Directories deals move ahead; AT&T drops, recovers

By Paul A. Harris

St. Louis, Mo., Oct. 16--During Thursday's quiet session in the leveraged loan market the directories deals began emerging from behind the bushes.

In the aftermarket, meanwhile, sources reported a quiet session, with AT&T's paper tumbling early and later trading up.

News circulated the market early Wednesday that junk bond investors would soon have a chance to start looking up the numbers of the Qwest directories deal - a two-tranche $1.05 billion Rule 144A offering to be issued jointly by Dex Media East LLC and Dex Media East Finance Co. via JP Morgan, Banc of America Securities, Deutsche Bank Securities Inc., Lehman Brothers and Wachovia Securities, Inc. which will hit the road Thursday according to a syndicate source.

The financing to fund the LBO by the Carlyle Group and Welsh, Carson, Anderson & Stowe contains a $1.49 billion credit facility led by the same syndicate as the junk bonds. The facility contains a $100 million revolver, a $690 million term loan A and a $700 million term loan B.

Off a little further, according to another market source, is the BCE directories deal via CIBC World Markets, Scotia Capital and Credit Suisse First Boston - a deal that could surface in late October according to the source.

The acquisition financing for the BCE directories business by Kohlberg Kravis Roberts and the Ontario Teachers' Pension Plan will include a C$1.54 billion credit facility (B1 expected) comprised of a C$100 million revolver, a C$400 million term loan A and a C$1.14 billion term loan B.

The deal is also expected to include approximately C$600 million of senior subordinated notes.

Further off on the horizon, capital markets sources tell Prospect News, is the deal to fund R.H. Donnelley Corp.'s acquisition of Sprint Corp.'s phone book business for $2.23 billion.

One official from the leveraged loan market told Prospect News on Wednesday that the success of the directories deals comes down to a question of capacity.

"Qwest is a market phenomenon," the official said. "You're going to have to watch it.

"It's huge," the source continued. "If I remember correctly there is a large component that is pro rata. Everybody's been structuring things with the smallest possible revolver and the largest possible B. And this deal for whatever reason is kind of the opposite.

"So I think the questions are A, does the junk get done? and B, is this market large enough to absorb this deal?"

The source said that roughly $800 million of the credit facility is for the banks, with the balance going into the non-bank market.

"That struck me as a huge challenge," the source said.

© 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.