The "B" loan offered on Thursday during a conference call was priced at LIBOR plus 2 1/4% with a step down to 2%, loan sources said. One buysider predicted, however, that investors were going to want to see even more of a price increase and for a longer period of time.
Trading in the bank debt was halted and the syndicated deal pulled back after the planned bond deal was postponed last Wednesday. During the conference call, the company informed investors it was expecting lower than projected earnings for its first quarter February through April and planned to revise its offering. The revenue forecast was off by about $20-30 million.
The credit was nearly three times oversubscribed in its first spin through the market. The debt backs the $1.35 billion acquisition of the company by Providence Equity Partners and Warburg Pincus. Telcordia is a subsidiary of Science Applications International Corp.
"They say it's a timing [issue]," said one buysider. "The company is in the business of selling software, some revenues are generated by sales to new customers, sometimes that process takes some time. There is a selling cycle. They were expecting certain amounts of new wins, which are taking longer than they thought. They think they will get the same amount of business, just not in the first quarter."
The initial loan included a six-year, $100 million revolver; a seven-year, $570 million term loan "B" and $300 million of senior subordinated notes due 2013. Pricing had been cut during syndication to 2% from 2 1/2%. Prior to the announcement, trading had gone as high as 101 3/4%, that buysider said.
Moody's Investors Service revised its ratings outlook to negative from stable. It affirmed its ratings of B1 on the revolver and term loan and B3 for the subordinated notes. J.P. Morgan had no comment and calls to Bear Stearns and Telcordia were not returned.