Citigroup made more changes to the VNU loan structure last Friday, even as it expected to land enough accounts to close the bank book Wednesday. The financing backs the leveraged buyout of the company by a consortium of private equity groups. The deal's $5.18 billion term loan tranches were finalized by a E350 increase to the euro tranche. The deal now consists of an E800 million tranche and a $4.187 billion tranche. Both are priced at LIBOR plus 2 3/4%, according to a banker. The $688 million multi-currency revolver remains unchanged.
"My translation this morning is that they are almost at the level of the book," said one portfolio manager Wednesday. "They needed to get more done, but they were still waiting to hear from like 60 guys so [a Citi salesman] thought it was probably done."
Citi may have been confident it would be able to haul in the needed accounts after it added an original issue discount of 99.5 on top of the 25 basis points it added a week before. While some investors were looking for 300 basis points, others were willing to participate once Citi offered them the OID and made structural changes.
One investor whose firm is not going to participate said Citi was pulling out all the stops. "They are pulling out the relationship card and saying things like, 'This is an important deal for Citibank,'" he said. Still, the portfolio manager said the concessions weren't enough. "[We'd] rather get 50 basis points in our pocket day one, rather than LIBOR 300, which could get refinanced a year from now at a lower price," he said. Rob Ruijter, VNU cfo, could not be reached. Calls to a VNU spokesman and a Citibank spokesman were not returned by press time.
Deutsche Bank also changed the structure of the bond portion of the deal last week. It now consists of $650 million 10% senior notes due 2014, E150 million 9% senior notes due 2014, $585 million 12.5% senior subordinated discount notes due 2016 and E200 million 11.125% senior discount notes due 2016. JPMorgan, ABN AMRO and ING are also participating in the financing.
VNU had some company in the OID world last week, as Lehman Brothers and Morgan Stanley added an OID to Iridium Satellite's new credit facility. The deal launched in early July as a covenant-lite structure with pricing 100 basis points lower on the first lein and 175 basis points lower on the second lien (CIN, 7/06). A maintenance covenant was added as was a 98 OID on the first lien and a 97 OID on the second. The $175 million first lien closed at LIBOR plus 4 1/4%, and the second lien closed at LIBOR plus 8 1/4%. Calls to bankers at Lehman Brothers and Morgan Stanley were not returned.
Iridium's term loan "B" broke at 98 and traded up to 98 1/2. The $50 million second lien broke at 97 and inched up to 97 1/2. A dealer said trading was mostly inactive on both loans. An Iridium spokeswoman did not return a call.
Other recent deals that have had to add an OID in order to get done include Toys "R" Us and Globalstar. Bank of America and Deutsche Bank added a 99 1/2 OID and 102 call protection to Toys' $800 million term loan (7/06). Wachovia Securities was said to be offering Globalstar's $100 million term loan at 99, with 102 and 101 call protection (7/17).
