Anchor orders come into Getty Images deal; TriZetto launches $442.5 million; LCDX down 1/8

By Paul A. Harris

St. Louis, June 10 - Getty Images Inc. held a well attended bank meeting on Tuesday to launch its $1.045 billion senior secured credit facility, according to an informed source.

The deal was already drawn some significant interest, the source added.

Meanwhile the overall bank loan market remained pretty quiet on Tuesday, according to a trader who added that prices nevertheless were relatively stable: flat to off 1/8 point on the day.

The LCDX 10 index closed 1/8 point lower, going out at 98.75 bid, 98.85 offered, the trader noted, adding that the index had been down as much as ¼ point early, but came back.

Among names quoted, the trader said that the term loan paper of Georgia Gulf Corp. was better on the day by ½ point at 97½ bid, 98 offered.

On Tuesday Fitch Ratings said it downgraded Georgia Gulf's issuer default rating to B- from B, its senior secured credit facility to BB-/RR1 from BB/RR1, its senior unsecured notes to CCC+/RR5 from B-/RR5 and senior subordinated notes to CCC/RR6 from CCC+/RR6.

The outlook remains negative. The ratings reflect tight liquidity, weak demand for the company's products and compressed margins, a high risk of non-compliance with the interest coverage covenant in the bank credit agreement at June 30, the agency said.

Meanwhile a portfolio manager from a mutual fund demanded to know why the LandSource Communities Development LLC term loan has gone up 5 points since the company filed for bankruptcy on Sunday.

"It was sitting there close to 70 bid for almost six months because people thought it might file for bankruptcy," the investor said.

"Then it did file, and the loan bid went up."

Getty bank meeting well attended

Over 100 people attended the Tuesday bank meeting for Getty Images' $1.045 billion senior secured credit facility, according to an informed source.

Pricing for the $705 million Libor plus 425 basis points seven-year term loan firmed up at 97. In addition to the original issue discount, the institutional piece comes with a 3¼% Libor floor.

"There are anchor orders, so it's going pretty well," the source added.

Barclays Capital, GE Capital and RBS Greenwich Capital are leading the deal which also includes a $75 million five-year revolver and a $265 million 40-day delayed-draw term loan with a seven-year final maturity.

Both the revolver and the delayed-draw term loan have a 50 bps commitment fee.

The facility has a $100 million accordion feature.

Proceeds will be used to help fund the buyout of the company by Hellman & Friedman LLC for $34 per share in cash. The transaction is valued at $2.4 billion, including the assumption of existing debt.

Other financing will come from up to $941.3 million in equity.

A special meeting of shareholders is scheduled to take place on June 20.

TriZetto launches deal

Elsewhere in Tuesday's quiet primary market TriZetto Group Inc. launched a $442.5 million senior secured credit facility.

RBC Capital Markets sole lead arranger and sole bookrunner. GE Capital is the syndication agent.

The deal is comprised of a $50 million six-year revolver talked Libor plus 400 bps, a $112.5 million six-year term loan A talked at Libor plus 425 bps with a 3% Libor floor, at an OID of 98 and a $280 million seven-year term loan B at talked at Libor plus 450 bps with 3% Libor floor and an OID of 98.

Proceeds will be used to help fund the acquisition of the company by funds advised by Apax Partners along with BlueCross BlueShield of Tennessee and The Regence Group, for $22.00 per share in cash in a transaction valued at approximately $1.4 billion.

The financing also includes $187.5 million mezzanine notes and over $891 million of equity comprising over 60% of capital structure.

Total leverage is 5.5 times.

The deal was privately rated. Corporate ratings are in the high single-B profile; senior secured ratings have a four-B profile.

According to the source, the mezzanine debt was well received, oversubscribed and has been circled completely.

Early-look marketing has been very successful with investors responsible for several large anchor tickets in the senior secured facilities as general syndication is launched, the source added.

An investor call is scheduled for June 20.

A positive yield curve

The bank loan portfolio manager believes that the Libor forward curve is telegraphing a message about rates.

"Three-month Libor is 2.79% today," the money manager said.

"On the forward curve, in September, it's 3.53%. In December it's 3.72%. A year from now it's 3.82%.

"That is telling you that the market thinks rates are going up."

Later in the day an investment banker, hearing these numbers, commented that the yield curve is no longer inverted, but rather is positive for the first time in a long time.

The rate 'tightrope'

The investor also noted that Federal Reserve Bank chairman Ben Bernanke's mood has apparently improved in recent days.

"A week ago he sounded gloomy, and today he said that the economy is not doing so badly, so he's going to focus on inflation."

With its spotlight shifting to inflation in a slow economy, the Fed will shortly find itself balancing on a tightrope, the money manager asserted.

"You're seeing editorials encouraging the Fed to raise rates in order to try to protect the dollar," the manager said.

"In many ways the Fed was pretty creative in the way that it handled the problems in the financial markets. Now they have to think about both the economy and the dollar.

"Whatever they do, one is going to win and the other will lose.

"It's a tightrope.

"How do you keep your interest rates high enough that people like the dollar but low enough so that the economy keeps going?"

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