Investors were less than thrilled when they received a mass e-mail Wednesday afternoon announcing commitments were due just two days later on a repricing for Travelport's term loan, which currently has $1.41 billion outstanding. After investors complained, some citing Loan Syndication and Trading Association guidelines that call for a five day period and a conference call, the commitment date was moved to this Thursday. The repricing news comes less than six months after the online travel subsidiary came to market.
According to LSTA procedures for credit agreement modifications, put in place in April 2003, lenders should be given a period of not less than five business days from the date of the conference call or receipt of the modifications. A shorter period can occur if there is an "exceptional circumstance," but one market player observed that a pricing change is clearly not an exceptional circumstance. Elliot Ganz, general counsel at the LSTA, confirmed guidelines are in place.
"It's really frustrating, they just blasted an e-mail," said one portfolio manager. "The paper is wrapped around 101. If I don't like it, sell it, that's basically the way it goes." The term loan was trading around 100.406-100.750 Friday morning, according to Markit. UBS is leading the repricing. Calls to bankers there were not returned.
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Repricings are the name of the game in January. Last week repricings for VNU N.V., Michaels Stores and Roundy's Supermarkets all were announced (see related story, page 5). Two weeks ago Intelsat and Panamsat repriced. Another portfolio manager suggested issuers are using this quiet period to sneak in a repricing before the multi-billion dollar deals start launching day after day, as opposed to one or two a week. "The pickup in January doesn't allocate until February. You have this period of a vacuum with no new loans in the market place," he said. "Repricings are coming because nothing else is going on and the market is hot."
Aside from catching the repricing bug, one portfolio manager was peeved Travelport is looking to refinance so soon after it came to market. "I think there should be a requirement," he said, about how long a company has to wait to reprice. Some thought Travelport would wait until it came to market to fund its buyout of Worldspan later in the year, but the second portfolio manager anticipated the company wanted to take advantage of the cheap pricing it can get now. Calls to Michael Rescoe, Travelport cfo, were referred to a spokesman who declined comment.
UBS, Credit Suisse and Lehman Brothers lead the deal, which launched syndication in July to back the acquisition of the company by The Blackstone Group from Cendant Corp. (CIN, 7/24).
VNU is also looking to drop pricing on its $5.18 billion term loan, much to the chagrin of the buyside. The term loan's $4.187 billion tranche is getting flexed down 50 basis points to LIBOR plus 2 1/4% and the e800 million tranche is being cut by 25 basis points to EURIBOR plus 2 1/4%, according to bankers. Some questioned why a term loan that required a number of facelifts over the summer just to make it through syndication deserved a price cut.
One dealer had the U.S. term loan trading around 100 7/8-101 1/8 last Wednesday. Its five-year, credit default swaps tightened to trade around 302 last Thursday, according to Markit.
The repricing "is a travesty," said one portfolio manager. He said the credit still has a 25 basis point step down if leverage falls below 4.25 times, which would bring pricing down if LIBOR plus 2%. "So I can either hold it at 225 or sell at 101--it's ridiculous. The OID may have been generous at the time, but wait another quarter" to do the reprice at least, he said. Citigroup, Deutsche Bank, JPMorgan, ABN AMRO and ING lead the credit. Calls to a VNU spokesman were not returned.
