Archstone sets structure, pricing; Allison selling down more term debt; LCDX, cash continue to rise

By Sara Rosenberg

New York, Sept. 19 - Archstone-Smith Trust released details on the structure and pricing of its multi-billion credit facility as the transaction was launched with a bank meeting during Wednesday's market hours.

Also in the primary, Allison Transmission is syndicating more of its already funded term loan B, this time at a slightly less juicy discount.

Moving to the secondary, LCDX and the cash market were once again stronger as investors continue to react to the recent interest rate cut.

Archstone-Smith held a "very well attended" bank meeting on Wednesday morning to present its credit facility to investors, at which time structure and pricing on the deal were announced, according to a market source.

The deal consists of a $750 million four-year revolver, a $2.4 billion four-year term loan A and a $1.981 billion five-year term loan B, the source said.

Both the revolver and the term loan A are priced at Libor plus 300 basis points, and the term loan B is priced at Libor plus 325 bps, the source continued.

The revolver carries a 200 bps upfront fee and a 50 bps unused fee.

The term loan A is being offered to investors with an original issue discount of 99.

There is mandatory amortization on the term loan A of $300 million in year one, $250 million in year two, $250 million in year three and the remaining amount in year four.

The term loan B is not being syndicated right now, the source remarked.

Financial covenants include minimum debt service coverage, maximum leverage ratio and tangible net worth, a buyside source added.

Lehman Brothers, Bank of America and Barclays are the lead banks on the deal.

Proceeds will be used to help fund the buyout of the company by Tishman Speyer and Lehman Brothers.

Under the terms of the agreement, Tishman and Lehman Brothers will acquire all outstanding common shares of beneficial interest in Archstone-Smith for $60.75 per share in cash.

The transaction is valued at $22.2 billion, including the assumption and refinancing of Archstone-Smith's outstanding debt and excluding transaction costs.

Closing and funding of the credit facility is scheduled for Oct. 5.

Archstone-Smith is an Englewood, Colo.-based real estate investment trust. Tishman Speyer is a New York-based owner, developer, operator and fund manager of real estate.

Allison B loan selling

Allison Transmission is selling off an additional $500 million of its already funded $3.1 billion term loan B to some institutional accounts and this new syndication is "pretty much wrapped up," according to a market source.

The $500 million of term loan B debt is being sold to investors with an original issue discount of 961/2.

Pricing on the paper is set at Libor plus 275 bps.

Just the other week, the banks managed to sell down about $1 billion of the term loan B at an original issue discount of 96.

"The market feels to be moving in the right direction," the source said. "People want to see these deals succeed, see the market come back. Everyone is rallying around trying to get this backlog cleared."

The term loan B had originally been launched to investors with a bank meeting on July 18 but was pulled on July 23 due to poor market conditions. During the brief time that it was in the retail syndication process, price talk was Libor plus 250 bps, with an original issue discount of 991/2.

Citigroup, Lehman Brothers and Merrill Lynch acted as the lead banks on the deal, which had been funded in August to help finance the buyout of the company by the Carlyle Group and Onex Corp. for $5.575 billion from General Motors Corp. on Aug. 7.

Allison's $3.5 billion credit facility (B1/BB-) also includes a $400 million revolver.

Allison Transmission is a Speedway, Ind., designer and manufacturer of automatic transmissions for on-highway trucks and buses, off-highway equipment and military vehicles.

Laureate oversubscribed, OID to firm soon

Laureate Education Inc.'s $775 million in senior secured term loan debt (B1) is said to be oversubscribed at reasonable discount levels, and market players are now expecting the original issue discount to firm up as early as Thursday, according to a market source.

Laureate's term loan debt is comprised of a $675 million covenant-light term loan B and a $100 million covenant-light delayed-draw term loan.

Both term loan tranches are priced at Libor plus 325 bps and both will carry the original issue discount.

Goldman Sachs, Citigroup, Credit Suisse and JPMorgan are the lead banks on the deal.

Proceeds will be used to help fund the already completed buyout of the company by an investor group led by company chairman and chief executive officer Douglas L. Becker that includes Kohlberg Kravis Roberts & Co., Citi Private Equity, S.A.C. Capital Management, LLC, SPG Partners, Bregal Investments, Caisse de depot et placement du Quebec, Sterling Capital, Makena Capital, Torreal SA, Brenthurst Funds, Vulcan Capital and others.

Laureate already has a $400 million revolver in place that was completed in connection with the leveraged buyout.

Leverage is around 7.1 times.

Laureate is a Baltimore-based provider of higher education.

LCDX, cash trade up

Switching to trading news, LCDX and the cash market in general continued to head higher during Wednesday's session as people were still reacting to the Federal Reserve's decision to cut interest rates by 50 bps on Tuesday, according to traders.

The index went out around 97.00 bid, 97.15 offered, up from 96.70 bid, 96.85 offered on Tuesday, traders said.

Around midday, the index was trading at 97.35, but then it settled back in a bit before the day was through.

As for the cash market, that was "definitely stronger," with names like Thomson Learning, Kinder Morgan Inc. and Georgia-Pacific Corp. gaining anywhere from half a point to a point, traders said.

Thomson Learning, a Stamford, Conn.-based higher education, careers and library reference company, saw its term loan B end the day at 96½ bid, 97 offered, up from 96 bid, 97 offered, one trader said.

Kinder Morgan, a Houston-based energy infrastructure provider, saw its term loan B end the day at 97¼ bid, 97¾ offered, up from 96¼ bid, 96 5/8 offered, a second trader said.

And, Georgia-Pacific, an Atlanta-based manufacturer and marketer of tissue, packaging, paper, building products and related chemicals, saw its term loan B end the day at 97 5/8 bid, 98 1/8 offered, up from 97 bid, 97¾ offered, the second trader added.

Emcor closes

Emcor Group Inc. completed its acquisition of Ohmstede, Ltd. for approximately $455 million in cash, according to a news release.

To help fund the transaction, Emcor got a new $300 million term loan priced at Libor plus 150 bps.

BMO acted as the lead bank on the deal.

Emcor is a Norwalk, Conn., provider of mechanical and electrical construction services and facilities services. Ohmstede is a Beaumont, Texas, provider of aftermarket maintenance and repair services, replacement parts and fabrication services for highly engineered shell and tube heat exchangers for the refinery and petrochemical industries.

© 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.