First Data may restructure ahead of launch; Thomson Learning inches up on numbers, LCDX softer

By Sara Rosenberg

New York, Aug. 30 - First Data Corp. is heard to be discussing a possible restructuring of its multi-billion-dollar credit facility before retail syndication kicks off on the deal because of the current market environment.

In trading news, Thomson Learning's term loan B was a touch stronger after the company posted second-quarter financials, and LCDX was a bit lower in muted activity.

Talk is that First Data may revise its proposed $16 billion credit facility ahead of the retail syndication bank meeting that is anticipated to take place in early September, according to a market source.

"I'm hearing that the banks on First Data and KKR are having big meetings today to discuss restructuring the credit facility before it launches," the source said.

The source also said that although he has received no indication on what changes may be made to the deal, the two most likely modifications would be eliminating the covenant-light structure and increasing pricing from the talk that was seen during the senior managing agents round.

Other speculation being thrown out by market participants is the potential addition of a second-lien term loan and a reduction in the size of the first-lien term loan B.

Currently, the credit facility consists of a $2 billion six-year revolver and a $14 billion seven-year term loan B, with both tranches covenant-light.

And, 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 basis points to 250 bps.

Although firm timing on the retail launch for the facility has yet to emerge, sources have heard that Sept. 5 is the targeted date.

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

Proceeds from the facility will be used to help fund Kohlberg Kravis Roberts & Co.'s leveraged buyout of the company for $34.00 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.

Last week, the company said that it is anticipating that the transaction will close by the end of September.

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

Thomson Learning trades up

In the secondary market, Thomson Learning's term loan B was a bit higher on the heels of second-quarter numbers getting announced on Wednesday night, according to a trader.

The term loan B ended the day at 94½ bid, 95 offered, up from previous levels of 94 1/8 bid, 94 7/8 offered, the trader said.

The trader went on to say that it was good a quarter for the company being that historically this quarter isn't its strongest due to the seasonality of the business.

"The academic calendar drives the purchasing behavior of our customers, with purchases for the fall semester in the third calendar quarter and purchases for the winter/spring semester in the fourth calendar quarter before the holiday break. We produce a significant amount of books in advance of these two order periods, and approximately 67% of our revenue is recorded in the third and fourth quarter of the calendar year," the company said in a posting on its web site.

For the three months ended June 30, revenues increased by $7.5 million, or 2.5%, to $310.4 million from $302.9 million for the same period last year, due to growth in domestic higher education revenue and the impact of foreign currency translation.

Net cash used by operating activities for the three-month period increased by $15 million, or about 104.2%, to $29.4 million from $14.4 million for the comparable period in 2006, due primarily to increased losses.

Net loss for the three months was $38.47 million, compared to $14.04 million in 2006.

For the six months ended June 30, revenues increased by $26.7 million, or 4.9%, to $576.9 million from $550.2 million for the six months ended June 30, 2006.

Net cash used by operating activities for the six-month period decreased by $10.6 million, or 25.1%, to $31.6 million from $42.2 million, due to more favorable timing of payments of accounts payable and accruals, partially offset by the increased losses.

Net loss for the six months was $79.50 million, compared to a net loss of $57.15 million last year.

As of June 30, total cash and cash equivalents were $18.8 million and total debt was $769.8 million. By comparison, at Dec. 31, 2006, total cash and cash equivalents were $36.1 million and total debt was $562.7 million.

Thomson Learning is a Stamford, Conn.-based higher education, careers and library reference company.

LCDX weakens

LCDX was off slightly on Thursday with very little activity seen in the market, according to a trader.

The index went out at around 94.60 bid, 94.70 offered, down from Wednesday's closing levels of 94.80 bid, 95.10 offered, the trader said.

Stocks were pretty much a wash on Thursday, with Nasdaq closing up 2.14 points, or 0.08%, the Dow Jones Industrial Average closing down 50.56 points, or 0.38%, and the Standard & Poor's 500 closing down 6.12 points, or 0.42%.

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