Misys Diagnostic sets talk; American Airlines slides; General Motors rises; LCDX stronger

By Sara Rosenberg

New York, Sept. 24 - Misys Diagnostic Systems came out with price talk on its proposed credit facility as the deal is gearing up to launch with a bank meeting on Tuesday.

In trading news, American Airlines Inc. saw its term loan weaken as investors were disappointed by the company's third-quarter passenger revenue forecast, General Motors Corp.'s term loan inched higher despite workers going on strike and LCDX was higher as the general market tone felt better.

Misys Diagnostic released price talk on its proposed $225 million senior secured credit facility (B1/B+) ahead of the Tuesday bank meeting that will kick off the syndication process on the deal, according to a market source.

Both the $25 million six-year revolver and the $200 million seven-year first-lien term loan will be presented to lenders with opening talk of Libor plus 300 basis points, the source said.

UBS Investment Bank and Jefferies are the lead banks on the deal.

Proceeds will be used to help fund the buyout of the company by Vista Equity Partners, LLC from Misys Healthcare Systems.

Misys Diagnostic is a provider of technology solutions for hospitals.

First Data book watched as deadline nears

As the Tuesday commitment deadline on First Data Corp.'s credit facility approaches, talk has been circulating around the market about how much and what type of commitments have already been placed on the books, according to market sources.

These sources said that the $5 billion seven-year term loan B-2, which is the only B tranche currently being syndicated, has received anywhere from $9 billion to $10 billion in orders depending on who was asked.

Of that amount, $8 billion has been broken down into various types: $3 billion is said to be true institutional money; $1 billion is said to be from Kohlberg Kravis Roberts & Co., with only $200 million really committed and $800 million to be financed, and $4 billion is said to be financed, meaning that probably $1 billion of that is committed and $3 billion will be financed, sources remarked.

As to what the remaining $1 billion to $2 billion in orders is comprised of, sources couldn't say.

The term loan B-2 is priced at Libor plus 275 bps, with an original issue discount of 96 and call protection of 103 in year one, 102 in year two and 101 in year three.

The term loan B-2 includes a euro-denominated sub-tranche that is expected to be sized at $1 billion, but the final size will depend on demand.

First Data's $15 billion credit facility (Ba3/BB-/BB) also includes a $2 billion six-year revolver, a $5 billion seven-year term loan B-1 and a $3 billion seven-year term loan B-3, with all three of these tranches priced at Libor plus 275 bps as well.

The revolver has a 50 bps commitment fee.

The term loan B-1 is prepayable at par, and the term loan B-3 is non-callable for 3.25 years.

Under the original plan, the term loan B-1 and term loan B-3 were expected to be syndicated, or sold down, at a later time. But, with so many commitments in on the term loan B-2, the question has been raised whether those commitments will spill into the other B tranches.

The credit facility contains a maximum senior secured net debt-to-EBITDA ratio of 7.25 times that is first tested (quarterly) on Dec. 31, 2008, decreasing by 0.25 times each year after that to 6.00 times at Dec. 31, 2013.

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

Proceeds are being used to help fund Kohlberg Kravis Roberts' buyout of the company for $34 in cash per share.

The transaction, which has a total value of about $29 billion, was completed on Monday.

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

American Airlines heads lower

Moving to trading news, American Airlines' term loan came under some pressure on Monday on the heels of the company releasing updated guidance for the third quarter, according to a trader.

The term loan ended the session at 97 7/8 bid, 98 3/8 offered, down about a quarter of a point from previous levels, the trader said.

According to the trader, people were primarily unpleased with the third-quarter passenger revenue estimate.

The company said in an 8-K filed late Friday with the Securities and Exchange Commission that it expects its third-quarter mainline passenger unit revenue to increase between 4.0% and 5.0% year over year and third-quarter consolidated passenger unit revenue is expected to increase between 3.7% and 4.7% year over year.

In total, cargo and other revenue is anticipated to be nearly flat with the second quarter.

"I think people had expected it to be better," the trader remarked.

As for liquidity, the Fort Worth, Texas-based airline company expects to end the third quarter with a cash and short-term investment balance of about $5.7 billion, including approximately $450 million in restricted cash and short-term investments.

Despite the pressure on American Airlines, UAL Corp. and Delta Air Lines Inc. managed to hold steady.

UAL, a Chicago-based airlines company, saw its term loan end unchanged at 94 7/8 bid, 95 7/8 offered, the trader said.

Delta, an Atlanta-based airline company, saw its second-lien term loan close the day unchanged at 97 bid, 97½ offered, the trader added.

GM stronger

General Motors' term loan was quoted higher in trading despite news that the United Auto Workers union called a national strike after contract talks between the parties stalled, according to a trader.

The term loan closed at 97 3/8 bid, 98 1/8 offered, up from Friday's levels of 96¾ bid, the trader said.

"It's expected to be short-lived. They're making progress and should come to an agreement here shortly," a second trader said regarding the strike.

"Some people are even thinking that this could be good because it might give them a chance to clear out some inventory," the second trader added.

General Motors is a Detroit-based developer, producer and marketer of cars, trucks and parts.

LCDX trades up

LCDX gained some ground during Monday's market session as the general secondary tone was positive, according to a trader.

The index went out around 97.55 bid, 97.65 offered, up from 97.35 bid, 97.50 offered on Friday, the trader said.

Equities, on the other hand, were softer with Nasdaq down 3.27 points, or 0.12%, Dow Jones Industrial Average down 61.13 points, or 0.44%, S&P 500 down 8.02 points, or 0.53%, and NYSE down 35.41 points, or 0.36%.

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