Intelsat, PanAmSat flex up on all tranches; TransDigm firms spreads; Hertz dips on repricing

By Sara Rosenberg

New York, June 19 - In primary happenings Monday, Intelsat Ltd. and PanAmSat Holding Corp. increased pricing on all tranches contained in their credit facilities in connection with their ongoing amendment process. Also, TransDigm Inc. firmed up pricing on its credit facility at the low end of original guidance.

As for the secondary, levels on The Hertz Corp.'s institutional bank debt softened as the company launched a repricing that would lower the interest rate on the debt.

Intelsat and PanAmSat flexed pricing higher on their various credit facility tranches that are being amended in connection with the merger of the two companies, according to a market source.

With the changes, pricing on both Intelsat's $300 million revolver and $346 million term loan B was increased by 50 basis points to Libor plus 225 basis points, the source said.

Furthermore, pricing on PanAmSat's $250 million revolver and $356 million term loan A was increased by 37.5 basis points to Libor plus 212.5 basis points, and pricing on its $1.639 billion term loan B was increased by 25 basis points to Libor plus 250 basis points, the source added.

At the end of May, both companies launched amendments to their credit facilities under which Intelsat's and PanAmSat's term loan B's will be turned into covenant-light structures, and maturities will be extended.

For Intelsat, the amendment will extend the maturity on its revolver to six years and extend the maturity on its term loan B to seven years.

For PanAmSat, the amendment will extend the maturities on its revolver and term loan A to six years and extend the maturity on its term loan B to 7½ years.

As originally proposed, the amendment would have left existing pricing grids on both the Intelsat and the PanAmSat credit facilities unchanged.

Citigroup is the lead bank on the amendments for both credit facilities.

The amendments are being done with the merger of Intelsat and PanAmSat that was first announced on Aug. 9, 2005, under which Intelsat will acquire PanAmSat for $25 per share in cash, or $3.2 billion.

Other merger financing is coming from bond offerings and a bridge loan that priced Monday.

PanAmSat priced $575 million of 10-year senior notes at par to yield 9%, in line with revised pre-deal market price talk but on the wide end of original guidance of 8¾% to 9%.

Meanwhile, Intelsat priced $750 million of 10-year senior notes at par to yield 9¼%, in line with the revised price talk, but wider than the originally expected 8¾% to 9% range.

Intelsat also priced $1.33 billion of 10-year fixed-rate senior notes at par to yield 11¼%, the wide end of the revised price talk of 11% to 11¼%, and even wider than original talk of 10¾% to 11%.

Lastly on the bond side, Intelsat priced $260 million of seven-year floating-rate senior notes at par with an initial interest rate of six-month Libor plus 600 basis points, the wide end of previous Libor plus 575 to 600 basis points price talk.

There is also a $600 million 10-year senior non-guaranteed bridge loan that priced at 11.25%.

Originally, the overall bond deal size was expected at $3.515 billion, but it was reduced to $2.915 billion following the addition of the bridge loan into the capital structure. The $600 million taken out of the total bond offering size came from the notes issued by Intelsat.

Closing of the transaction is subject to obtaining regulatory approval from the FCC. All other regulatory approvals required prior to closing have been obtained.

Intelsat is a Pembroke, Bermuda, satellite company. PanAmSat is a Wilton, Conn., satellite company.

TransDigm sets pricing

In other primary news, TransDigm firmed up pricing on all tranches under its $800 million credit facility (B1/B+/BB-) at Libor plus 200 basis points, the low end of previous spread guidance of Libor plus 200 to 225 basis points, according to a market source.

The facility contains a $150 million six-year revolver that has a 50 basis point commitment fee and a $650 million seven-year term loan B.

Credit Suisse and Bank of America are joint lead arrangers on the deal, with Credit Suisse the left lead.

Proceeds from the credit facility, $275 million of senior subordinated notes and cash on hand will be used to fund a bond tender, to refinance all outstanding bank debt and to pay related fees and expenses.

The company is tendering for its $400 million of 8 3/8% senior subordinated notes due 2011. The offer expires on June 22.

TransDigm is a Cleveland-based designer, producer and supplier of highly engineered aircraft components for commercial and military aircraft.

Hertz weaker on repricing

Hertz's strip of institutional bank debt traded down during Monday's market hours after details on the company's proposed repricing made their way around the marketplace, according to a trader.

The strip of term loan B and synthetic letter-of-credit bank debt was quoted at par ¼ bid, par ½ offered, down from previous levels of par 5/8 bid, 101 1/8 offered, the trader said.

On Monday, the Park Ridge, N.J, vehicle rental organization launched an amendment for its term loan B and its synthetic letter-of-credit facility that would take the spread on the debt down to Libor plus 200 basis points from the current rate of Libor plus 225 basis points.

In addition, there is a step down to Libor plus 175 basis points, based on leverage. Under the existing loan terms, the institutional bank debt carries a step down to Libor plus 200 basis points from Libor plus 225 basis points that is based on leverage, so basically with this repricing, the company is leaving the pricing grid in place but changing it to match the new pricing level, the source explained.

Deutsche Bank is leading the repricing.

Rumors about a potential repricing transaction for Hertz have been swirling around since April when Avis Budget Car Rental LLC was able to successfully syndicate its term loan at pricing of Libor plus 125 basis points. Being that ratings are similar on the Avis (Ba2/BBB-/BBB-) and the Hertz (Ba2/BB/BBB-) deals and they both operate in the same sector, market players were speculating that Hertz would try to lower its spreads to be more in line with Avis' spreads.

Cricket closes

Cricket Communications, Inc., a wholly owned subsidiary of Leap Wireless International, Inc., closed on its new $1.1 billion senior secured credit facility (B2/B), according to a company news release.

Banc of America Securities LLC and Goldman Sachs Credit Partners LP acted as joint lead arrangers and joint bookrunners on the deal. Bank of America is administrative agent and Goldman Sachs Credit Partners LP is documentation agent.

The facility, which actually was completed this past Friday, consists of a $900 million seven-year term loan and a $200 million five-year revolver, both priced with an interest rate of Libor plus 275 basis points.

The term loan carries a step down to Libor plus 250 basis points if Leap's corporate family debt rating is upgraded to B2 by Moody's Investors Service or better (it currently stands at B3) and the company maintains its B- corporate family debt rating with Standard & Poor's.

Proceeds from the term loan are being used to repay about $593 million in principal amount of debt, plus accrued interest, owed under the company's existing credit agreement.

In addition, about $295 million of term loan proceeds will be used for ongoing working capital, acquisitions, including the acquisition of wireless licenses that may be purchased in the Federal Communications Commission's "Advanced Wireless Service" auction, also known as Auction No. 66, acquisition-related build-outs, investments and general corporate purposes.

"It is important for Leap to have a capital structure that provides good liquidity while balancing flexibility and cost," said Dean Luvisa, acting chief financial officer for Leap, in the release. "These expanded facilities strengthen our cash position and provide the company with flexibility to pursue attractive opportunities for expansion should they present themselves in the future. We believe we are well positioned to grow the business while maintaining a relatively low overall cost of capital."

Leap is San Diego-based provider of wireless communications services.

Century Campus Housing closes

Century Campus Housing Management closed on its new $201.2 million credit facility, according to a news release, consisting of a $181.2 million five-year first-lien term loan with an interest rate of Libor plus 137.5 basis points and a $20 million eight-year second-lien term loan with an interest rate of Libor plus 300 basis points.

Both term loans carry a 37.5 basis point commitment fee.

The second-lien term loan contains call protection of 103 for first three years and 101 in years four and five.

RBS Securities acted as the lead arranger and bookrunner on the deal. LBBW signed on as syndication agent.

Proceeds were used to finance Transfield Pty. Ltd.'s acquisition of Century Campus Housing from its previous owner, Century Development, and to purchase or acquire about $130 million of existing debt.

Houston-based Century Campus Housing is the largest private sector on-campus student housing company in the United States.

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