Clear Channel widens OID, trying to build cash book; Sensata B loan slides; General Motors softens

By Sara Rosenberg

New York, July 11 - Clear Channel Communications Inc. came out with an official change to its original issue discount and revealed that it is looking to assemble a cash book for roughly $4 billion of its term loan B.

Also in the primary, MonaVie modified pricing on its in market credit facility, indicating what the all-in rate will fall out to even though the specific details are still being determined.

Meanwhile, in trading news, Sensata Technologies BV's term loan B headed lower on the heels of a rating downgrade as the rest of the cash market weakened, and General Motors Corp.'s term loan traded down as well.

Clear Channel officially announced on Friday an increase to the original issue discount on the about $4 billion worth of term loan B debt that it is looking to sell under the $10.7 billion 71/2-year tranche (B1/B), according to market sources.

The term loan B debt is now being offered to investors at a discount price in the 85 to 86 context, compared to the 90 to 91 talk that surfaced at launch, sources said.

There have been rumors floating around the market for a few weeks now that the original issue discount would widen, with the earlier speculation putting the price in the high 80s and the later speculation putting it in the mid 80s, but nothing official had come out until now.

The spread on the term loan B is Libor plus 365 basis points with a step down to Libor plus 340 bps at less than 7:1 total leverage.

Commitments from lenders are now due by the close of business on July 18. When the deal was first launched, the commitment deadline had been set for July 2.

How much of the term loan B is actually sold in the end will end up depending on market demand. At launch, it was said that the banks were looking to sell up to $3 billion of the tranche.

Sources said that the banks on the deal are trying to build a cash book for the roughly $4 billion of term loan B.

Clear Channel already sold $5.5 billion of its bank debt in a leveraged trade, sources added.

Under a leveraged syndication, the actual commitment size is less than the amount of the order size that's put in the book. For example, if a lender puts in $150 million and the banks give four turns of leverage, that $150 million is marked down as a $600 million commitment.

By comparison, under a cash syndication, if a lender puts in $150 million, the commitment is marked down at that actual size.

Citigroup, Deutsche Bank and Morgan Stanley are the joint lead arrangers and bookrunners on the deal, with Citi the administrative agent, Deutsche and Morgan Stanley the syndication agents, and Credit Suisse, RBS and Wachovia the co-documentation agents.

Clear Channel's $16.77 billion senior secured credit facility also includes a $690 million six-year receivables-based revolver, a $1.425 billion six-year term loan A (B1/B), a $2 billion six-year revolver (B1/B) that is split into $1.85 billion in U.S. dollars and $150 million available in alternate currencies, a $705.6 million 71/2-year asset sale term loan C (B1/B) and a $1.25 billion 71/2-year delayed-draw term loan (B1/B).

As of now, the only debt that is formally being syndicated is the piece of term loan B.

Pricing on the receivables-based revolver is initially set at Libor plus 240 bps, but it can range from Libor plus 215 bps to 240 bps, depending on leverage. This tranche has a 37.5 bps commitment fee.

Initial pricing on the term loan A and the revolver is Libor plus 340 bps, but it can range from Libor plus 290 bps to 340 bps, depending on leverage. The revolver has a 50 bps commitment fee.

And, pricing on the term loan C and the delayed-draw term loan is Libor plus 365 bps with a step down to Libor plus 340 bps at less than 7:1 total leverage. The delayed-draw term loan has a 182.5 bps commitment fee.

Originally, based on filings with the Securities and Exchange Commission, it was expected that the receivables-based revolver could be sized at $1 billion and that the term loan A could be sized at $1.115 billion.

However, those filings explained that if availability under the receivables-based revolver is less than $750 million due to borrowing base limitations, the term loan A would be increased by the amount of such shortfall and the maximum availability under the receivables facility will be reduced by a corresponding amount.

Covenants under the facility include a maximum consolidated senior secured net debt to adjusted EBITDA ratio requirement.

Proceeds will be used to help fund the buyout of Clear Channel by Bain Capital Partners LLC and Thomas H. Lee Partners LP for $36.00 in cash or stock per share, in a transaction valued at about $17.9 billion. The purchase price was lowered from $39.20 per share in connection with a settlement agreement that enabled the buyout to progress, and entailed putting all debt and equity financing in escrow.

Of the total delayed-draw funds, $750 million can be used to purchase or repay Clear Channel's outstanding 7.65% senior notes due 2010 and the remainder will be available to purchase or repay Clear Channel's outstanding 4¼% senior notes due 2009.

Other buyout financing is coming from $980 million of 10¾% senior unsecured notes, $1.33 billion of 11% cash pay/11¾% PIK senior unsecured toggle notes and equity.

The acquisition of Clear Channel is expected to close by the end of the third quarter, subject to shareholder approval, which will be sought at a meeting on July 24.

Clear Channel is a San Antonio media and entertainment company specializing in "gone from home" entertainment and information services.

MonaVie tweaks pricing

MonaVie came out with new pricing on its $135 million credit facility, telling investors that the all-in rate on each tranche will be 14%, according to a market source.

This all-in rate will be obtained through the combination of Libor plus an undetermined spread, a Libor floor and an original issue discount, the source said.

Tranching on the deal consists of a $10 million revolver and a $125 million term loan A.

At launch, the revolver and the term loan A were presented to lenders with guidance in the Libor plus 500 bps to 550 bps range, with the understanding being that there would be a Libor floor and an original issue discount.

Jefferies is the lead bank on the facility that will be used for a dividend recapitalization.

Total leverage is 0.7 times.

MonaVie is a health drink with acai berries.

Sensata trades down

Switching to the secondary market, Sensata Technologies' term loan B was noticeably weaker during the Friday session on the back of a ratings downgrade, although some thought the drop was more a function of the overall market being down than a reaction to the ratings news, according to a trader.

Late Thursday, Moody's Investors Service lowered the ratings of Sensata, dropping, among other things, the corporate family rating to B3 from B2 and the senior secured credit facility to B1 from Ba3.

Moody's said that the downgrade reflects high leverage levels and modest debt service metrics, and the potential for weaker economic trends to further pressure the company's operating performance over the coming year.

The company's term loan B was quoted at 88 bid, 89 offered on Friday, down from Thursday's levels of 90½ bid, 91½ offered, the trader said.

The cash market in general, at its low on Friday, was down about a half a point to a point, and then it rebounded a little as the day progressed to end only down about a quarter to a half a point depending on the name, the trader added.

Sensata is an Attleboro, Mass.-based designer and manufacturer of sensors and controls.

General Motors driven lower

General Motors' term loan lost some more ground in trading as the debt was possibly still being affected by recent bankruptcy speculation, or it could also have just been pulled down by the rest of the market, according to a trader.

The Detroit-based automotive company's term loan was quoted at 79 bid, 81 offered, down from 80 bid, 82 offered, the trader said.

On Thursday, the loan had dropped by about half a point to a point on the day as grumblings about bankruptcy were circulating. Reports later emerged that the company called the speculation inaccurate.

As mentioned above, the cash market in general felt heavy with equities on Friday, ending the day down by about a quarter to a half a point.

LCDX 10, on the other hand, held in pretty well, ending the day basically unchanged at around 96.75 bid, 96.90 offered, after coming back from a low of around 96.55 bid, the trader added.

Meanwhile, Nasdaq went out down 18.77 points, or 0.83%, Dow Jones Industrial Average went out down 128.48 points, or 1.14%, S&P 500 went out down 13.90 points, or 1.11%, and NYSE went out down 88.70 points, or 1.05%.

O'Reilly closes

O'Reilly Automotive Inc. completed its acquisition of Phoenix-based CSK Auto Corp. for 0.4285 of a share of O'Reilly common stock plus $1.00 in cash, according to a news release.

The acquisition was done through an exchange offer in a transaction valued at about $1 billion, including about $500 million of debt.

To help fund the transaction, and to refinance existing debt and provide liquidity, O'Reilly got a new $1.2 billion asset-based revolving credit facility.

The facility consists of a $125 million first-in, last-out tranche that is priced at Libor plus 375 bps and a $1.075 billion conforming borrowing base tranche that is priced at Libor plus 250 bps. Both tranches priced in line with initial talk.

Bank of America and Lehman Brothers acted as the lead banks on the deal, with Bank of America the left lead.

With the close of the transaction, Springfield, Mo.-based O'Reilly is the third largest national auto parts retailer with about 3,200 stores located across the United States. The combined company had pro forma revenues of $4.4 billion in 2007.

General Growth closes

General Growth Properties, Inc. closed on the first stage of its new secured mortgage loan facility, under which $875 million was drawn to repay all remaining loans maturing in the third quarter, except for one $73 million property loan which cannot be repaid without a prepayment penalty prior to its due date in September, according to a news release.

Through an interest rate swap that was executed, the initial borrowings will bear interest at a fixed rate of 5.64% per year.

The company anticipates receiving additional funding under the three-year loan facility of up to an additional $875 million, which would bring the loan facility to its maximum balance of $1.75 billion.

The additional facility funding would be used to repay the property loan that matures in September and as many as six other property loans which mature on various dates in the fourth quarter, and for other general corporate purposes.

The loan has two one-year extension options.

General Growth is a Chicago-based real estate investment trust.

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