IPC widens out second-lien guidance; USI adds term loan pricing grid; Burger King breaks in upper-101s

By Sara Rosenberg

New York, July 12 - IPC Acquisition Corp. widened out price talk on its second-lien term loan as the deal launched via a bank meeting Tuesday. And, United Subcontractors Inc. added a pricing step down to its oversubscribed term loan that becomes effective upon the company meeting a specific leverage test.

In the secondary, Burger King Corp. allocated its new deal, with the term loan B trading around in the upper-101 context throughout the day.

IPC decided to launch its $150 million seven-year second-lien term loan (B3/B-) with opening price talk unofficially set at Libor plus 650 to 700 basis points as opposed to talk of just Libor plus 650 basis points that was found in the company's original commitment letter, according to a market source.

"No official talk released," the market source said, "that's just where orders are."

The company's $50 million revolver due Dec. 31, 2010 (B2/B+)and $285 million six-year first-lien term loan (B2/B+) both launched, as expected, with opening price talk of Libor plus 275 basis points, the source said.

As for the actual bank meeting, that was said to have gone very well with the deal seeming to have good momentum as "multiple orders on each tranche" had already been placed by Tuesday afternoon, the source added.

Goldman Sachs is the lead bank on the $485 million senior credit facility that will be used to refinance the company's existing credit facility, which has approximately $47.5 million outstanding, finance the tender offer for the company's $150 million 11.5% senior subordinated notes due Dec. 15, 2009 and finance the repurchase of some equity securities.

The revolver is available for general corporate purposes.

Security for the revolver and first-lien term loan is substantially all company assets on a first priority basis and security for the second-lien term loan is substantially all company assets on a second priority basis.

Mandatory loan prepayments, subject to certain exceptions, will be required from excess cash flow, net proceeds from asset sales, the net proceeds of debt and equity issuances and net insurance proceeds.

Financial covenants will include a maximum total leverage ratio, a maximum first-lien leverage ratio, a minimum interest coverage ratio and a limit on future capital expenditures, according to an 8-K that was filed Tuesday with the Securities and Exchange Commission in connection with syndication of the credit facility.

For the year ending Sept. 30, the company estimates revenue of $330 million, net income of $15 million and interest expense of $26 million, the filing said.

For the 12 months ended June 30, unaudited financial results include revenue of $304 million and interest expense of $23 million.

Estimated financial results for the 12 months ending Dec. 31 include revenue of $361 million and interest expense of $30 million.

IPC is a New York-based provider of mission-critical communications solutions to global enterprises.

USI adds step down

United Subcontractors inserted a step down provision in its term loan B credit agreement under which pricing can go down from the current Libor plus 275 basis points level to the Libor plus 250 basis points level if leverage falls below 3x, according to a market source.

Recommitments towards the $265 million seven-year term loan B tranche were due Tuesday.

The term loan was said to be two times oversubscribed by mid-last week, and, because of the strong attention that the tranche got, the syndicate felt the need to close down the books one day early on the deal.

Royal Bank of Scotland and Citigroup are joint lead arrangers on the deal, with RBS left lead and administrative agent.

United Subcontractors' $305 million credit facility (B1/B+) also contains a $40 million six-year revolver with an interest rate of Libor plus 275 basis points as well. This pro rata tranche is -and was by last week - fully circled, but was nowhere near as much of a blowout as the term loan B.

Proceeds from the facility will be used for to fund the $42.5 million acquisition of CSCI, a shell contracting business, pay a $20 million dividend to the sponsor, which is Wind Point Partners, and refinance existing credit facility debt.

Following completion of the transaction, net leverage will be 3.3x.

United Subcontractors is a Salt Lake City-based installer of residential and commercial insulation systems and provider of related products and services.

UAL amendment expected to pass

UAL Corp.'s 12th amendment to its debtor-in-possession financing facility is expected by some investors to pass as consents, along with commitments to the proposed $300 million term loan add-on, were due Tuesday, according to a fund manager.

Under the amendment, lenders would waive events of default related to technical matters, including any agreements to acquire aircraft, extend the maturity of the DIP to Dec. 30, with an option to extend the term until March 31, 2006, and allow for the $300 million term loan add-on.

UAL, parent company of United Airlines, also asked lenders to amend the minimum cash covenant, provide for a new capital expenditure basket for some aircraft purchases, including a cash sublimit and financing requirement for the balance of the purchase price, and make changes to the collateral package.

JPMorgan and Citigroup are the lead banks on the Elk Grove Township, Ill., airline carrier's DIP.

Burger King trades in 101s

Burger King's $750 million seven-year term loan B freed up for trading on Tuesday, with the paper quoted at 101½ bid, 101 5/8 offered on the break and throughout the remainder of the session in pretty active trading, according to one trader.

A second trader, however, said that the paper fell off slightly by the end of the day to 101 3/8 bid, 101 5/8 offered from the 101½ bid, 101 5/8 offered context that was seen on the break. Furthermore, according to this trader, the paper traded as high as 101 7/8 during market hours before coming in a bit.

The term loan B is priced with an interest rate of Libor plus 175 basis points and was originally issued to investors at par. Initial price talk on the tranche had been Libor plus 200 basis points but pricing was reverse flexed during syndication on strong demand.

Burger King's $1.15 billion credit facility (Ba2/B+) also contains a $150 million revolver and $250 million six-year term loan A with both pro rata tranches priced at Libor plus 175 basis points as well. Pricing on these tranches was left unchanged since launch.

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

Proceeds will be used by the Miami-based fast food hamburger chain to refinance existing debt.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.