Ocwen falls on letter backdating allegations; Styrolution leaves books open, updates coming

By Sara Rosenberg

New York, Oct. 21 – Ocwen Financial Corp.’s term loan B headed lower in the secondary market on Tuesday following news that the company received a letter from the New York Department of Financial Services regarding backdating letters to mortgage borrowers.

Meanwhile, in the primary, Styrolution (Styrolution Group GmbH and Styrolution US Holding LLC) pushed out the commitment deadline on its term loan B and is expected to come out with updated terms on the transaction shortly.

Furthermore, TransFirst Inc., Norwegian Cruise Line Holdings Ltd., Block Communications Inc., Ability Network Inc. and Emcore Photovoltaics joined this week’s calendar.

Ocwen retreats

Ocwen’s term loan B dropped in trading on Tuesday to 95˝ bid, 96˝ offered from 98˝ bid, 99 offered after it was revealed that the company is being investigated by the New York Department of Financial Services for incorrectly dated borrower correspondence, according to a trader.

The Department of Finance said in a letter that Ocwen backdated “potentially hundreds of thousands of letters to borrowers, likely causing them significant harm”

The letter went on to say that if the Department concludes that it cannot trust Ocwen’s systems and processes it will take “whatever action is necessary to ensure that borrowers are protected.”

In response, Ocwen said in a news release: “Ocwen regrets that, due to software errors in our correspondence systems, we inadvertently sent improperly dated letters to some borrowers. As always, our goal is to avoid foreclosure.

“We believe that we have resolved the letter dating issues that have been identified to date, and we continue our investigation as to whether there are additional letter dating issues that need to be resolved. We are working with and fully cooperating with DFS and the Monitor to address their concerns,” the news release added.

Ocwen is an Atlanta-based servicer and originator of mortgage loans.

Styrolution revises deadline

Switching to the primary, Styrolution extended the commitment deadline on its €1.05 billion-equivalent five-year covenant-light term loan B (B2/B) from Tuesday, and investors were told that updated terms and timing are anticipated to emerge in the near-term, a market source said.

The loan, which has U.S. and euro tranches, was launched earlier this month with talk of Libor/Euribor plus 450 basis points to 475 bps with a 1% Libor floor, an original issue discount of 99 and 101 soft call protection for one year.

Barclays and J.P. Morgan Securities LLC are the joint global coordinators, with Barclays the left lead on the U.S. piece and JPMorgan the left lead on the euro piece.

Proceeds will be used with additional second-lien debt and cash on hand to fund Ineos’ acquisition of BASF SE’s 50% share in Styrolution so that it becomes a wholly owned standalone company within Ineos, and to redeem Styrolution’s existing 7 5/8% senior secured notes due 2016.

Styrolution second attempt

Styrolution’s current deal is a second try to get a term loan B. This past summer the company had been in market with a €1.6 billion-equivalent U.S. and euro seven-year term loan B for the same purpose, but the deal was pulled due to unfavorable primary conditions.

The U.S. portion of the pulled term loan B was talked at Libor plus 400 bps with a 1% Libor floor and a discount of 99, after flexing from Libor plus 350 bps with a discount of 99˝, and the euro portion was talked at Euribor plus 400 bps to 425 bps with a 1% floor and a discount of 99, after flexing from Euribor plus 350 bps to 375 bps with a discount of 99˝. Both tranches included 101 soft call protection for six months.

Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Barclays, HSBC and J.P. Morgan Securities LLC were the lead banks on the pulled deal, with Citigroup the left lead on the U.S. portion and Credit Suisse the left lead on the euro portion.

Styrolution is a Frankfurt-based styrenics supplier.

TransFirst joins calendar

Also on the new deal front, TransFirst set a bank meeting for 10:30 a.m. ET on Thursday to launch a $1.05 billion credit facility, according to a market source.

The facility consists of a $50 million five-year revolver, a $665 million seven-year covenant-light first-lien term loan and a $335 million eight-year covenant-light second-lien term loan, the source said.

Jefferies Finance LLC, Guggenheim and Nomura are leading the deal that will be used with $566 million of equity to fund the buyout of the company by Vista Equity Partners.

First-lien net leverage is 4.6 times and total net leverage is 7 times, the source added.

TransFirst, a Hauppauge, N.Y.-based provider of secure payment processing, expects the buyout to close later this year.

Norwegian plans meeting

Norwegian Cruise Line will hold a bank meeting at 1:30 p.m. ET on Thursday to launch a $500 million seven-year term loan that is talked at Libor plus 350 bps to 375 bps with a 0.75% Libor floor and an original issue discount of 99, a market source remarked.

The company also expects to get a $450 million incremental term loan A.

J.P. Morgan Securities LLC, Barclays and Deutsche Bank Securities Inc. are leading the senior secured deal that will be used to help fund the acquisition of Prestige Cruises International Inc. for $3,025,000,000, including the assumption of debt.

Other funds for the transaction will come from cash on hand, the issuance of about 20.3 million equity shares or $670 million to Prestige shareholders and a commitment for a $780 million senior unsecured bridge loan.

Closing is expected in the fourth quarter, subject to regulatory approvals and other customary conditions.

Norwegian Cruise Line is a Miami-based cruise company. Prestige is the parent company of Oceania Cruises and Regent Seven Seas Cruises.

Block Communications on deck

Block Communications set a bank meeting for 10 a.m. ET in New York on Thursday to launch a $225 million seven-year covenant-light term loan B, according to a market source.

Bank of America Merrill Lunch and J.P. Morgan Securities LLC are leading the deal that will be used to fund the acquisitions of MetroCast and Line Systems Inc.

Block Communications is a Toledo, Ohio-based diversified media company.

Ability coming soon

Ability Network surfaced with plans to hold a conference call on Thursday to launch $116.1 million of incremental term loans, according to a market source.

The debt consists of a $92.5 million incremental first-lien term loan due May 2021 talked at Libor plus 500 bps with a 1% Libor floor and a $23.6 million incremental second-lien term loan due May 2022 talked at Libor plus 825 bps with a 1% Libor floor, the source said, adding that original issue discounts are still to be determined.

Spreads on floors on the incremental loans match the existing first-and second-lien term loans.

Macquarie Capital (USA) Inc. is leading the deal that will be used to fund the acquisition of MD On-Line Inc., a Parsippany, N.J.-based maker of electronic data interchange and revenue cycle tools for payers and providers.

Ability is a Minneapolis-based developer of workflow technology for hospitals, home health agencies and other care settings.

Emcore readies deal

Emcore Photovoltaics scheduled a bank meeting for 2 p.m. ET on Thursday to launch a $72.5 million credit facility, according to a market source.

The facility consists of a $15 million revolver and a $57.5 million term loan, the source said.

Citizens Financial Group is leading the deal that will be used to help fund the $150 million buyout of the company by Veritas Capital from Emcore Corp.

Closing is expected in December or January, subject to Emcore shareholder approval and other customary conditions.

Emcore Photovoltaics is an Albuquerque, N.M.-based provider of products for space power applications.

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