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Avago $4.6B loan backing LSI acquisition enters secondary north of issue price

avago-technologies_200x200Accounts this afternoon received allocations of the covenant-lite $4.6 billion B term loan for Avago Technologies, which broke for trading at 100/100.5, from issuance at 99.5, according to sources. The seven-year loan is priced at L+300, with a 0.75% LIBOR floor. Deutsche Bank, Barclays, Bank of America Merrill Lynch, and Citigroup arranged the loan, which cleared tight to original talk. The publicly traded semiconductor manufacturer will use proceeds to support its $6.6 billion acquisition of LSI Corp. The senior secured financing also includes a $500 million revolver, while Avago is also planning to fund the deal with a $1 billion investment from Silver Lake Partners, which would be in the form of a seven-year 2% convertible note, with a conversion price of $48.04 per share or preferred stock. The company will also use $1 billion of cash from the combined balance sheet to fund the transaction. Terms:

Borrower Avago Technologies
Issue $4.6 billion B term loan
UoP Fund acquisition of LSI
Spread L+300
LIBOR floor 0.75%
Price 99.5
Tenor seven years
YTM (once funded) 3.89%
Call protection 12 months 101 soft call
Corporate ratings BB+/Ba2/BB+
Facility ratings BBB-/Ba1/BBB-
S&P recovery rating 2
Financial covenants none
Arrangers DB, Barc, BAML, Citi
Admin agent DB
Price talk L+325/0.75%/99
Notes Ticking fee of 150 bps kicks in on June 1, stepping to 300 bps July 1; includes a 24-month MFN sunset provision
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Freescale $2.72B B-4 term loan enters trading above par issuance

freescale-semi-logo_optThe $2.72 billion B-4 term loan for Freescale Semiconductor broke for trading late this afternoon at 100.125/100.625, from issuance at par. The loan due March 2020 is priced at L+325, with a 1% LIBOR floor. The covenant-lite deal reprices the publicly traded chip maker’s existing $2.38 billion B-4 loan down from L+375, with a 1.25% floor, while it also refinances the company’s $350 million B-3 term loan due 2016 into the same tranche. Citigroup, Barclays, Credit Suisse, Deutsche Bank, Goldman Sachs, and Morgan Stanley arranged the financing, which cleared in line with original talk. Terms:

 

Borrower Freescale Semiconductor
Issue $2.72 billion B-4 term loan
UoP Refinancing/repricing
Spread L+325
LIBOR floor 1%
Price 100
Maturity March 2020
YTM 4.32%
Call protection six months 101 soft call
Corporate ratings B/B2
Facility ratings B/B1
S&P recovery rating 3
Financial covenants none
Arrangers/bookrunners Citi, Barc, CS, DB, GS, MS
Admin agent Citi
Px talk L+325/1%/100

 

 

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Weather Company TLB (NBC, Bain, Blackstone) drifts lower as DirecTV blackout continues

weatherch_optThe Weather Company B term loan due 2017 (L+275, 0.75% LIBOR floor) has slid about two points over the past week, which sources attribute to both the ongoing DirecTV blackout as well as the lack of investor enthusiasm for low-coupon paper.

The loan has cooled to bracket 98, after trading at 98 this morning, sources said. By comparison, the loan was quoted at 98.125/98.625 yesterday afternoon and was wrapped around par a week ago.

DirecTV last month dropped the Weather Channel as a result of a fee dispute, and there has since been no resolution. The paper initially softened a bit last month on the news, but held north of par thanks in part to strong technical conditions at the time.

The issuer is rated B/B1, while the first-lien loan is rated B+/Ba3, with a 2 recovery rating from S&P.

The issuer, formerly known as The Weather Channel, about a year ago repriced its $1.56 billion first-lien term loan, reducing the coupon from L+325, 1% floor.

In June, the company placed a $625 million covenant-lite second-lien term loan due 2021 (L+600, 1% floor), proceeds of which backed a shareholder dividend. That loan is wrapped around 98 today, versus issuance at 99 in June. The second-lien is rated CCC+/B3, with a 6 recovery rating.

The second-lien tranche is covenant-lite, though the first-lien loan is governed by a first-lien-leverage test. Deutsche Bank is administrative agent.

NBC Universal, Bain Capital, and Blackstone Group in 2008 purchased The Weather Company properties from Landmark Communications in a $3.5 billion transaction. The issuer is a provider of real-time weather information through various media platforms, including cable television and the Internet. – Kerry Kantin

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Cumulus Media readies $2.2B loan refinancing for launch today

cumulus-logo-222featured-150x100J.P. Morgan is launching an all-first-lien refinancing for Cumulus Media Holdings with a lender call at 2:00 p.m. EST today.

The deal will repay first- and second-lien debt, resetting first-lien leverage at roughly 5x, sources said.

The new deal includes a $2.025 billion, seven-year term loan and a $200 million, five-year revolving credit.

Cumulus a year ago repriced its $1.317 billion covenant-lite first-lien term loan due September 2018 to L+350, with a 1% LIBOR floor, via J.P. Morgan and UBS. The 101 soft call rolls off this month.

The issuer in 2011 put in place a first- and second-lien deal to back its $2.4 billion acquisition of Citadel Broadcasting. In addition to the first-lien term loan, the financing included a $790 million, 7.5-year second-lien term loan priced at L+600, with a 1.5% LIBOR floor. It was non-callable in the first year, then callable at 103, 102, and 101.

The Atlanta-based broadcaster controls more than 525 radio stations in 110 U.S. media markets. – Chris Donnelly

 

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Tribune $3.8B leveraged loan backing Local TV buy enters trading above OID

tribune-company_200x200

The $3.8 billion TLB for Tribune Co. broke for trading late this afternoon at 100/100.25, from issuance at 99.75, according to sources. The seven-year loan is priced at L+300, with a 1% LIBOR floor, and includes six months of 101 soft call protection. J.P. Morgan, Bank of America Merrill Lynch, Citigroup, Deutsche Bank, and Credit Suisse arranged the loan, which backs Tribune Co.’s planned acquisition of Local TV from Oak Hill Capital Partners. The issuer is also putting in place a $300 million, five-year revolver. As reported, the leads trimmed pricing on the covenant-lite loan from original talk of L+350, with a 1% floor and a 99 offer price. Tribune in July agreed to purchase Local TV’s 19 television stations for $2.725 billion in cash. The company will also refinance its existing debt alongside the purchase and is spinning off its publishing assets into an independent company, ultimately leaving a pure-play broadcaster.

Terms:

Borrower Tribune Co.
Issue $3.8 billion TLB
UoP Finance Local TV purchase, refinance debt
Spread L+300
LIBOR floor 1.00%
Price 99.75
Tenor seven years
Call protection six months of 101 soft call
YTM 4.11%
Corporate ratings BB-/Ba3
Facility ratings BB+/Ba3
S&P recovery rating 1
Financial covenants none
Bookrunners JPM, BAML, Citi, DB, CS
Admin agent JPM
Px talk L+350/1%/99
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Tribune cuts pricing on $3.8B leveraged loan, backs Local TV buy

tribune-company_200x200A J.P. Morgan-led arranger group is seeking recommitments on Tribune Co.’s term loan by 5:00 p.m. EST today after flexing down pricing to L+300, with a 1% LIBOR floor, offered at 99.75, sources said. In addition, the 101 soft call premium was trimmed to six months from one year.

Leads J.P. Morgan, Bank of America Merrill Lynch, Citigroup, Deutsche Bank, and Credit Suisse originally talked the $3.8 billion, seven-year term loan at L+350, with a 1% LIBOR floor, at 99, sources said. As revised the loan would yield 4.11% to maturity.

The term loan, along with a $300 million, five-year revolver, will back Tribune Co.’s planned acquisition of Local TV from Oak Hill Capital Partners.

The loan drew BB+/Ba3 ratings, along with a 1 recovery rating from Standard & Poor’s. Tribune is rated BB-/Ba3.

Tribune in July agreed to purchase Local TV’s 19 television stations for $2.725 billion in cash. Tribune will also refinance its existing debt alongside the purchase and is spinning off its publishing assets into an independent company, ultimately leaving a pure-play broadcaster. In a July statement, the company said it would develop “detailed separation plans” over the next 9-12 months.

With the purchase, the media company’s broadcast portfolio will increase to 42 stations, from 23. Tribune expects the merger to generate more than $100 million in annual run-rate synergies within five years of closing.

The transaction will be structured to deliver Tribune a step up in the tax basis of the acquired assets. Taking into account the company’s estimate of run-rate synergies and the present value of this tax asset, the effective purchase-price multiple on a pro forma basis is approximately 7x 2011 and 2012 average EBITDA, the company said.

Tribune’s existing bank debt – a $1.1 billion B term loan and a $300 million asset-based revolver – was put in place in December to back the media company’s exit from Chapter 11. The covenant-lite TLB due 2019 is priced at L+300, with a 1% LIBOR floor.

Local TV, meanwhile, last tapped the loan market in September for a fungible $70 million add-on to its $181 million covenant-lite term loan due 2015 (L+400). The original loan stems from Oak Hill’s 2007 purchase of the New York Times’ Broadcast Media Group, though the company extended the maturity of a majority of its term debt by two years, to 2015, via an amend-to-extend transaction early last year. The company exited Chapter 11 on Dec. 31. – Chris Donnelly

 

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Twitter obtains $1B revolver from five banks ahead of IPO

new_twitter_logoTwitter disclosed that it has obtained a $1 billion, five-year unsecured revolver from a group of five banks ahead of its initial public offering.

Morgan Stanley and J.P. Morgan acted as joint lead arrangers. Morgan Stanley is administrative agent. Bank of America Merrill Lynch, Deutsche Bank, and Goldman Sachs also participated in the transaction.

Pricing on the revolver is tied to a leverage-based grid, ranging from L+100-175, with commitment fees ranging from 10-25 bps.

The company has not drawn any amounts under the facility.

The tech company is expected to begin trading on the New York Stock Exchange later this fall under the symbol TWTR. – Richard Kellerhals

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Verizon $12B high grade term loan nets oversubscription ahead of deadline

Verizon Communications’ $12 billion A term loan has drawn an oversubscription ahead of Tuesday’s commitment deadline, sources said.

J.P. Morgan and Morgan Stanley are acting as global coordinators. J.P. Morgan, Morgan Stanley, Barclays, and Bank of America Merrill Lynch are acting as joint lead arrangers. J.P. Morgan is administrative agent.

Proceeds from the loan, along with a record-setting $49 billion bond offering, will be used to back Verizon’s $130 billion acquisition of a 45% stake in Verizon Wireless from Vodafone.

The $12 billion A term loan is split between a $6 billion, three-year tranche and a $6 billion, five-year tranche. Pricing on the three- and five-year tranches has been set at L+137.5 and L+150, respectively. Lenders are being offered upfront fees of 35 bps for commitments of $125 million or more and 30 bps for commitments under $125 million.

The financing also includes a $2 billion revolver.

S&P and Moody’s have each downgraded Verizon’s ratings by one notch, to BBB+/Baa1, reflecting the leverage implications of adding $67 billion of new debt to Verizon’s balance sheet after the closing of the deal. Both agencies noted, however, that the outlook is stable at the lower ratings.

New York-based Verizon provides communication and information products and services. U.K.-based Vodafone provides mobile telecommunications services worldwide. – Richard Kellerhals

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Bankruptcy: Conexant Systems committee of unsecured creditors appointed; list, contacts

The U.S. Trustee overseeing the Chapter 11 proceedings of semiconductor-maker Conexant Systems Inc. appointed a committee of unsecured creditors March 8. Current membership and contact information is as follows:

  • PRES-4340 Von Karman LP (David Bonaparte, 949-442-5965)
  • Samsung Electronics Co. (Jaishuk Hong, 82-2-2255-8337)
  • STATS ChipPAC Ltd. (Thomas McNaughton, 510-979-8204)

The committee chose law firms Kelley Drye & Warren and Womble Carlyle Sandridge & Rice as co-counsel to represent its interests in the case, according to a notice filed with the court.

Conexant filed for bankruptcy protection on Feb. 28, with a “pre-arranged” reorganization plan that would see the company exit Chapter 11 within 120 days. – John Bringardner

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Reader’s Digest nets $105M DIP after filing for Chp 11 over weekend

The Reader’s Digest Association said Sunday that it filed for Chapter 11 in U.S. Bankruptcy Court in White Plains, N.Y. – its second bankruptcy filing in less than four years – in a debt-for-equity swap reorganization.

The restructuring has the support of both the company’s secured lenders and an ad hoc committee of senior secured noteholders, comprising GoldenTree Asset Management, Empyrean Capital, and Apollo Management, which hold roughly 70% of the company’s $464 million of senior secured notes that were put in place when Reader’s Digest last exited bankruptcy in early 2010.

The restructuring would convert the secured notes to 100% of the equity of the new company, Reader’s Digest said.

Those notes (L+650 with a 3% LIBOR floor), due 2017, last traded in a round lot Feb. 1 at 40, according to traded data, while odd lots have since changed hands as high as 50.

In addition to the secured notes, RDA’s $534 million in prepetition debt includes a $59.26 million secured credit facility and a $10 million unsecured term loan from Luxor Capital Group and Point Lobos Capital.

The noteholders are providing the company with a $105 million DIP facility, according to a declaration filed in bankruptcy court by Reader’s Digest president and CEO Robert Guth in connection with the Chapter 11 filing. The DIP refinances the roughly $60 million of the company’s prepetition secured credit facility at L+500 with a 3% LIBOR floor, and has $45 million in new money at L+950 with a 1.5% LIBOR floor. The DIP matures on Oct. 31.

The company plans to seek interim access to $11 million of the new money, court documents say.

Under the proposed restructuring plan, upon emergence, the refinancing portion of the DIP would convert to a first out, priority exit term loan, while the new money portion of the DIP would convert to a second out, first priority term loan in an amount equal to the new money DIP outstanding at emergence. Both facilities would be pari passu.

The first out exit term loan would be priced at L+600 with a 3% LIBOR floor, while borrowings under the second out facility would be at L+1,100 with a 1.5% LIBOR floor, court documents show.

The Chapter 11 filing comes after a failed sales effort of the company as a whole, according to sources, though Reader’s Digest did successfully sell off Weekly Reader and Allrecipes.com businesses last year for $3.6 million and $175 million, respectively.

More deals could be on the way.

The company hired FTI Capital Advisors in 2012 as its financial advisor to sell or license the regional components of the company’s international operations, or the businesses as a whole, Guth’s declaration said, adding that Reader’s Digest “received preliminary proposals for most regions, which reflect a mix of upfront cash and royalty income.”

Noting that the company sold its Spain and Portugal businesses on July 31, 2012, Guth said that Reader’s Digest was “currently in negotiations for the sale and licensing of certain international markets, and is considering other alternative dispositions for certain international markets.”

In Sunday’s announcement, the company said it “expects to finalize certain agreements in the coming weeks.”

The Chapter 11 filing only covers Reader’s Digest U.S. businesses.

The company had previously hired Morgan Stanley and Evercore Partners to explore dispositions or a sale, according to sources. Moelis & Co. is advising the ad hoc committee of noteholders.

Under the terms of its restructuring support agreement, Reader’s Digest must file a reorganization plan and disclosure statement within 25 days of the petition date, win confirmation of the plan by July 15, and exit from Chapter 11 by July 31.

According to court documents, Alden Global Capital holds a 17.77% stake in the company, while Point Lobos holds a 13.55% stake in the company. Its other large equity holders include Jefferies High Yield Holdings LLC (9.43%), GoldenTree Asset Management LP (9.22%), General Electric Capital Corp. (8.96%), JP Morgan Chase Bank NA (6.79%), and Goldman Sachs Asset Management LP (5.69%). – Staff reports