Realogy trades up; Web.com reworks deal; Emdeon talk surfaces; Open Link readies loan

By Sara Rosenberg

New York, Oct. 6 - Realogy Corp.'s bank debt gained some ground in trading on Thursday on the back of the release of estimated third-quarter numbers and with strength in the general market, as evidenced by improvements in names like First Data Corp. and Freescale Semiconductor Inc.

Over in the primary market, Web.com made a number of changes to its credit facility, including shortening maturities, as well as increasing amortization and the excess cash flow sweep on the first-lien term loan, and it is also expected that original issue discounts will widen.

Also, Emdeon Inc. released price talk on its term loan in connection with its launch, and Open Link Financial Inc. came out with the timing and structure on its credit facility.

Additionally, GE SeaCo's credit facility is being met with strong demand, and if things continue as well, oversubscription on the transaction will be used to fill the accordion feature, resulting in an upsizing of the revolver tranche.

Realogy loans strengthen

Realogy's bank debt was higher during Thursday's trading session as the company revealed unaudited numbers for the third quarter in an 8-K filed late Wednesday, and the secondary in general was better, according to a trader.

The company's first extended strip was quoted at 81½ bid, 82½ offered, versus 81 bid, 82 offered on the open and 80½ bid, 81½ offered on during the previous day's activity, the trader said.

The non-extended strip was quoted at 89½ bid, 90½ offered, up from 89 bid, 90 offered on the open and 88¼ bid, 89¼ offered on Wednesday.

And, the 13½ second-lien loan was quoted at 92½ bid, 94 offered, compared to 91½ bid, 93½ offered on the open and at the previous day's close, the trader added.

Realogy estimated results

Realogy's unaudited financials for the third quarter include an expected net loss of about $30 million, compared to a net loss in the 2010 quarter of $33 million.

Revenues for the quarter are estimated at $1.2 billion, compared to $1.1 billion last year.

And, EBITDA before restructuring and other items is expected to be $185 million for the third quarter, versus $173 million in the prior year.

Furthermore, at Sept. 30, senior secured leverage ratio is expected to be in the range of 4.1 times to 4.2 times versus the covenant requirement of less than 4.75 times, and there was $50 million drawn on the company's revolver and $113 million of outstanding letters-of-credit.

Realogy is a Parsippany, N.J.-based provider of real estate and relocation services.

First Data, Freescale rise

First Data and Freescale both saw better levels on their term loans being that the market had a positive bias to it, according to a trader, who said that it was hard to quantify just how much things in general were up since some names performed better than others.

First Data, a Greenwood Village, Colo., provider of electronic commerce and payment services, saw its extended term loan quoted at 85½ bid, 86½ offered, up from 84¾ bid, 85¾ offered, the trader said.

Freescale, an Austin, Texas-based designer and manufacturer of embedded semiconductors for the automotive, consumer, industrial and networking markets, saw its term loan quoted at 90¼ bid, 90¾ offered, up from 89¾ bid, 90¼ offered, the trader added.

Web.com tweaks facility

Switching to the primary, Web.com made of a number of revisions to its credit facility, and while coupons and Libor floors were left unchanged, its is thought that the original issue discounts on the first-and second-lien term loans will come wide of initial talk, according to market sources.

Under the changes, the $600 million first-lien term loan B (Ba3/B) will now have a six-year maturity instead of seven years, and the $150 million seven-year second-lien term loan (B3/CCC+) will mature in seven years instead of in eight years, sources said.

Amortization on the first-lien term loan was reset at 1% in year one and 5% thereafter, from just 1% per annum, and the excess cash flow sweep is now 75% in year one and 50% in year two with step-downs to 25% and 0% versus being 50% with step downs to be agreed upon, sources continued.

Also, the accordion feature on the first-lien was reduced to $50 million from $200 million plus unlimited amounts up to 3.75 times first-lien leverage, the $100 million accordion under the second-lien was eliminated, and most-favored-nation language is now 25 bps, down from 50 bps.

Web.com pricing

Web.com's first-lien term loan B continues to be talked at Libor plus 550 bps with a 1.5% Libor floor, and the expectation is that it will sell at a discount that is in the low 90s, compared to initial talk at launch of 96½ to 97, the source remarked.

The second-lien term loan is still talked at Libor plus 950 bps with a 1.5% Libor floor and, like the first-lien, it is anticipated to get done at a discount in the low 90s versus original talk 96½ to 97.

Original issue discounts on the two tranches are expected to firm up shortly, the source added.

As before, the first-lien term B has 101 soft call protection for one year, while the second-lien loan is non-callable for one year, then at 103 in year two, 102 in year three and 101 in year four.

Prior to launch, regulatory filings had the first-lien term loan B expected at Libor plus 425 bps with a 1.25% Libor floor, and the second-lien term loan expected at Libor plus 800 bps with a 1.25% Libor floor and call protection of 102 in year one and 101 in year two.

Web.com getting revolver

Web.com's $800 million senior secured credit facility, which is being led by J.P. Morgan Securities LLC, Deutsche Bank Securities Inc., Goldman Sachs & Co. and SunTrust Robinson Humphrey Inc., also includes a $50 million five-year revolver (Ba3/B)

Proceeds will be used to fund the acquisition of a majority stake in Network Solutions from General Atlantic LLC for $405 million in cash and 18 million shares of common stock, refinance existing debt and for general corporate purposes.

Completion of the acquisition is expected in the fourth quarter, subject to shareholder and regulatory approvals, and customary conditions.

Leverage is 4.0 times through the first-lien and 5.0 times through the second-lien.

Web.com is a Jacksonville, Fla.-based provider of internet services and online marketing services. Network Solutions is a Herndon, Va.-based provider of website services, online marketing and domain-name registration.

Emdeon sets guidance

Emdeon held a very well-attended bank meeting on Thursday morning to kick off syndication on its proposed credit facility, at which time price talk on the $1.2 billion seven-year term loan B was disclosed, according to market sources.

The B loan is being talked at Libor plus 550 bps to 575 bps with a 1.25% Libor floor and an original issue discount of 96 to 97, and there is 101 soft call protection for one year, as well as a maximum first-lien net leverage ratio and a minimum consolidated cash interest coverage ratio, sources remarked.

By comparison, filings with the Securities and Exchange Commission had outlined expected pricing on the term loan B at Libor plus 475 bps with a 1.25% Libor floor, and had said it would be a covenant-light deal.

The company's $1.325 billion senior secured credit facility (Ba3) also includes a $125 million five-year revolver.

Commitments are due on Oct. 14, with closing and funding expected to occur during the week of Oct. 31.

Emdeon lead banks

Bank of America, Citigroup and Barclays are the joint lead arrangers and bookrunners on Emdeon's credit facility, and Goldman Sachs & Co. is a bookrunner as well.

Proceeds, along with $750 million of notes, $870 million of equity and the rollover of about $330 million of equity, will be used to fund the buyout of the company by Blackstone Capital Partners VI LP for $19.00 per share in cash. The transaction is valued at about $3 billion.

Closing is subject to customary conditions, including approval by Emdeon;s stockholders, which will be sought at a Nov. 1 meeting, and clearance under the Hart-Scott-Rodino Act.

Following completion of the transaction, Hellman & Friedman will maintain a significant minority equity interest in the company.

Emdeon trims bridge loan

Of the total $750 million of notes that Emdeon is getting for the buyout, $375 million has already been placed with a single investor and $375 million is expected to be issued in the high-yield market.

Because of the decision to privately place a portion of the notes, the company reduced the size of its bridge loan commitment to $375 million, regulatory filings revealed.

Pricing on the bridge loan is Libor plus 850 bps for the first 60 days. Thereafter, interest will be payable at a rate equal to the senior cap. There is a 1.25% Libor floor.

Emdeon is a Nashville-based provider of revenue and payment cycle management solutions, connecting payers, providers and patients in the U.S. health care system.

Open Link details emerge

Open Link Financial revealed that it will be holding a bank meeting on Tuesday morning to launch its proposed credit facility, which is sized at $375 million and consists of a $50 million revolver and a $325 million first-lien term loan, according to a market source. Price talk is not yet available.

Previously, it was known that the meeting was likely next week's business, but a specific date and structure were not available.

Credit Suisse Securities (USA) LLC is the lead bank on the deal that will be used to help fund the buyout of the company by Hellman & Friedman from the Carlyle Group.

Closing is expected in the fourth quarter, subject to standard conditions, and first-lien leverage is anticipated to be 4.0 times based on adjusted pro forma Sept. 30 EBITDA.

Open Link is a Uniondale, N.Y.-based provider of cross-asset trading, risk management and operations processing software services.

GE SeaCo going strong

In other news, GE SeaCo's $1.3 billion credit facility already has over $900 million of orders "with still several banks looking at the deal," and any oversubscription will be used to fill a $200 million accordion feature, a market source told Prospect News.

The tranche that would be upsized is a variable-funding note revolver, which was launched with a size of $300 million, but could go up to $500 million based on demand, the source said.

The facility also includes a $1 billion term loan talked at Libor plus 300 bps, increasing to Libor plus 400 bps after two years and stepping up to Libor plus 600 bps at year six.

Deutsche Bank Securities Inc. and ING are the lead banks on the deal that is expected to close at the end of this month.

GE SeaCo being acquired

Proceeds from GE SeaCo's credit facility, along with equity, will be used to fund the buyout of the company by HNA Group Co. Ltd. and Bravia Capital.

The company was formed in 1998 as a joint venture between General Electric Capital Corp. and Sea Containers Ltd.

Of the roughly $1.05 billion purchase price, GE will receive about $500 million and SeaCo will receive about $528 million.

GE SeaCo is a Singapore-based marine container leasing company.

DigitalGlobe allocations

DigitalGlobe is expected to give out allocations on its credit facility on Friday, and pricing on the term loan B is expected to firm within the range of talk, according to a market source.

The $500 million term loan B is talked at Libor plus 425 bps to 450 bps with a 1.25% Libor floor and an original issue discount of 97½ to 98 and includes 101 soft call protection for one year.

Morgan Stanley & Co. LLC and J.P. Morgan Securities LLC are the leading the $600 million senior secured credit facility (Ba3/BB+), which also provides for a $100 million revolver.

Proceeds will be used to fund a tender offer that expires on Oct. 25 for the company's $355 million of 10½% senior secured notes due 2014 and for general corporate purposes, including stock repurchases and acquisitions.

DigitalGlobe is a Longmont, Colo.-based content provider of high-resolution earth imagery products and services.

Microsemi pricing soon

Microsemi Corp.'s $800 million senior secured term loan B (BB) due Feb. 2, 2018 is also anticipated to see pricing come within the range of initial talk and will likely free up for trading on Friday, according to a market source.

The B loan is talked at Libor plus 425 bps to 450 bps with a 1.25% Libor floor and an original issue discount of 97 to 98 and includes 101 soft call protection for one year.

With this deal, the company is basically amending, restating and extending its existing $375 million term loan B that was obtained a few months ago at pricing of Libor plus 300 bps with a 1% Libor floor and sold at par. It is also getting $425 million of new term loan B borrowings.

The deal has been getting a good reception from investors, which is why earlier in the week the decision was made to accelerate the commitment deadline to Thursday from Oct. 11.

Morgan Stanley Senior Funding Inc. is the lead arranger and bookrunner on the facility.

Microsemi buying Zarlink

In addition to refinancing the existing B loan debt, proceeds from Microsemi's new term loan B will be used to help fund the acquisition of Zarlink Semiconductor Inc. for C$3.98 in cash per share and about C$1.6 in cash per 6% unsecured subordinated convertible debenture. The total transaction value is roughly $525 million, net of Zarlink's cash which is currently $107 million.

A tender offer for Zarlink's shares and debentures expires on Oct. 12, and closing is subject to customary conditions, including the tender of 66 2/3% of the outstanding shares.

At close, debt to EBITDA will be about 3.0 times.

Microsemi is an Aliso Viejo, Calif.-based provider of semiconductor services. Zarlink is an Ottawa, Canada-based designer of mixed-signal semiconductor products for communications and medical applications.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.