GE Capital Corp. stepped in and bought $235 million of bonds for Global eXchange Services, the business-to-business company being sold to Francisco Partners by General Electric, once the private-equity firm decided to skip the bond market. This unusual tactic is leading some investors to be even more wary of the $210 million loan that backs the transaction and is led by Credit Suisse First Boston. "This was certainly not plan A," said one banker, who noted that the 121/ 2% coupon on the bonds "is pretty expensive." One buysider, meanwhile, said "GXS is going to struggle and I cannot see it happening at LIBOR plus 33/ 4%." A GXS spokesman referred questions to a GE spokesman, who declined comment. A spokesman for Francisco Partners also declined comment on the deal.
CSFB has not yet changed pricing on the loan though, said bankers. The $175 million, five-year "B" piece is still priced at LIBOR plus 33/ 4%, while the $35 million, six-year revolver has a LIBOR plus 31/ 2% spread. The commitment fee is 1/2%. CSFB launched syndication at the start of September to support the $800 million acquisition, expected to close this October (LMW, 6/30). A CSFB banker declined to comment on the deal, but one banker familiar with the situation, said, "The bonds were never put on the road." One banker explained the bond market was not going to support the transaction due to the sector, but another said of GE, "When they like an asset they go large." The bank deal was rough sledding before this due to the tough sector, he added.
One buysider commented, "The ratings give some hope the deal will get done, but it is facing a tough time in the marketplace." Standard & Poor's has rated the facility BB- citing the steady revenue flow of the company. But the ratings agency also points out the company's limited track record as an independent company. Gaithersburg, Md.-based GXS operates one of the largest supply chain e-commerce networks in the world.
