Mylan pro rata fees emerge; Cash, LCDX lower as credit concerns increase on Citi write-offs

By Sara Rosenberg

New York, Nov. 19 - Mylan Inc. released details on the upfront fees investors will receive for commitments toward its revolver and term loan A as syndication began in Europe and is getting ready to kickoff in the United States next week.

The cash market in general and LCDX were noticeably weaker during Monday's trading session as stocks were down following news reports that Citigroup Inc. is facing write-offs.

Mylan came out with the upfront fees on its $750 million six-year multicurrency revolver and $500 million six-year amortizing U.S.- and euro-denominated term loan A, according to a market source.

Banks are being offered two tickets on the pro rata tranches - as managing agents, they are asked to commit $20 million to the revolver and $30 million to the term loan A for a 75 basis point upfront fee, and as co-managing agents, they are asked to commit $10 million to the revolver and $15 million to the term loan A for 50 bps upfront, the source said.

The revolver is priced at Libor/Euribor plus 275 bps, with a 50 bps commitment fee, and the term loan A is priced at Libor plus/Euribor plus 325 bps.

Mylan's $4.85 billion senior credit facility (B1/BB) also includes a $3.6 billion seven-year U.S. and euro term loan B that is priced at Libor/Euribor plus 325 bps.

The original issue discount offered to funds on the term loan B will be disclosed at the New York bank meeting on Nov. 27, the source added.

The facility was already launched to European investors with a bank meeting in London that took place on Monday.

The size of the euro-denominated component within the term loan A and the term loan B is to be determined based on demand.

There are minimum consolidated interest coverage and maximum consolidated senior leverage covenants contained in the credit agreement.

Commitments from banks and funds in Europe and the United States are due on Dec. 7.

Merrill Lynch and Citigroup are the joint bookrunners and joint lead arrangers on the deal, with Merrill the left lead, and JPMorgan is the administrative agent.

Proceeds from the facility, which actually funded in early October, were used to help fund the acquisition of Merck KGaA's generics business, to refinance Mylan's existing credit facility and to purchase the company's 5¾% senior notes due 2010 and 6 3/8% senior notes due 2015 under a tender offer.

At the close, the term loan B had been divided into a $2 billion U.S. tranche and a €1.13 billion euro tranche.

Mylan is a Canonsburg, Pa., pharmaceutical company.

Houghton to close at original terms

Houghton International Inc.'s $200 million credit facility is anticipated to wrap at initial terms when the books are closed this Wednesday, according to a market source.

The deal is comprised of a $40 million revolver and a $160 million term loan, with both tranches priced at Libor plus 375 bps.

The term loan is being offered to investors with an original issue discount of 991/2.

Bank of Ireland and GE Capital are the lead banks on the deal, with Bank of Ireland the left lead.

Proceeds will be used to help fund the buyout of the company by AEA Investors LLC.

Houghton International is a Valley Forge, Pa., manufacturer and supplier of industrial fluids and chemical management services.

Cash, LCDX drop off

Moving to trading news, the cash market and LCDX 9 both saw negative momentum on Monday in sympathy with equities after news surfaced about Citigroup's upcoming potential write-offs, according to traders.

In cash, everything was down by a minimum of a quarter of a point, including the recent new issue names like Alltel Communications Inc., First Data Corp., Texas Competitive Electric Holdings Co. LLC (TXU) and Nuveen Investments Inc.

Alltel, a Little Rock, Ark., provider of wireless voice and data communications services, saw its term loan B-3 end the day 95 3/8 bid, 95 5/8 offered, down from Friday's levels of 95¾ bid, 96 offered, traders said.

First Data, a Greenwood Village, Colo., provider of electronic commerce and payment services for businesses, saw its term loan B-1 end the day 94½ bid, 95 offered, down from 95 1/8 bid, 95 5/8 offered, and its term loan B-2 end the day at 94¾ bid, 95¼ offered, down from 95 3/8 bid, 95 7/8 offered, traders continued.

Texas Competitive, a Dallas-based energy company, saw its term loan B-2 close at 97¾ bid, 98 1/8 offered, down from 98 3/8 bid, 98 5/8 offered, and its term loan B-3 close at 97¾ plus bid, 98 1/8 plus offered, down from 98 3/8 plus bid, 98 5/8 plus offered, traders remarked.

And, Nuveen, a Chicago-based provider of investment services, saw its term loan B end the day at 98 3/8 bid, 98 7/8 offered, down from 98¾ bid, 99 1/8 offered, traders added.

LCDX losses were a little lighter as there was less flow in the index than there was in cash, one trader said.

The index went out at 95.65 bid, 95.80 offered, down from Friday's closing levels of 95.75 bid, 95.85 offered.

"There are more credit concerns following news of Citigroup write-offs. Goldman Sachs downgraded the stock," the trader said in explanation of Monday's weak market performance.

On Monday morning, Goldman Sachs downgraded Citigroup's stock to sell from neutral, saying that Citigroup may have to write off a total of $15 billion in collateralized debt obligations over the fourth quarter of 2007 and the first quarter of 2008.

On this news, stocks slid lower, with Nasdaq ending down 43.86 points, or 1.66%, the Dow Jones Industrial Average down 218.35 points, or 1.66%, the S&P 500 down 25.47 points, or 1.75%, and the NYSE down 204.05 points, or 2.10%.

Chicago Bridge closes

Chicago Bridge & Iron Co. NV completed its acquisition of the Lummus Global business from ABB for about $850 million, according to a news release.

To help fund the transaction, Chicago Bridge & Iron got a new $200 million five-year unsecured term loan that was provided by certain of the company's existing revolving credit facility lenders.

In addition, the company upsized its existing revolver to $1 billion from $850 million.

Chicago Bridge & Iron is a Netherlands-based engineering, procurement and construction company. Lummus is a provider of process technologies used in the oil & gas and petrochemical industries, and a global EPC contractor.

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