Nuveen breaks; Psychiatric Solutions up on numbers; LCDX slides; Alltel floats early guidance

By Sara Rosenberg

New York, Nov. 2 - Nuveen Investments Inc.'s credit facility allocated and freed up for trading on Friday, with the term loan trading above its original issue discount price, Psychiatric Solutions Inc.'s term loan was stronger after the release of third-quarter financials, and LCDX was softer with the general secondary market.

Meanwhile, over in the primary, Alltel Communications Inc. started circulating early price talk on its term loan B-2 as the deal is getting ready to launch with a bank meeting on Monday.

Nuveen Investments' credit facility hit the secondary market on Friday afternoon, with the $2.315 billion seven-year term loan B quoted at 99 5/8 bid, 99 7/8 offered, according to a trader.

The term loan B is priced at Libor plus 300 basis points, was sold to investors at an original issue discount of 99, and carries 101 soft call protection for one year.

During syndication, the term loan B was upsized from $2.215 billion after the company's bond offering was downsized to $785 million from $885 million, and the discount on the paper tightened from initial talk that was in the 98½ area.

The company's $2.565 billion senior secured credit facility (Ba2/BB-) also includes a $250 million six-year revolver priced at Libor plus 300 bps.

Deutsche Bank and Wachovia are the joint lead arrangers on the deal, and Merrill Lynch and Morgan Stanley are co-lead arrangers. All four banks are bookrunners.

Proceeds will be used to help fund the leveraged buyout of the company by Madison Dearborn Partners, LLC for $65.00 per share in cash. The total transaction is valued at $6.3 billion, including existing debt of $550 million.

Nuveen is a Chicago-based provider of investment services.

Psychiatric Solutions stronger with earnings

Psychiatric Solutions' term loan traded higher during market hours after the company announced its results for the third quarter, according to a trader.

The term loan went out at 97¾ bid, 98 offered, up from Thursday's levels of 97 bid, 97 7/8 offered, the trader said.

For the quarter, the company reported income from continuing operations of $0.38 per diluted share, up 31% from $0.29 per diluted share for the third quarter of 2006, and total revenue grew 58.5% to $402 million during the quarter from $253.7 million for the third quarter of 2006.

Also in the third quarter, consolidated adjusted EBITDA increased 61.8% to $68.9 million, reflecting a 17.1% margin.

Based primarily on operating and financial results for the third quarter and first nine months of 2007, the company affirmed its guidance for adjusted earnings from continuing operations for 2007 of $1.47 to $1.49 per diluted share, representing an annual growth rate in a range of 29% to 31% compared to 2006.

The company also established its 2008 guidance for adjusted earnings from continuing operations in the range of $1.83 to $1.87 per diluted share, reflecting growth of 23% to 27%.

Psychiatric Solution is a Franklin, Tenn., provider of inpatient behavioral health care services.

LCDX trades down

LCDX 9 lost some more ground on Friday as did the cash market in general, according to traders.

The index went out at 97.45 bid, 97.60 offered, down from Thursday's levels of 97.75 bid, 97.85 offered, traders said.

And the overall cash market was down about an eighth of a point on the day, traders remarked.

"Sentiment wasn't positive today. It was following off of yesterday," one trader added.

Alltel price talk surfaces

Moving to the primary market, Alltel Communications pricing guidance began making its way around the market as the company is gearing up for its Monday afternoon bank meeting in New York that will officially kick off syndication on the term loan B-2 tranche, according to a market source.

The $6 billion 71/2-year term loan B-2 is being guided to accounts at Libor plus 275 bps, with an original issue discount of 971/2, the source said.

"But that OID will likely come up as account interest piles in," the source remarked. "A lot of soft circles pre-bank meeting."

The term loan B-2 has soft call protection of 103 in year one, 102 in year two and 101 in year three.

The loan is part of a $16.25 billion senior secured credit facility (Ba3) that also includes a $1.5 billion six-year revolver, a $4 billion 71/2-year term loan B-1, a $4 billion 71/2-year term loan B-3 and a $750 million one-year delayed-draw, with 71/2-year final maturity, term loan, with all of these tranches priced at Libor plus 275 bps as well.

The term loan B-1 carries no call protection, and the term loan B-3 is non-callable for three years. These tranches are not being syndicated at this time.

As for the revolver and delayed-draw term loan, "those are underwritten as is. Not widely syndicated but accounts will be hit up quietly to commit," the source added.

Goldman Sachs, Citigroup, Barclays and RBS Securities are the joint bookrunners on the credit facility, with Goldman and Citi the joint lead arrangers.

The facility has a consolidated net senior secured debt to consolidated EBITDA covenant beginning June 30, 2008 based on consolidated EBITDA for the relevant rolling four-quarter measurement period ended as of such date.

Proceeds from the credit facility will be used to help fund the leverages buyout of the company by TPG Capital and GS Capital Partners for $71.50 per share in cash. The transaction is valued at $27.5 billion.

Other financing will come from $4.6 billion in equity and $5.2 billion in senior unsecured cash-pay notes and $2.5 billion in senior unsecured payment-in-kind option debt - all or a portion of which may take the form of a senior unsecured PIK option bridge loan.

The bonds/bridge loans were revised from their original structure that called for $4.7 billion of senior unsecured cash-pay notes and $3 billion of senior unsecured PIK notes.

The delayed-draw term loan will be available to purchase or otherwise acquire licenses and rights in the 700 MHz auction to be conducted by the Federal Communications Commission.

Pro forma for the transaction, Alltel Communications' senior secured debt to adjusted EBITDA will be 4.6 times and net debt to adjusted EBITDA will be 7.0 times. Total consolidated Alltel Corp. (the holding company) net debt to adjusted EBITDA will be 7.7 times and adjusted EBITDA to Alltel Corp. consolidated cash interest expense will be 1.5 times.

Alltel is a Little Rock, Ark., provider of wireless voice and data communications services.

Varel wraps at initial terms

Varel Holdings Inc.'s $160 million senior secured credit facility (B+) will close at original pricing terms being that the books were fully subscribed at those levels, according to a market source.

The facility consists of a $140 million term loan and a $20 million revolver, with both tranches priced at Libor plus 375 bps.

The term loan was sold to investors at an original issue discount of 97.

Lehman is the lead bank on the deal.

Proceeds will be used to help fund the buyout of the company by Arcapita Inc. from KRG Capital Partners for about $369 million.

Other buyout financing will come from $75 million in mezzanine debt and $173 million of equity.

Leverage is around 5.0 times.

Varel is a Carrollton, Texas, manufacturer of drill bits for the oil and gas, mining and industrial industries.

Palm firms OID

Palm Inc. finalized the original issue discount on its $400 million 61/2-year term loan at 90, according to a market source.

When the deal first launched, the discount was talked in the mid-90 area. It was then revised to the low-90 area, with some saying that it was guided around 93.

The term loan is priced at Libor plus 350 bps and carries soft call protection of 103 in year one, 102 in year two and 101 in year three.

Palm's $430 million credit facility (Ba3/B+) also includes a $30 million five-year revolver that is priced at Libor plus 350 bps as well.

Under the original financing plans, the revolver was expected to be sized at $40 million and pricing on the term loan was estimated by the company to be around Libor plus 225 bps to 275 bps, depending on ratings and market conditions.

JPMorgan and Morgan Stanley are the joint bookrunners on the deal.

Pro forma for the transaction, net debt to adjusted EBITDA is around 0.3 times and total debt to adjusted EBITDA is around 3.4 times.

Proceeds from the credit facility were used to help fund a recently completed recapitalization, under which Elevation Partners invested $325 million in Palm through the purchase of a new series of convertible preferred stock with a conversion price of $8.50 per share.

As part of the recapitalization, shareholders received a cash distribution of $9.00 per share that was funded by the term loan, existing cash and the Elevation investment. The amount of total proceeds distributed to shareholders is estimated to be about $940 million.

At close, Elevation owned about 27% of Palm's outstanding common stock on an as-converted and diluted basis.

Palm is a Sunnyvale, Calif., mobile computing devices company.

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