MetroPCS, Michaels, Belfor set price talk; AlixPartners breaks after adding step down

By Sara Rosenberg

New York, Oct. 11 - MetroPCS Communications Inc., Michaels Stores Inc. and Belfor released price talk on their credit facilities, as MetroPCS and Michaels launched with bank meetings on Wednesday and Belfor is getting ready for its launch on Thursday.

In secondary happenings, AlixPartners LLC's credit facility freed for trading in the afternoon after a pricing step down was added to the term loan B tranche.

MetroPCS held a bank meeting Wednesday morning for its proposed $1.5 billion credit facility (B1/B), and in conjunction with the launch, opening price talk on all tranches under the facility was revealed to be Libor plus 275 basis points, according to a market source.

Tranching on the deal is comprised of a $100 million revolver and a $1.4 billion term loan B.

The revolver has a 50 bps commitment fee.

The deal has been met with positive market reception as a number of orders from existing and new accounts started rolling in before the actual launch took place and have continued to do so since the bank meeting was held, the source said.

Bear Stearns is lead arranger on the deal and joint bookrunner with Merrill Lynch and Bank of America.

Proceeds from the facility, along with a $1.1 billion senior notes offering, will be used to refinance $900 million of existing debt and fund the purchase of wireless spectrums won in Auction 66.

The company's existing credit facility includes, among other things, a first-lien loan that is callable at 102 and a second-lien loan that is non-callable until May. The company plans to tender for the second-lien loan to get this refinancing done.

Following this transaction, senior secured leverage will be 3.5 times against core EBITDA, total leverage will be 6.2 times against core EBITDA and net leverage will be 4.9 times against core EBITDA.

MetroPCS is a Dallas-based provider of wireless communications services.

Michaels spread guidance

Michaels Stores came out with price talk of Libor plus 300 bps on its $2.4 billion term loan (B2/B-) as syndication on the transaction officially kicked off during the Wednesday session, according to a fund manager.

The company's $3.4 billion senior secured credit facility also includes a $1 billion asset-based revolver.

The revolver will be subject to a borrowing base that will be calculated periodically based on specified percentages of the value of eligible credit card receivables and eligible inventory.

Deutsche Bank, JPMorgan, Bank of America and Credit Suisse are the lead banks on the deal.

Proceeds from the credit facility, along with $1.075 billion in proposed senior notes and senior subordinated notes, will be used to help fund the leveraged buyout of Michaels by Bain Capital and The Blackstone Group.

Under the LBO agreement, Michaels Stores' shareholders will receive $44.00 per share in cash, representing a transaction value of more than $6 billion.

A maximum of $250 million may be borrowed under the revolver for LBO financing.

Michaels Stores is an Irving, Texas, specialty retailer of arts, crafts, framing, floral, wall decor and seasonal merchandise for the hobbyist and do-it-yourself home decorator.

Belfor price talk

Belfor started floating around opening price talk of Libor plus 250 bps on all tranches under its proposed $225 million credit facility as the transaction is getting ready to launch into syndication with a bank meeting on Thursday, according to sources.

Tranching on the deal is comprised of a $75 million revolver and a $150 million institutional term loan.

JPMorgan is the lead bank on the facility that will be used to help fund a management buyout of the company.

Belfor is a damage restoration company.

Petco upsizes, trims pricing

Petco Animal Supplies Inc. increased the size of its covenant-light seven-year term loan B (Ba3/B) and reverse flexed pricing by 25 bps, according to a market source.

The term loan B is now sized at $700 million, up from an original size of $650 million, and pricing was dropped to Libor plus 275 bps from original talk of Libor plus 300 bps, the source said.

The company's now $900 million senior secured credit facility also includes a $180 million six-year last-in, first-out asset-based revolver priced at Libor plus 150 bps and a $20 million six-year first-in, last-out asset-based revolver priced at Libor plus 250 bps.

Credit Suisse, Bank of America and Wells Fargo are the lead banks on the deal, with Credit Suisse the left lead.

Proceeds will be used to help fund the leveraged buyout of Petco by Leonard Green & Partners, LP and Texas Pacific Group.

As part of the LBO financing, GS Mezzanine has agreed to purchase newly issued eight-year 10½% senior subordinated notes. The size of this mezzanine financing was reduced to $450 million from $500 million due to the term loan B upsizing, the source explained.

Leonard Green has provided an equity commitment for $350 million, and Texas Pacific Group has provided an equity commitment for $415 million to help fund the deal as well.

Under the LBO agreement, the sponsors will buy Petco for $29.00 per share in cash. The total value of the transaction, including assumed debt, is $1.8 billion.

Petco is a San Diego-based specialty retailer of premium pet food, supplies and services.

United Subcontractors coming along

United Subcontractors Inc.'s reworked credit facility is "going much better" since the changes were announced last week, but the deal is "still not there" in terms of fully syndicating as of yet, according to a fund manager.

The facility consists of a $275 million first-lien term loan (B2/B) and a $15 million synthetic letter-of-credit facility (B2/B) at Libor plus 350 bps with call protection of 102 in year one and 101 in year two, and an original issue discount of 99, a $175 million second-lien term loan (Caa1/CCC+) at Libor plus 900 bps that's non-callable for two years, then at 104 in year three, 102 in year four and par thereafter, and is offered at 99, and a $35 million revolver (B2/B) at Libor plus 275 bps.

As was previously reported, last week the syndicate downsized the first-lien term loan from $300 million and the second-lien term loan from $200 million, increased pricing on the first-lien term loan and synthetic letter-of-credit facility from talk of Libor plus 275 to 300 bps, increased pricing on the second-lien from talk of Libor plus 750 to 800 bps, added the call premiums to the first-lien term loan and synthetic letter-of-credit facility, sweetened the second-lien call premiums, and added original issue discounts to the first-lien term loan, synthetic letter-of-credit facility and second-lien loan.

Furthermore, at that time, amortization on the first-lien term loan was sweetened to 5% per year and the cash flow sweep was beefed up to 100%.

Proceeds from the $500 million credit facility will be used to fund a dividend payment to Wind Point Partners and to refinance existing debt. With the term loan downsizings, the dividend payment was reduced by $50 million to $75 million.

Goldman Sachs is the lead bank on the deal.

United Subcontractors is a Salt Lake City-based installer of residential and commercial insulation systems and provider of related products and services.

AlixPartners frees to trade

Switching to trading, AlixPartners' credit facility hit the secondary on Wednesday afternoon after the addition of a step down provision, with the $385 million term loan B quoted at par 3/8 bid, par 5/8 offered, according to a market source.

The term loan is priced at Libor plus 250 bps, in line with original talk, but now contains the ability to step to Libor plus 225 bps at 3.5 times leverage, the source said.

AlixPartners' $435 million credit facility (B1/BB-) also includes a $50 million revolver priced at Libor plus 250 bps.

Lehman and Deutsche Bank are the lead banks on the deal, with Lehman the left lead.

Proceeds will be used to help fund the acquisition of the company by Hellman & Friedman LLC. AlixPartners' 78 managing directors, along with the remainder of its more than 500 employees, also will gain a considerable equity stake in the enterprise.

The transaction puts the total enterprise value of the firm in excess of $800 million.

AlixPartners is a Southfield, Mich., provider of operational management, risk evaluation, corporate restructuring, and legal and financial advisory services to underperforming and troubled companies.

Transeastern fall progresses

Transeastern's term loan slide continued into the Wednesday session as the paper gave up another point in trading, according to a fund manager.

The bank debt closed the day quoted at 62 bid, 64 offered, the fund manager said, down from Tuesday's levels of 63 bid, 65 offered.

Nothing new has emerged on the company's troubling financial situation, which became public knowledge about two weeks ago when it was announced that the existing capital structure can't be supported due to Florida housing market conditions. However, ever since that news hit the market, the bank debt has been on a perpetual freefall.

Prior to that news, the debt was being quoted in the high 90's.

Transeastern 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.

Neither Technical Olympic USA Inc. nor Falcone Group, the participants in the Transeastern joint venture, plan to put any more equity capital into the company until the capital structure problems are resolved.

Technical Olympic is a Hollywood, Fla.-based builder and seller of single family homes.

SunGard stronger

SunGard Data Systems Inc.'s term loan B was slightly higher in trading as the secondary market in general has felt stronger over the past few sessions, according to a trader.

The term loan B closed the day at 101 bid, 101½ offered, up about an eighth of a point, the trader said.

SunGard is a Wayne, Pa.-based provider of integrated software and processing solutions.

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