Las Vegas Sands falls with ratings cut; TNS well attended; LCDX softens slightly

By Sara Rosenberg

New York, March 17 - Las Vegas Sands Corp.'s strip of institutional bank debt headed lower during Tuesday's trading session as the company was hit with a ratings downgrade, and the LCDX 10 index was a little lower despite stocks being up.

Moving to new deal happenings, TNS Inc. launched its proposed term loan with a bank meeting that saw a strong showing from investors and the deal has already garnered some early interest.

Las Vegas Sands slides lower

Las Vegas Sands' strip of institutional bank debt lost some ground in trading as Standard & Poor's announced that it lowered the company's ratings, according to a trader.

The strip of debt was quoted at 42¾ bid, 43¾ offered, down from Monday's levels of 43¾ bid, 44¾ offered, the trader said.

On Tuesday morning, S&P downgraded Las Vegas Sands' corporate credit rating to B- from B and its senior secured credit facility to B- from B+.

The ratings were removed from CreditWatch and the outlook is negative.

Las Vegas Sands downgrade reflects covenant concerns

According to S&P, the lowering of Las Vegas Sands' ratings reflects concerns over the company's ability to maintain compliance with its credit facilities while funding its development pipeline.

The rating agency said that based on its projections for performance in 2009 and 2010 at the company's properties in the United States, Macau and Singapore, combined with additional spending requirements of more than $4.5 billion, there will be a liquidity shortfall absent potential asset sales in Macau.

S&P also attributed the downgrade to the expectation that the company will continue to be required to fund equity cure payments over at least the next several quarters in order to remain in compliance with covenants within its bank facilities.

Las Vegas Sands is a Las Vegas-based developer of multi-use integrated resorts.

Education Management on the rise

Education Management LLC's term loan ticked higher since last week as the company launched an amendment to its credit facility that will allow for the repurchase of the debt at a price below par, according to a market source.

The term loan was quoted at 84 bid, 87 offered on Tuesday, unchanged from Monday's levels but up from Friday's levels of 83 bid, 85 offered, the source said.

The source explained that he didn't think the rise was based on the amendment, but rather on the fact that the cash loan market has been a little stronger this week.

Under the amendment, the company is looking to be allowed to buy back up to $400 million of its term loan in a Dutch auction.

Education Management offering fee

In return for approving the amendment, Education Management is offering lenders a 5 basis point fee.

The company is asking for consents to be in on Friday.

As part of the amendment, the company would have until June 30, 2010 to tender for its term loan debt.

Other terms of the amendment include a $150 million minimum liquidity test, a tender minimum of $15 million and the inability to use revolver borrowings to fund any buyback.

Goldman Sachs and JPMorgan are leading the amendment.

Education Management is a Pittsburgh-based provider of post-secondary education.

LCDX dips

The LCDX 10 index was a little lower on Tuesday even though equities saw an improvement, according to traders.

One trader had the index quoted at 73.20 bid, 73.45 offered and a second trader had it quoted at 73.25 bid, 73.50 offered. On Monday, the index went out around 73.50 bid, 73.70 offered.

Nasdaq closed up 58.09 points, or 4.14%, Dow Jones Industrial Average closed up 178.73 points, or 2.48%, S&P 500 closed up 24.23 points, or 3.21%, and NYSE closed up 139.23 points, or 2.94%.

As for the cash market overall, one trader remarked that a tone was non-existent being that activity was so light, while a second trader said that things felt slightly better, but it was kind of name dependant.

TNS launch goes well

Over in the primary market, TNS held its bank meeting in New York on Tuesday morning and the launch was described as "extraordinarily well attended" as around 64 institutions were represented in the room and a number of other investors were on the phone, according to a market source.

In addition, the company's new deal has already seen some early interest from existing lenders, the source continued.

The company launched a $250 million incremental term loan (B1) due March 28, 2014 that is talked at Libor plus 600 bps with a 3.5% Libor floor, an original issue discount of 90, and 101 soft call protection for one year.

Amortization on the loan is 7.5% in the first year, 10% in the second and third years and 12.5% in the fourth and fifth years.

Financial covenants include a limit on capital expenditures, which will initially be $50 million in the first year with step-ups to be agreed upon; a maximum leverage ratio, which will initially be 3.25 times with step-downs to be agreed upon; and a minimum consolidated fixed-charge coverage ratio, which will initially be 1.20 times with step-ups to be agreed upon.

TNS acquiring VeriSign business

Proceeds from TNS' newly launched term loan will be used to help fund the acquisition of VeriSign Inc.'s communication services group for $230 million in cash.

Expected pro forma leverage is around 21/2.

SunTrust is the bookrunner and lead agent on the new loan and has committed to provide $40 million of the debt.

In connection with the new deal, the company's existing $178.5 million term loan B will be amended to accommodate the new debt and to revise pricing to Libor plus 600 bps with a 3.5% Libor floor from the current rate of Libor plus 200 bps.

TNS is a Reston, Va.-based provider of business-critical, cost-effective data communications services for transaction-oriented applications.

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