Affiliated Computer cuts B loan size, spread; Burlington sets term loan talk; Reliant dips on lower forecast

By Sara Rosenberg

New York, March 20 - Affiliated Computer Services Inc. downsized its term loan B tranche as results from its stock tender offer surfaced, and, at the same time, reverse flexed pricing on the loan. Also in the primary, Burlington Coat Factory Warehouse Corp. came out with pricing guidance on its term loan B.

Meanwhile, on the secondary front, Reliant Energy Inc.'s bank debt softened up as the company lowered its outlook for 2006.

Affiliated Computer reduced the size of its term loan B to meet the amount of tendered common stock shares in its Dutch auction and lowered pricing on the tranche by 50 basis points, according to a market source.

The seven-year term loan B is now sized at $800 million, down from an original size of up to $4 billion, and pricing was reverse flexed to Libor plus 150 basis points from original price talk at launch of Libor plus 200 basis points, the source said.

Recommitments were due from lenders by the end of the day Monday, the source added.

The downsizing of the term loan B was a result of Affiliated Computer successfully tendering for only 7.4 million shares of its class A common stock at a purchase price of $63 per share for a total cost of approximately $465 million.

Under the Dutch auction tender, the company had originally offered to purchase up to 55.5 million shares of its class A common stock at a minimum price per share of $56 and a maximum price of $63, for a total value of about $3.5 billion.

Affiliated Computer's now $1.8 billion credit facility (Ba2) - down from $5 billion - also contains a $1 billion six-revolver with an initial interest rate of Libor plus 200 basis points that was left unchanged in terms of size and pricing.

In addition to funding the tender offer, proceeds from the facility were used to refinance the company's existing credit facility, including repaying about $288 million in outstanding debt under its existing revolver.

At close, which was announced Monday, there was about $93 million drawn under the new $1 billion revolver. Future borrowings under the revolver are available for working capital and to finance permitted acquisitions.

Citigroup acted as the lead arranger and administrative agent on the deal, and Bear Stearns, Wells Fargo, Bank of America, SunTrust, Wachovia, Morgan Stanley and Bank of Tokyo Mitsubishi all signed on in various agent roles.

The credit facility contains a $750 million accordion feature under which the company can add one or more incremental term loan facilities to the capital structure and/or increase the revolver size.

The facility also includes an additional uncommitted accordion feature of up to approximately $3 billion allowing for future incremental borrowings under the term loan to fund purchases of the company's equity and debt securities.

Affiliated Computer Services is a Dallas-based provider of business process and information technology outsourcing solutions to commercial and government clients.

Burlington floats talk

Burlington came out with price talk on its $775 million term loan B (B), even though a rating from Moody's Investors Service has yet to emerge, with the opening spread range set at Libor plus 225 to 250 basis points, according to a market source.

The term loan was launched to investors on Thursday of last week but, at that time, no price talk was announced, with some indicating that the syndicate was waiting on the Moody's rating.

Burlington's $1.575 billion credit facility also contains an $800 million ABL revolver that is split into a $735 million tranche talked at Libor plus 150 basis points and a $65 million first-in, last-out tranche A+ talked at Libor plus 325 basis points.

Bear Stearns and Bank of America are the joint lead arrangers and joint bookrunners on the deal.

Borrowings under the revolver are limited by a borrowing base, which is calculated periodically based on specified percentages of the value of eligible inventory and eligible credit card receivables, subject to certain reserves and other adjustments.

Security for the revolver is a perfected first-priority lien on all inventory and accounts of the company and its subsidiaries and a perfected second-priority lien on substantially all other real and personal property.

Security for the term loan is a perfected first-priority lien on substantially all real and personal property and a perfected second-priority lien on all inventory and accounts.

Proceeds will be used to help fund Bain Capital Partners LLC's leveraged buyout of the Burlington, N.J., retailer of branded apparel for $45.50 per share in cash, or $2.06 billion.

In addition to the facility, Burlington also plans on issuing $500 million in bonds - split into a $200 million senior unsecured notes offering and a $300 million senior subordinated notes offering - and up to $500 million in equity.

If the notes are not issued the company intends to put in place a $200 million senior bridge facility and a $300 million subordinated bridge facility.

Up to $100 million of the term loan can be transferred to the notes and/or bridge facilities prior to closing.

UPC upsizes, cuts euro spread

UPC Broadband Holding BV recently upsized its deal by $670 million equivalent as demand from the European market has been quite overwhelming in just the few days since the deal was launched into syndication, and, because of the strong reception, pricing on the euro portion of the transaction was reverse flexed, according to a market source.

The company is now getting $2.62 billion equivalent in new institutional term loan debt as opposed to the original size of $1.95 billion equivalent, the source said.

The new debt is being raised in two tranches - a $1.31 billion (up from $975 million) equivalent term loan J due March 2013 and a $1.31 billion (also up from $975 million) equivalent term loan K due December 2013.

Both the term loan J and the term loan K are comprised of euro and dollar funds.

The euro-denominated term loan J and term loan K bank debt is now priced with an interest rate of Euribor plus 225 basis points, down from original price talk at launch of Euribor plus 250 basis points, the source said.

The dollar-denominated term loan J and term loan K bank debt is still being talked at Libor plus 225 basis points.

Proceeds from the new term loan debt will be used to refinance the company's existing €140 million term loan F-1, $525 million term loan F-2, €550 million term loan H-1 and $1.25 billion term loan H-2.

Under the originally sized deal, the company was only going to refinance the term loan F-1, term loan F-2 and term loan H-2. However, based on how the book was building, the company opted to add the term loan H-1 to the list of tranches being refinanced through this transaction - not completely a surprise since it was said from the start that an upsizing to refinance some more of its existing bank debt could happen if demand was strong enough.

It is anticipated that the company's existing €1 billion term loan G will remain outstanding after this new deal is completed.

The size of the euro and dollar carve outs under the new term loan J and term loan K have not yet been determined, but it is thought that the dollar pieces will end up in the neighborhood of $1.775 billion since that is the amount of dollar-denominated debt that is being refinanced, the source added.

TD Securities and Bank of America are the lead banks on the deal, with TD the left lead.

UPC Broadband is the Netherlands-based broadband company owned by Liberty Global Inc.

Easton-Bell lowers pricing

Easton-Bell Sports Inc. recently reverse flexed pricing on its $335 million term loan B, with the addition of a step down based on leverage, since the tranche was massively oversubscribed with about $2.4 billion in the book, according to a buyside source.

The term loan B is now priced with an interest rate of Libor plus 175 basis points, down from original price talk at launch of Libor plus 200 basis points, and under the new step down pricing can drop to Libor plus 150 basis points if leverage is less than 4x, the source said.

Prior to the bank meeting taking place, the term loan was actually talked in the Libor plus 200 to 225 basis points context, but being that commitments had already started to come in before the launch, lenders were told that the deal was essentially being marketed at the low end of that talk.

Easton-Bell's approximately $415 million senior credit facility (B1/B+) also contains a $70 million revolver and a C$12 million revolver.

Wachovia and Goldman Sachs are joint lead arrangers and joint bookrunners on the deal, with Wachovia the left lead.

Proceeds from the facility will be used to help fund the merger of Riddell Bell Holdings with Easton Sports, forming the newly named branded sports company Easton-Bell, to refinance existing debt, and for working capital and other general corporate requirements.

York Street Capital Partners, a U.S.-based mezzanine debt fund principally sponsored by Teachers' Private Capital, will increase its existing equity investment in Riddell Bell as part of the transaction.

Riddell, a portfolio company of Fenway Partners and Teachers' Private Capital, is a Dallas-based designer, developer and marketer of head protection equipment and related accessories for numerous athletic and recreational activities. Easton is a Van Nuys, Calif.-based developer, manufacturer, marketer and distributor of baseball, softball, hockey and cycling equipment.

Aearo Tech shifts funds

Aearo Technologies Inc. tweaked tranching on its credit facility by moving $20 million out of its first-lien term loan and into its second-lien term loan, according to a market source.

The first-lien term loan (B2/B) is now sized at $360 million, up from an original size of $340 million, the source said. Pricing was left unchanged at Libor plus 250 basis points.

On the flip side, the second-lien term loan (Caa1/CCC+) is now sized at $150 million, down from an original size of $170 million, the source added. Pricing was left unchanged at Libor plus 650 basis points.

The company's $60 million revolver (B2/B) was left untouched in terms of size and pricing, which is currently set at Libor plus 250 basis points.

Bank of America, Goldman Sachs and Bear Stearns are the lead banks on the $570 million deal, with Bank of America the left lead.

Proceeds from the credit facility will be used to help fund Permira's leveraged buyout of the company.

Under the acquisition agreement, Permira will purchase Aearo Technologies for about $765 million from Bear Stearns Merchant Banking and other investors.

The transaction is subject to financing, regulatory approvals and other customary closing conditions.

Aearo Technologies is an Indianapolis-based personal protection equipment company.

Reliant weakens on revised outlook

Switching to trading, Reliant Energy's bank debt fell slightly as the company announced that it has lowered it 2006 forecast to reflect the impact of a significant decline in commodity prices and mild weather, according to a trader.

The company's B1 tranche closed the day quoted at 99¾ bid, par ¼ offered, off about a quarter on the bid side. The B2 tranche closed the day quoted at par 3/8 bid, par 7/8 offered, off about an eighth. And the revolver closed the day quoted at 96 bid, 97½ offered, off about three eighths on the bid side, the trader said.

On Monday, Reliant said that it now expects adjusted EBITDA for 2006 to be $457 million, as opposed to the previous guidance of $570 million.

Furthermore, the company now expects loss from continuing operations before income taxes to be $89 million for 2006, as opposed to the previous guidance of $62 million.

Reliant Energy is a Houston-based provider of electricity and energy services to retail and wholesale customers.

Movie Gallery softens

Movie Gallery Inc.'s term loan headed lower on Monday with no particular reason seen behind the weakening levels other than market technicals, according to a trader.

The term loan closed the session quoted at 92 bid, and a range of 92½ to 93 offered, compared with Friday's closing levels of around 93 bid, 94 offered, the trader said.

"It's quiet today. Could just be quoted off of one seller and that's skewing the market. I don't know how real that level is," the trader said.

Movie Gallery is a Dothan, Ala.-based operator of video retail stores.

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