat of an impetus for the change.

American Safety Razor's $225 million seven-year first-lien term loan (B2/B) was seen with an opening bid of 101 with no offers on the break and by late day, a $1 million piece of the paper was seen offered at 102½ but no bids were found, according to a buyside source.

The $77.5 million 71/2-year second-lien term loan (Caa1/CCC+) was also seen with an opening bid of 101 with no offers on the break. By late day, a $1 million piece of the paper was being offered at 103 but, like the first lien, no bids were seen in the marketplace, the buyside source said.

"I haven't really seen an active market in it," the buyside source continued. "I think a lot of people are out today."

The first-lien term loan is priced with an interest rate of Libor plus 275 basis points. The tranche was initially launched with a size of $200 million and pricing of Libor plus 300 basis points but was upsized and reverse flexed during syndication.

The second-lien term loan is priced with an interest rate of Libor plus 625 basis points. The tranche was originally launched with a size of $87.5 million and pricing of Libor plus 675 basis points but was downsized and reverse flexed during syndication.

American Safety Razor's facility also contains a $25 million five-year revolver (B2/B) with an interest rate of Libor plus 300 basis points. The tranche was left unchanged in terms of both size and pricing throughout syndication.

As for allocations, they were "pretty weak," according to the buyside source who said that he got about 35% of his order amount.

Proceeds from the credit facility will be used to refinance existing debt and pay a dividend. The size of the planned dividend payment was slightly increased through the $15 million overall loan upsizing.

UBS is the lead bank on the deal.

American Safety Razor, a J.W. Childs Associates LP portfolio company, is a Verona, Va., manufacturer of personal care consumer products primarily consisting of shaving razors and blades.

Telcordia ups B loan spread

Telcordia increased pricing on its $570 million term loan B on Friday - the day recommitments were due - by 50 basis points to Libor plus 275 basis points with a step down to Libor plus 250 basis points if leverage falls below 5x, according to sources. Furthermore, 101 soft call protection was added to the tranche.

Despite the changes to pricing, the Friday recommitment deadline was left unchanged and closing is targeted for early next week, sources said.

The company's leveraged buyout financing package has been a primary focus, starting with Wednesday's surprise announcement that all bank loan trades and commitments were being canceled and the $300 million bond deal was being pulled.

Telcordia held a conference call Thursday morning, explaining to investors that the deals had to be remarketed because $20 million to $30 million of first quarter 2005 revenue shortfalls were found, caused by delayed closing of $5 million to $10 million of software and equipment sales contracts.

Following the call, loan investors were asked to recommit to the term loan B at Libor plus 225 basis points, up from the Libor plus 200 basis points pricing level that the deal was originally allocated at on March 4. The syndicate had also added a step down in pricing to Libor plus 200 basis points if leverage fell below 5x.

But pricing on the term loan B was raised on Friday as the remarketed $300 million senior subordinated notes offering priced at par to yield 10%. Original pricing on the bond deal that was set on Feb. 25 was par to yield 8 7/8%.

"I heard one guy say that if the bonds priced at 10%, he wouldn't do the bank deal at just 25 basis points higher," one market source told Prospect News.

"They didn't come out and say that they raised the loan pricing because of the bonds but to keep the relative value between the loan and the bonds that kind of price increase is justified," a second source added.

When the Telcordia term loan B first launched around mid-February, the tranche was sized at $520 million but was increased to $570 million after the bond deal was decreased to $300 million from $350 million. Also, initial price talk on the tranche at launch was Libor plus 250 basis points, but the deal reverse flexed to Libor plus 200 basis points during syndication on strong investor interest.

Telcordia's $670 million credit facility (B1/B+) also contains a $100 million revolver.

Proceeds from the credit facility and the bonds will be used to help fund the leveraged buyout of Telcordia by Providence Equity Partners and Warburg Pincus for $1.35 billion in cash.

JPMorgan, Bear Stearns, Deutsche and Lehman are the lead banks on the credit facility, with JPMorgan the left lead.

Telcordia is a Piscataway, N.J, provider of telecommunications software and services for IP, wireline, wireless and cable.

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