Advanced Micro, National Processing, Gold Toe, IWCO Direct set talk; Transeastern, Dura drop in trading

By Sara Rosenberg

New York, Oct. 5 - Advanced Micro Devices Inc., National Processing Co., Gold Toe Investment Corp. and IWCO Direct came out with price talk on their credit facilities as all four transactions were launched with bank meetings during Thursday's market hours.

In the secondary, Transeastern's term loan dropped a few more points after Technical Olympic USA, Inc. presented at the Deutsche Bank High Yield Conference in Arizona on Thursday and apparently said some negative things about the joint venture.

Also in trading, Dura Automotive Systems Inc.'s second-lien loan came under some pressure on continued overall negativity toward the auto sector.

Advanced Micro Devices held a bank meeting on Thursday to launch its proposed $2.5 billion seven-year term loan B (Ba3/BB-) to investors, and at that meeting it was announced that pricing on the loan is being talked at Libor plus 200 to 225 basis points, according to a market source.

Morgan Stanley is the lead arranger, bookrunner and administrative agent on the loan.

The term loan B will have no financial covenants.

Proceeds will be used to help fund the acquisition of ATI Technologies Inc. for a combination of $4.2 billion in cash and 57 million shares of common stock.

In addition to term loan B proceeds, the company will use existing cash, cash equivalents and short-term investment balances of about $3 billion to fund the acquisition.

The transaction, which is expected to close by Nov. 30, is subject to ATI shareholder approval, Canadian court supervision of a plan of arrangement and other regulatory approvals, including merger notification filings in the United States, Canada and other jurisdictions, as well as customary closing conditions.

U.S., Canadian and German antitrust approvals for the transaction have already been satisfied.

The acquisition remains subject to the approval of ATI shareholders and certain other regulatory approvals, including approval by the Minister of Industry under the Investment Canada Act and prior clearance under competition laws in Taiwan, as well as other customary closing conditions.

A special meeting of ATI shareholders to approve the transaction is scheduled to be held on Oct. 13.

Advanced Micro is a Sunnyvale, Calif., provider of microprocessor services for computing, communications and consumer electronics markets. ATI is a Markham, Ont., designer and manufacturer of innovative 3D graphics, PC platform technologies and digital media silicon products.

National Processing spread guidance

National Processing released price talk on its first- and second-lien $580 million credit facility as it too kicked off syndication Thursday with a bank meeting, according to a market source.

The $50 million revolver (B) and the $390 million first-lien term loan (B) were launched to investors with opening talk of Libor plus 275 bps, and the $140 million second-lien term loan (CCC+) was launched to investors with opening talk of Libor plus 675 bps, the source said.

Call premiums on the second-lien loan are 102 in year one and 101 in year two, the source added.

Merrill Lynch, Bank of America and Bear Stearns are the lead banks on the deal, with Merrill the left lead.

Proceeds will be used to fund the acquisition of the Louisville, Ky.-based Independent Sales Organization merchant processing businesses of BA Merchant Services by Iron Triangle Payment Systems, a GTCR Golder Rauner portfolio company.

Louisville, Ky.-based Iron Triangle Payment conducts its operations through its wholly owned subsidiary, Retriever Payment Systems, a leading merchant processor in the small- and medium-sized business market.

Based upon the number of merchant locations served, the consolidated business operations resulting from the acquisition will rank as the sixth largest provider of merchant processing services in the United States, supporting more than 260,000 merchant locations.

Included in the transaction is the National Processing Co. brand name and Best Payment Solution, Inc.

Gold Toe opening pricing

Gold Toe also came out with price talk on its first- and second-lien $380 million credit facility Thursday in conjunction with the deal's official launch, according to a market source.

The $50 million revolver (B1) and the $225 million first-lien term loan (B1) were both presented to lenders with talk of Libor plus 300 bps, and the $105 million second-lien term loan (Caa1) was presented with talk of Libor plus 650 bps, the source said.

Bear Stearns is the lead bank on the deal that will be used to help fund the leveraged buyout of Gold Toe by The Blackstone Group and simultaneous merger with Moretz Inc.

The LBO/merger transaction is valued at about $400 million.

Total leverage will be around 6 times on an 8.3 times valuation. Adjusted EBITDA is around $55 million, and interest coverage is around 2 times.

In connection with the deal, the outstanding debt and preferred stock of Gold Toe's wholly owned subsidiary, Gold Toe Corp., will be refinanced, including its 10 1/8% senior subordinated notes due 2008 and 12½% senior exchangeable preferred stock due 2010.

As a result of its investment, Blackstone will be the majority owner of the company, John Moretz, chief executive officer, will be the second largest shareholder and an affiliate of Vestar Capital Partners, the current majority owner of Gold Toe, will retain a minority stake.

Gold Toe is a New York-based hosiery company. Moretz is a Newton, N.C.-based sockwear manufacturer and private labeler for the sporting goods market and retailers.

IWCO price talk

IWCO Direct announced an opening price talk level of Libor plus 300 bps on all first-lien tranches under its credit facility Thursday as this deal was yet another that was presented to lenders with a bank meeting on Thursday, according to a market source.

In addition, pricing on all the first-lien tranches, revolver included, can step up to Libor plus 350 bps if leverage exceeds 4.0 times, the source added.

First-lien tranching on the deal is comprised of a $25 million revolver, a $35 million delayed-draw term loan and a $150 million first-lien term loan.

The revolver has a 50 basis point undrawn fee.

The delayed-draw term loan is delayed draw for six months and carries a 100 bps undrawn fee.

IWCO's $235 million credit facility also includes a $25 million second-lien term loan that has already been placed by CVC with their mezzanine fund.

Bear Stearns is the lead bank on the deal that will be used to repay existing debt and to fund an $80 million dividend payment.

There is 3.9 times of first-lien leverage on the company and 4.6-times total leverage, based on August last-12-month EBITDA.

IWCO Direct is a Chanhassen, Minn., direct marketing company.

West sees interest

West Corp.'s $2.1 billion seven-year term loan has started to see interest from lenders as some commitments have already been placed in the short time since the deal's Tuesday launch, according to a market source.

The term loan is being talked at Libor plus 250 bps.

The company's $2.35 billion credit facility (Ba3/B+) also includes a $250 million revolver with a 50 bps commitment fee.

Lehman, Deutsche and Bank of America are joint bookrunners on the credit facility, and Lehman and Deutsche are joint lead arrangers. Lehman is also acting as administrative agent, and Deutsche and Bank of America are acting as syndication agents. Wachovia is documentation agent.

Proceeds from the credit facility, along with $1.1 billion in proposed high-yield bonds, will be used to help fund the leveraged buyout of West by an investor group led by Thomas H. Lee Partners and Quadrangle Group LLC.

Under the agreement, all stockholders except Gary West, chairman of the board, and Mary West, vice chairman of the board, will receive $48.75 per share in cash. Gary and Mary West will receive $42.83 per share in cash for about 85% of their current ownership and about 15% of their current ownership will convert into shares of the corporation surviving the merger.

The transaction values the company at $4.1 billion, including debt as of the date of the definitive agreement.

West is an Omaha, Neb., provider of outsourced communication services.

Transeastern slide progresses

Switching to trading news, Transeastern's term loan continued to weaken during the Thursday session after Technical Olympic's presentation at the Deutsche High Yield Conference, according to traders.

"No specifics, but I heard that Technical Olympic didn't have a lot of good things to say about the Transeastern joint venture," one trader remarked.

The term loan closed the day at 64 bid, 67 offered, down from Wednesday's levels of 67½ bid, 69 offered, traders said.

The Transeastern fall actually began last week after news emerged that because of the weak Florida housing market, the company cannot support its existing capital structure.

The company said that it is exploring various options to fix the liquidity problem, including requesting waivers from its lenders regarding potential defaults and permitting future advances under the revolver, and restructuring land bank obligations.

After the announcement was made, the term loan dropped by more than 30 points over the course of last week, moving to the upper-60's from the upper-90's. Levels started to move up into the low-70's at the start of this week, but that positive momentum was short lived as the debt has spent the past two days spiraling lower again.

Transeastern is a joint venture between Technical Olympic and Falcone Group. Technical Olympic is a Hollywood, Fla.-based builder and seller of single family homes.

Dura skids lower

Dura Automotive's second-lien term loan gave up about a point or two in trading on Thursday as investors continue to dislike the auto sector in general, according to a trader.

The second-lien paper closed the day at 84 bid, 86 offered, the trader said.

Dura is a Rochester Hills, Mich.-based automotive parts maker.

Ace Cash closes

JLL Partners Fund V, LP completed its leveraged buyout of Ace Cash Express Inc. for $30 per share in cash, according to a news release.

To help fund the LBO, Ace got a new $400 million credit facility consisting of a $275 million five-year asset-based revolver with an interest rate of Libor plus 150 bps and a $125 million covenant-light seven-year term loan B (B3/B+) at Libor plus 300 bps.

During syndication, pricing on the term loan firmed up at the low end of original guidance of Libor plus 300 to 325 bps.

Of the total revolver amount, $50 million is seasonal and will be available from January through March.

Bear Stearns acted as the bookrunner and administrative agent on the term loan. General Electric Capital Corp. acted as the bookrunner and administrative agent on the revolver.

Other LBO financing came from $175 million of 10¼% eight-year senior notes and $178.8 million of equity.

Ace is an Irving, Texas, retailer of financial services, including check cashing, short-term consumer loans, bill payment and prepaid debit card services.

Cinemark closes

Cinemark USA Inc. closed on its $1.27 billion senior credit facility (Ba2/B), according to a company news release, consisting of a $1.12 billion term loan at Libor plus 200 bps with a step down to Libor plus 175 bps at Ba3/BB- corporate ratings and a 150 million revolver priced at Libor plus 200 bps.

During syndication pricing on the term loan and the revolver was reverse flexed from original talk of Libor plus 225 bps, and the step was added to the term loan tranche.

Proceeds were used to fund the acquisition of Century Theatres, Inc. and to refinance existing credit facility debt. The equity purchase price for Century is about $681 million. The bank debt that was refinanced includes Cinemark's current senior facility of $254 million and Century's senior facility of $360 million.

Lehman Brothers and Morgan Stanley acted as the lead banks on the credit facility.

Cinemark is a Plano, Texas, motion picture exhibitor. Century is a San Rafael, Calif., motion picture exhibitor.

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