Travelport frees to trade; Millennium Radio first-lien expected at high end; SPI flexes up

By Sara Rosenberg

New York, Aug. 17 - Travelport Inc.'s $2 billion-plus credit facility freed for trading on Thursday afternoon, with both the U.S. and synthetic letter-of-credit facility strip and the euro term loan quoted atop par.

In primary happenings, Millennium Radio's first-lien bank debt is expected to clear the market at the wide end of original pricing guidance based on interest that has been received at that spread level, and the second-lien debt is done at the low end of original guidance.

Also in the primary, SPI Petroleum LLC increased pricing on its term loan for the second time since syndication on the deal began, with the latest spread expected as the final one.

Travelport's credit facility hit the secondary market on Thursday, with the strip of U.S. term loan and synthetic letter-of-credit facility debt, and the euro term loan debt quoted at par ½ bid, par ¾ offered, according to a trader.

Of the total $2.2 billion seven-year term loan amount, the euro piece is sized at €620 million with the remainder being the U.S. portion.

The U.S. term loan and the $125 million seven-year synthetic letter-of-credit facility are priced with an interest rate of Libor plus 300 basis points and carry a step down to Libor plus 275 basis points at 41/2x leverage.

The euro term loan is priced with an interest rate of Libor plus 275 basis points.

During syndication, pricing on the U.S. term loan and the synthetic letter-of-credit facility was flexed up from original talk at launch of Libor plus 250 to 275 basis points with the addition of the step down, and pricing on the euro term loan firmed up at the wide end of original guidance of Libor plus 250 to 275 basis points.

In addition, during syndication the size of the euro term loan firmed up from original guidance of at least €500 and possibly as high as €750 million.

Travelport's $2.6 billion senior secured credit facility (B1/B+) also contains a $275 million revolver with an interest rate of Libor plus 275 basis points.

During syndication, pricing on the revolver firmed up at the wide end of original guidance of Libor plus 250 to 275 basis points.

Of the total $275 million revolver amount, $175 million is in U.S. dollars and $100 million is multicurrency including euro, sterling and dollars.

UBS Investment Bank, Credit Suisse Securities LLC and Lehman Brothers Inc. are the lead banks on the credit facility.

Proceeds will be used to help fund The Blackstone Group's leveraged buyout of Travelport from Cendant Corp. for about $4.3 billion in cash.

Travelport is a Parsippany, N.J.-based travel distribution services company.

Travelport versus VNU

With Travelport trading in the upper par's, some are looking at the performance of another multi-billion dollar LBO deal that has made its way into the secondary lately, VNU NV, and trying to figure out why there is such a discrepancy between the strength in the two companies' trading levels.

VNU, a Netherlands-based information and media company, has a $4.1875 billion seven-year U.S. dollar term loan B (B1/B+), which is priced at Libor plus 275 basis points and was issued with an original discount of 991/2, that is currently being quoted at 99½ bid, 99¾ offered in the secondary market, according to a trader. The loan was quoted around the 99 3/8 bid, 99 5/8 offered context when it started trading on Aug. 8.

"Accounts [are] commenting [on] how well Travelport is trading versus VNU. Both [have] great sponsors. Accounts think, other than specific credit nuances, that roughly $5 billion of VNU [is] too much to clear the market versus roughly half in Travelport. Interesting story as we head into September with several jumbo deals announced," one sellside source remarked.

"Way off the record," a buyside source countered. "I think VNU was just not a good structure. Far too little free cash flow. It was credible to suggest the structure was designed to sell some non-guarantor subs and pay down the sponsors without delevering. It was a clear case of very good company, bad balance sheet in the sense that it was hard to predict an upgrade path and there is some technological risk.

"The feeling from the book was that the sponsors had to really pay up to do the deal, they went along because it is such a nice business and allowed them to put a lot of cash to work, but they laid the overvaluation risk on lenders not on themselves - the fact they went to put so little equity in tells us something about their business expectations.

"Travelport is a more reasonably structured deal - Blackstone wrote a very large equity check and the free cash flow is a fairly normal percent of the term loan," the buyside source continued.

When asked whether the 25 basis point difference in spread between the VNU and Travelport U.S. term loans might be playing a part in the trading levels, both the buyside source and a trader agreed that it was likely not a very big factor.

"Below par is attractive to CLOs too. I'd say the credit differences are a lot more important - people want to own Travelport - maybe think it was cheap because of London, to some extent. VNU was a difficult deal to get pushed through both on the bank side AND the bond side, and people tend to remember that for a long time when they think about trading it," the buyside source explained.

"Hand to hand combat [on VNU] around the OID price. Dealers are winning to the extent the bid is today the OID price, but will that hold? The market's giving a signal that there's not much natural enthusiasm to drive the price up. In these early days the trick is to get the buyside types hoping to fill out their needs lower than issue to capitulate. Once that dance is over, we shall see. Not a prediction of down prices, just an observation that the action has not been exactly comforting," the buyside source added.

"I am shocked how well Travelport is doing and it would say to me to buy VNU," the trader piped in. "Industry might also be a factor as there are not many travel deals out there."

Millennium spread expectations

Meanwhile, in primary news, Millennium Radio has basically zeroed in on where its credit facility pricing will fall out based on demand from investors during the syndication process, with the first lien expected at the wide end of talk and the second lien expected at the low end, according to a market source.

It is currently considered "likely" that the company's $15 million six-year revolver (B1/B-) and $120 million six-year first-lien term loan B (B1/B-) will end up at Libor plus 275 basis points, the high end of original talk at launch of Libor plus 250 to 275 basis points, the source said.

Meanwhile, the $40 million seven-year second-lien term loan (Caa1/CCC) is "done" at Libor plus 550 basis points, the tight end of original talk at launch of Libor plus 550 to 575 basis points, the source added.

UBS and The Bank of New York are joint lead arrangers on the $175 million senior secured credit facility, with UBS the left lead. General Electric Capital Corp. signed on to the transaction in the role of documentation agent.

Proceeds will be used to fund a recapitalization plan, which includes a refinancing of all of the company's outstanding debt and a distribution to equity holders.

Millennium Radio is a Lawrenceville, N.J., privately held radio broadcasting company.

SPI ups term loan pricing

SPI Petroleum once again increased pricing on its $155 million term loan (B2/B), with this latest spread being a total of 175 basis points higher than the originally proposed pricing that the bank debt was launched with in July, according to a market source.

Under the newest spread change, the term loan is priced with an interest rate of Libor plus 450 basis points, up from most recent guidance of Libor plus 350 to 400 basis points and original talk at launch of Libor plus 275 basis points, the source said.

The term loan contains 101 soft call protection for one year.

SPI Petroleum's $340 million credit facility also includes a $185 million ABL revolver that is priced with an interest rate of Libor plus 125 basis points. Pricing on this tranche was flexed up during syndication from original talk at launch of Libor plus 112.5 basis points.

The deal is probably going to allocate next week, the source added.

JPMorgan and PNC are the lead banks on the credit facility, with JPMorgan the left lead on the term loan and PNC the left lead on the revolver.

Proceeds will be used to finance acquisitions.

SPI is an Oklahoma City-based marketer of petroleum products.

Concord Re oversubscribed

Concord Re's $375 million term loan B is oversubscribed at current price talk of Libor plus 450 basis points ahead of Friday's commitment deadline, a market source told Prospect News on Thursday.

And, there are still a number of investors working on the deal, the source added.

Expected ratings on the transaction are Ba2/BB+.

Goldman Sachs is the lead bank on the deal that will be used to serve as collateral for the ability to underwrite insurance business.

This transaction is an insurance deal for Lexington Property Division of AIG.

Concord is a single purpose dedicated insurance vehicle designed for participating in commercial property insurance business for AIG. It has a diversified book of insurance business which includes energy, manufacturing, general property, real estate, communications, inland marine and construction services.

JC Flowers is the sponsor on the deal, providing $375 million of equity.

Berry Plastics cuts B loan pricing

Berry Plastics Corp. lowered pricing on its $675 million seven-year term loan B to Libor plus 175 basis points from original talk at launch of Libor plus 200 basis points, according to a market source.

Pricing on the company's $200 million six-year revolver was left unchanged at Libor plus 200 basis points with a 50 basis point commitment fee, the source added.

Credit Suisse, Deutsche Bank, Citigroup and JPMorgan are joint bookrunners on the $875 million credit facility (Ba2/B+), and Credit Suisse and Citigroup are joint lead arrangers.

Proceeds will be used to help fund the leveraged buyout of Berry by Apollo Management, LP and Graham Partners for $2.25 billion from Goldman Sachs Capital Partners and JPMorgan Partners, and to help fund a tender offer for its $335 million of 10.75% senior subordinated notes due 2012.

The tender is scheduled to expire on Aug. 21.

Berry Plastics is an Evansville, Ind., manufacturer and marketer of rigid plastic packaging products.

La Petite closes

La Petite Academy, Inc. closed on its $215 million senior secured credit facility Thursday, according to an 8-K filed with the Securities and Exchange Commission.

The facility consists of a $20 million five-year revolver (B1/B) at Libor plus 325 basis points with a 50 basis point commitment fee, a $110 million six-year first-lien term B (B1/B) at Libor plus 300 basis points and an $85 million 61/2-year second-lien term loan (B3/CCC) at Libor plus 725 basis points.

During syndication, pricing on the term loan B was reverse flexed from original talk at launch of Libor plus 325 basis points.

Although the transaction has been completed, allocations are not expected to go out until probably Monday, according to a market source.

Credit Suisse and JPMorgan acted as joint lead arrangers on the deal that was used to refinance the company's existing senior credit facility and will be used to fund the redemption of its 10% senior notes due 2008 on Sept. 18.

La Petite is a Chicago-based for-profit preschool provider.

© 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.