First Data rises with earnings; Dole Food slides on IPO plans; Reader's Digest nosedives

By Sara Rosenberg

New York, Aug. 14 - First Data Corp.'s term loan B debt headed higher during Friday's trading session as the company came out with quarterly results that, although weren't great, were a little better than people had been anticipating.

Also in the secondary market, Dole Food Co. Inc.'s strip of institutional bank debt softened after the company revealed plans for an initial public offering that would be used, among other things, to pay down debt, and the Reader's Digest Association Inc.'s term loan B fell by a couple of points.

In more trading happenings, Venetian Macau's strip of institutional bank debt and Oshkosh Corp.'s term were both a little weaker on the day on no specific news as it appeared that investors were just trying to find good levels for the paper.

First Data up on numbers

First Data's term loan B debt gained some ground in trading following the release of second-quarter earnings that showed a decrease in the company's net loss and adjusted EBITDA, but were still better than expected, according to traders.

One trader had the term loan B-2 quoted at 84¾ bid, 85¼ offered, compared to 83¾ bid, 84¾ offered on Thursday.

Meanwhile, a second trader had the term loan B-2 quoted at 84¼ bid, 85¼ offered, up from 83½ bid, 84¼ offered, and the term loan B-3 quoted at 84 bid, 85 offered, up about a point on the day.

For the second quarter, First Data reported a net loss of $195.9 million, compared to a net loss of $160.6 million in the 2008 second quarter.

Consolidated revenues for the quarter were $2.209 billion, basically flat from $2.204 billion in the comparable period last year.

And, adjusted EBITDA for the quarter was $607.2 million, down 5% from $641 million in the prior year.

First Data reduces term debt

During the second quarter, First Data repaid $32.2 million of its senior secured term loan as required under the amortization schedule, according to a 10-Q filed with the Securities and Exchange Commission Friday.

For the six months ended June 30, the company made a total of $64.4 million in amortization payments.

As for the company's revolver, there was $95 million outstanding under the facility at June 30, compared to $18 million outstanding at Dec. 31, 2008.

The revolver had $1.6 billion in availability as of June 30 after considering the amount outstanding, letters of credit issued under the facility, and the $230.6 million commitment from Lehman Brothers that is no longer being funded.

First Data is an Atlanta-based provider of electronic commerce and payment services.

Dole dips with IPO filing

Dole Food's strip of institutional bank debt headed lower on Friday following the company's announcement that it will be doing an initial public offering of common stock with proceeds going to pay down debt and for general corporate purposes, according to traders.

The strip of debt was quoted at par ¼ bid, 101¼ offered, down from 101¼ bid, 102 offered, traders said.

One trader explained that even though the company didn't specifically say what type of debt it will repay with the IPO proceeds, investors are assuming that some of the bank debt will get paid down at par, which is why levels moved closer to the par area.

As of June 20, the company had a $175.3 million term loan B and a $653 million term loan C. Pricing on the tranches, due in 2013, can range from Libor plus 450 basis points to 500 bps based on senior secured leverage and there is a 3% Libor floor.

The asset-based revolving credit facility, as of June 20, had a borrowing base of $320 million and no amounts drawn. Pricing on this facility can range from Libor plus 300 bps to 350 bps based on availability.

Dole to eliminate cross-defaults

Also in its IPO filing, Dole revealed that it hopes to complete transactions prior to doing the IPO that will result in the elimination of current cross-default provisions that exist between its senior secured facilities and certain debt of its parent company, DHM Holding Co. Inc.

In addition, the filing said that the company plans to offer senior secured notes during the third quarter of this year, with proceeds from the new notes, along with cash on hand and/or borrowings under the its revolving credit facility, to be used to redeem its outstanding 2010 notes.

Then on Friday afternoon, Dole announced that it is doing a $325 million private offering of senior secured notes due 2016 to redeem the 2010 senior notes. There is currently $363 million of the 2010 notes outstanding.

Dole is a Westlake Village, Calif.-based producer, marketer and distributor of fresh fruit and fresh vegetables.

Reader's Digest drops

Reader's Digest's term loan B fell off by a couple of points on Friday, according to traders.

The term loan B was quoted by one trader at 37 bid, 38 offered, by a second trader at 36 bid, 38 offered, down from 40½ bid, 42½ offered, and by a third trader at 39 bid, 41 offered, down from 42½ bid, 44½ offered.

Reader's Digest is a Pleasantville, N.Y.-based publishing company.

Venetian Macau trades down

Venetian Macau's strip of institutional bank debt was a little softer in trading on no specific news, with a trader attributing the loss to people "searching for a level."

The strip was quoted at 90 bid, 91 offered, down from 90½ bid, 91½ offered on Thursday.

Late in the day Thursday, the company announced in an 8-K filing that it completed its amendment that allows for the issuance of notes and equity, and increases loan pricing.

"That's nothing really new in terms of news. Market knew earlier that the amendment passed," the trader added.

Under the amendment, the company is permitted to sell up to $1 billion of senior secured notes if proceeds from those notes are used to prepay loans, permitted to sell $500 million of senior unsecured notes if the consolidated leverage ratio is not greater than 3.0 times and they mature later than the credit facility, and can sell equity. However, the lesser of the net proceeds from the sale and $500 million must be used to prepay loans with a concurrent permanent reduction in revolver commitments.

As a result of the amendment, pricing on Venetian Macau's facility was increased by 325 bps to Libor plus 550 bps. However, once $500 million of proceeds from permitted equity sales is applied to prepay the loans, pricing will step down by 100 bps to Libor plus 450 bps.

Venetian Macau is a subsidiary of Las Vegas Sands Corp., a Las Vegas-based hotel, gaming, resort and exhibition/convention company.

Oshkosh dips

Another name that moved lower for no apparent reason on Friday was Oshkosh, with its term loan quoted at 99½ bid, par ½ offered, down from par bid, according to a trader.

Lately, there has been a bunch of positive news surrounding Oshkosh, like the completion of its equity offering on Wednesday that raised about $358 million in net proceeds, which were used to repay term loan borrowings.

And then on Thursday, Standard & Poor's raised its long-term corporate credit rating on Oshkosh to B+ from B as a result of the completion of the equity deal.

Lastly, on Friday, the company announced that its Oshkosh Defense division delivered a competitively priced and low-risk bid for the U.S. Army's Family of Medium Tactical Vehicles competitive rebuy.

The Family of Medium Tactical Vehicles program is a five-year, multibillion-dollar contract award for the production of an estimated 23,000 vehicles and trailers for the Army.

Oshkosh is an Oshkosh, Wis.-based designer, manufacturer and marketer of a broad range of specialty access equipment, commercial, fire & emergency and military vehicles and vehicle bodies.

American Campus closes

American Campus Communities Inc. closed on its new $225 million three-year senior secured revolving credit facility, according to a news release.

KeyBank acted as the lead bank on the deal.

The facility has a one-year extension option.

Security is seven properties.

Proceeds are being used to replace the company's existing $160 million revolver and to fund acquisitions, other working capital needs and future property development.

American Campus is an Austin, Texas-based real estate investment trust focused on student housing properties.

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