Lead banks rejiggered the loan and bond portions of the VNU N.V. financing (CIN, 7/24) and even increased pricing on the U.S. tranche, but some investors still want more concessions, either in the form of more spread or a new structure on the bank side.
The bank deal, led by Citigroup, includes a $688 million multi-currency revolver and a $5.18 billion term loan, which initially was broken into a $4.7125 billion tranche and a E380 million tranche. The bank has increased the euro term loan to at least E450 million, with the final size based on demand. The U.S. term loan was cut to $4.625 billion.
Pricing on the U.S. term loan has been increased 25 basis points to LIBOR plus 2 3/4%, with a potential step-down to LIBOR plus 2 1/2% when leverage is below 4.25 times. LIBOR plus 2 1/4% pricing on the revolver and LIBOR plus 2 1/2% on the euro term loan did not change (7/21). The financing is led by Citigroup, Deutsche Bank, JPMorgan, ABN AMRO and ING.
According to one investor, the banks have had 30 accounts commit for $2 billion and Citi might have to extend the commitment period past today. A banker said they are putting together a book and have not announced anything about extending the time frame. Another investor said that some accounts are committing on a tier, with better terms for greater commitments. A Citigroup banker declined comment.
One portfolio manager explained that this deal was probably pitched a few months ago, when the market would allow for low pricing on a tight structure, but that the original terms won't fly in these market conditions and the deal might need to be restructured.
"VNU got priced up to 275, but it is not going to clear there, no way," said one investor who is looking for 300 basis points. "Citi is on the issuer-friendly side and has tried to jam some aggressive structure, which lowballs and offends our intelligence. [They have] approached the loan market like they are approaching a bunch of lemmings."
Deutsche Bank, which is leading the bonds, also tweaked that structure. The banks added E200 million of senior discount notes due 2016. The senior subordinated discount notes were downsized to $600 million. The U.S. roadshow continued last week and pricing is expected today. The new notes will be pari pasu with existing debt at VNU.
VNU's existing bond debt consists of floating rate Euro medium-term notes due 2012, 6.75% Euro MT Notes due 2012, 2.5% Yen MT Notes due 2011, floating rate Euro MT Notes due 2010, 5.625% GBP MT Notes due 2010/17, 5.5% Eurobonds due 2008, 6.75% Eurobonds due 2008, and 6.625% Eurobonds due 2007, according to a Moody's Investors Service report. All existing bonds were rated Caa1 by Moody's.
AlpInvest Partners, The Blackstone Group, The Carlyle Group, Hellman & Friedman, Kohlberg Kravis Roberts & Co. and Thomas H. Lee Partners are purchasing the Haarlem, Netherlands-based information and media company that owns Billboard Magazine for E7.5 billion.
