USIS, Misys break; TXU talk may vary from closing spreads; Allison selling down more term B

By Sara Rosenberg

New York, Oct. 11 - USIS and Misys Diagnostic Systems both hit the secondary market on Thursday, with both companies' term loans quoted above their original issue discount price.

In other news, TXU Corp. released details on its massive, already funded credit facility, including pricing, but sources are saying that when the deal launches into syndication, official price talk may differ.

Also, Allison Transmission is selling off another block of its term loan B debt, this time at a discount that is noticeably smaller than where the paper sold off before.

USIS' $725 million term loan freed up for trading on Thursday afternoon, with levels quoted at 97¼ bid, 97¾ offered on the break and then moving up to 97½ bid, 98 offered, according to a market source.

The term loan is priced at Libor plus 300 bps and was sold to investors with an original issue discount of 97.

Prior to a formal conference call launch on Oct. 3, the term loan was in soft launch mode with early discount guidance set at 96½ to 97.

Lehman Brothers and Bank of America acted as the lead banks on the deal.

The term loan includes a secured leverage covenant.

Proceeds from the loan, which already funded, were used to help fund Providence Equity Partners Inc.'s acquisition of the company from Welsh, Carson, Anderson & Stowe and the Carlyle Group for $1.5 billion.

The company's credit facility (B1/B+) also includes a $90 million revolver.

USIS is a Falls Church, Va., provider of pre-employment screening services and security investigations for the federal government and a supplier of cleared personnel supporting critical federal programs.

Misys frees to trade

Also breaking for trading on Thursday was Misys Diagnostic Systems, with its $200 million seven-year first-lien term loan quoted at 98½ bid, 99½ offered, according to a trader.

The term loan is priced at Libor plus 325 bps and was sold to investors with an original issue discount of 981/4.

During syndication, pricing on the term loan firmed up at the wide end of original guidance of Libor plus 300 bps to 325 bps and the discount was revised from the 98 level that was presented to lenders at launch.

Misys' $225 million senior secured credit facility (B1/B+) also includes a $25 million six-year revolver priced at Libor plus 325 bps. Pricing on this tranche also firmed at the high end of talk of Libor plus 300 bps to 325 bps.

UBS Investment Bank and Jefferies acted as the lead banks on the deal.

Proceeds were used to help fund the buyout of the company by Vista Equity Partners, LLC from Misys Healthcare Systems, which was completed on Thursday as well.

Misys Diagnostic is a provider of technology solutions for hospitals.

LCDX stays firm

LCDX was minimally higher on Thursday as a positive tone continued to be felt in the secondary, according to a trader.

The series 9 LCDX ended the day at 100.25 bid, 100.35 offered, up from Wednesday's levels of 100.20 bid, 100.30 offered, the trader said.

The series 8 LCDX ended the day at 97.85 bid, 97.95 offered, up from Wednesday's levels of 97.80 bid, 97.90 offered, the trader added.

As for the cash market, the trader said that levels were unchanged to maybe an eighth of a point with good flows and firm undertones.

Movie Gallery slides lower

Movie Gallery Inc.'s first-lien term loan was softer on Thursday on continued rumors over the company's possible prepackaged Chapter 11 filing, according to a trader.

The first-lien term loan ended the session at 89 bid, 90 offered, down about half a point on the day, the trader said.

Over the past few days there has been talk that the company is putting together a bankruptcy plan and lining up a debtor-in-possession financing facility.

Rumor has it that if the company files, its existing second-lien term loan will be turned into PIK, its existing first-lien term loan will be left in place with a bump in coupon and its existing revolver will be rolled up into a DIP, the trader said.

"I think people thought the $150 million DIP was all new money. Maybe they didn't know the revolver was going to be wrapped up into it. Or maybe I have it wrong and it's all new money. Who knows. It's all just rumor at this point," the trader added.

Movie Gallery is a Dothan, Ala.-based video rental company.

TXU talk, closing pricing could differ

Over in primary happenings, TXU revealed the pricing that was put in place when its up to $24.5 billion senior secured credit facility closed on Wednesday, but, according to sources, official price talk at launch could potentially come out at different levels.

All tranches under the credit facility, which was borrowed by Texas Competitive Electric Holdings Co. LLC, carried pricing of Libor plus 350 bps at signing, according to an 8-K filed with the Securities and Exchange Commission Thursday.

This funded deal, however, has not yet been launched into syndication, although there are already some orders in the book anyway, one source told Prospect News.

"We are being told maybe this is just where the deal funded at yesterday," the source added.

"Where it funds and where you market it are two independent things. [This is] not necessarily where it will launch," a second source remarked.

The second source went on to say that with the emergence of all the credit facility details, inquiries on the deal from potential investors will likely start to pick up, which in turn could help the lead banks figure out where to set the official price talk.

A bank meeting to officially kick off syndication is scheduled to take place on Monday, which is when price talk is expected to come out.

The deal is comprised of an up to $16.45 billion seven-year term loan, an up to $4.1 billion seven-year final maturity delayed-draw term loan, an up to $1.25 billion seven-year letter-of-credit facility and an up to $2.7 billion six-year revolver.

The revolver has a commitment fee of 50 bps and the delayed-draw term loan has an undrawn fee of 125 bps for the first year and 150 bps after that, according to the 8-K filing.

Under the facility, the company must maintain a maximum secured leverage ratio beginning on Sept. 30, 2008 of 7.25 to 1.00.

Citigroup, JPMorgan, Goldman Sachs, Lehman Brothers, Morgan Stanley and Credit Suisse are the joint lead arrangers and bookrunners on the deal, with Citi administrative agent, JPMorgan syndication agent, and Credit Suisse, Goldman, Lehman and Morgan Stanley co-documentation agents.

Proceeds from the credit facility were used to help fund the recently completed leveraged buyout of the company by an investor group led by Kohlberg Kravis Roberts & Co. and Texas Pacific Group for $69.25 per share. The transaction was valued at $45 billion.

TXU is a Dallas-based energy company.

Allison syndicating B loan block

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 time the original issue discount on the paper is set at 981/4, according to a market source.

At first, the banks were going to sell the term loan debt at 971/2, but the discount was tightened "due to the strong momentum of the Allison bonds" that priced on Thursday, the source said.

The $550 million eight-year cash-pay senior notes priced at par to yield 11%, in line with previous unofficial guidance.

In September, the banks sold off $500 million of the Allison term loan B debt at a discount of 96¼ and about $1 billion was sold off at a discount of 96.

On Thursday, some of this term loan B debt that had been syndicated before traded at 97½ in the secondary, a trader remarked.

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

This latest syndication effort is hoped to wrap up on Friday, the source added.

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.

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

Levi closes

Levi Strauss & Co. closed on its $750 million amended and restated credit facility due Oct. 11, 2012, according to a company news release.

Bank of America and Credit Suisse acted as the lead banks on the deal.

The facility consists of a $500 million revolver priced at Libor plus 150 bps, with a 25 bps commitment fee, and a $250 million term loan priced at Libor plus 250 bps.

Security for the entire credit facility is certain domestic assets and certain U.S. trademarks associated with the Levi's brand.

The term loan will be borrowed on a first dollar drawn basis.

As the term loan tranche is repaid, the maximum availability under the facility will not be automatically reduced by the amount of the repayment.

The lien on the trademarks, but not the other assets, will be released upon the full repayment of the term loan.

The facility contains a springing fixed charge coverage ratio covenant of 1.0 to 1.0, which arises when excess availability is less than $100 million. This covenant will be discontinued upon termination and repayment of the term loan and the implementation of a liquidity reserve of $50 million.

The deal was done in conjunction with, and is a condition of, the company's cash tender offer for any and all of its outstanding $525 million 12¼% senior notes due 2012. The tender offer will expire on Oct. 17.

Levi Strauss is a San Francisco-based apparel maker.

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