Cincinnati Bell breaks in mid- to upper-par region; September calendar continues to build

By Sara Rosenberg

New York, Aug. 26 - Cincinnati Bell Inc.'s term loan freed up for trading on Friday, with levels quoted in the upper-par context but anticipated to move higher next week when there are more market players around to generate more trading activity.

The new deal calendar for September continues to grow, giving investors something to look forward to as new issue activity has essentially come to a grinding halt during these last summer weeks - with Eastman Kodak Co.'s up to $2.7 billion credit facility being the one exception.

Cincinnati Bell's $400 million term loan (Ba3/B+) broke for trading in an otherwise quiet, summer Friday secondary market, leaving some investors to believe that levels were unable to reach their full potential.

The bank debt was quoted at par 3/8 bid, par ¾ offered immediately after the break and then ticked slightly higher to par ½ bid, par ¾ offered, where it closed out the session, according to a trader.

Another market source, however, heard that the new term loan got as high as par ¾ bid, 101 offered.

"I didn't see it get there but it's going to get there next week," the trader said about the par ¾ bid, 101 offered level. "It's just that they broke it into nothing. There was just nobody around."

The term loan is priced with an interest rate of Libor plus 150 basis points. Originally the tranche was launched with price talk of Libor plus 175 basis points but was reverse flexed during syndication on strong demand.

Bank of America is the lead bank on the deal that will be used to fund the approximately $448 million repurchase of the company's outstanding 16% senior subordinated discount notes due 2009.

The company's existing revolver that was completed early this year will remain in place as is. No amendment to the revolver is needed to allow for the new term loan since under the terms of the credit agreement the company can incur up to $500 million of additional bank debt.

The note repurchase is conditioned on completion of financing.

As a result of lower interest expense, this refinancing, which is expected to close in the third quarter, is anticipated to increase free cash flow by $20 million to $25 million on an annualized basis.

Cincinnati Bell is a Cincinnati-based local exchange and wireless provider.

September calendar shapes up

September is looking to be a busy month in terms of new loan deals as a number of companies have either scheduled bank meetings or are aiming to, including Aspect Software, Panolam Industries Inc., Yellowstone Club, Express Scripts Inc., PBI Media Holdings Inc., Lamar Media Corp., School Specialty Inc., Walter Industries Inc., SS&C Technologies Inc. and Triple Crown Media Inc.

Aspect Software is launching its proposed $725 million credit facility on Sept. 7 that consists of a $425 million five-year term loan B, a $50 million five-year revolver and a $250 million 51/2-year second-lien term loan that was pre-syndicated.

JP Morgan and Deutsche Bank Securities are the lead banks on the term loan B and the revolver, with Wells Fargo Foothill acting as documentation agent.

JP Morgan and Lehman Brothers are the lead banks on the second-lien term loan, with D.B. Zwirn Finance acting as administrative agent.

Proceeds from the credit facility will be used to help fund the acquisition of Aspect Communications Corp.

Concerto, a Westford, Mass.-based portfolio company of Golden Gate Capital that provides contact center software and services, is purchasing Aspect for $1 billion. Golden Gate and Oak Investment will contribute equity toward the deal.

Also launching Sept. 7 is Panolam Industries, which is bringing a new credit facility (B2) via joint lead arrangers Credit Suisse First Boston and Jefferies.

Proceeds will be used for acquisition financing.

Panolam is a Shelton, Conn., provider of decorative surfaces for commercial and residential interiors, store and store fixtures and furniture.

Yellowstone Club will be making its mark as well with bank meetings scheduled for Sept. 7 and Sept. 8 to launch its $330 million five-year term loan B that will be used for a recapitalization.

Credit Suisse First Boston is the sole lead arranger on the deal for the Big Sky, Mont., private ski and golf community.

Then there's Express Scripts, which is looking at possibly scheduling a bank meeting for either Sept. 7 or Sept. 8 to launch its credit facility via joint lead arrangers Credit Suisse First Boston and Citibank.

Proceeds will be used for the acquisition of Orlando, Fla.-based pharmaceutical company Priority Healthcare Corp. in a cash transaction for $28 per share, or $1.3 billion.

Express Scripts is a St. Louis-based independent pharmacy benefits manager.

PBI Media in mid-September

Coming up shortly after is PBI Media with a Sept. 12 launch for its approximately $385 million credit facility consisting of a $60 million six-year revolver, a $245 million seven-year term loan B and an approximately $78 million to $80 million eight-year second-lien term loan.

Credit Suisse First Boston and UBS are joint lead arrangers on the deal, with CSFB the left lead.

Proceeds will be used to help fund Wasserstein & Co. LP's purchase of Primedia Inc.'s Business Information segment for $385 million in cash. The Business Information segment consists of business-to-business targeted publications.

Lamar Media has not yet finalized timing, but the syndicate is targeting September to launch the $800 million senior secured credit facility (Ba1/BB) consisting of a $400 million revolver and a $400 million term loan.

JPMorgan is the lead bank on the deal that will be used by the Baton Rouge, La., outdoor advertising company to refinance existing bank debt and for general corporate purposes.

School Specialty ahead

School Specialty is another one that hasn't firmed up timing but is targeting a September launch for its $665 million senior secured credit facility consisting of a $175 million six-year revolver, a $240 million term loan and a $250 million delayed-draw term loan.

JPMorgan and Bank of America are co-lead arrangers on the Greenville, Wis., education company's deal. JPMorgan, Bank of America and Deutsche Bank are joint bookrunners, with JPMorgan also administrative agent, Bank of America syndication agent and Deutsche documentation agent.

Proceeds will be used to help finance Bain Capital Partners LLC's leveraged buyout of the company in a $1.5 billion transaction including assumption of non-convertible debt totaling $101 million, and for general corporate purposes.

The delayed-draw term loan will be used to fund certain permitted acquisitions and to repurchase any of School Specialty's 3.75% convertible subordinated notes due 2023 tendered and exchanged.

Walter plans $1.7 billion facility

Last on the unspecific September timeframe is Walter Industries' proposed $1.7 billion credit facility via Banc of America Securities LLC and Morgan Stanley & Co. that is being obtained in connection with Walter's proposed acquisition of Mueller Water Products Inc.

The company is dividing into two separate entities - one comprised of its water group, which will include Mueller and U.S. Pipe, and the other comprised of its energy group and homebuilding and financing group.

The water group has gotten a commitment for a new $1.125 billion credit facility consisting of a $125 million revolver and a $1 billion term loan B, according to a presentation on the offering.

The energy/homebuilding/financing group has gotten a commitment for a new $575 million credit facility consisting of a $200 million revolver and a $375 million term loan B.

Walter Industries is a Tampa, Fla.-based diversified company that operates in homebuilding, related financing, and water transmission products, and is also a producer of high-quality metallurgical coal. Mueller is a Decatur, Ill.-based supplier of water infrastructure and delivery systems.

SS&C plans $900 million facility

Moving along to late-September, there's SS&C Technologies Inc.'s approximately $900 million credit facility via JPMorgan, Bank of America and Wachovia that will be used to help fund The Carlyle Group's acquisition of the company.

Sunshine Acquisition Corp., an affiliate of Carlyle, will purchase SS&C for $37.25 in cash for each share of SS&C common stock, or about $941 million.

SS&C is a Windsor, Conn.-based provider of investment and financial management software and related services.

Lastly, targeted for late-September, is Triple Crown Media's new credit facility via Wachovia that is being obtained in connection with the creation of Triple Crown through a spinoff from Gray Television Inc.

Gray Television is spinning off its Newspaper Publishing and Graylink Wireless businesses to its shareholders, creating Triple Crown Media, which will be a separately traded public company. Bull Run Corp., an Atlanta-based sports and affinity marketing, printing and publishing, and association management company, will then be merged into Triple Crown immediately following the spinoff.

Proceeds from the new credit facility will be used to make the $40 million distribution to Gray and to refinance all of Bull Run's bank debt and subordinated debt.

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