Affinion Trades Actively On Break
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Affinion Trades Actively On Break

Affinion Group's term loan broke and traded around 101 last Wednesday, settling into a range of 100 1/4 to 100 3/4, according to a trader. It is estimated close to $100 million of paper traded.

Affinion Group's term loan broke and traded around 101 last Wednesday, settling into a range of 100 1/4 to 100 3/4, according to a trader. It is estimated close to $100 million of paper traded.

Deutsche Bank and Bank of America brought the five-year, $350 million unsecured term loan to market last Monday. It will be used to redeem preferred stock held by Cendant Corp. and pay a $241 million dividend to majority shareholder Apollo Management. Pricing on the term loan is LIBOR plus 6 1/4% with a 50 basis point step up at both 18 months and 36 months. There is also a 99 original issue discount that is non-callable for six months. The paper becomes callable at par for months seven through 18, and then goes to 102 for the next year and then 101 for the following 12 months. The credit also has a payment-in-kind toggle where the interest can be paid in-kind or with cash. If the PIK option is used, pricing goes up to LIBOR plus 7%, according to a banker. It is anticipated the debt will get paid out completely at par between months seven to 18.

Like the $1 billion unsecured term loan for Intelsat (CIN, 1/5), the deal was marketed to bond buyers, one investor said. "It's a silly market," he said. "People are trying to play us like the bonds and we don't have that kind of protection. No restrictions to keep you from repricing, so why not come into the loan market?" he said.

The Norwalk, Conn.-based direct marketer tapped Credit Suisse and DB in October 2005 to provide $985 million of financing for the acquisition of Cendant Corp.'s marketing service division (LMW, 10/10/2005). At that time, the deal consisted of a six-year, $125 million revolver and a seven-year, $860 million "B" term loan, both priced at LIBOR plus 2 3/4%. The term loan "B" was amended in December, downsizing it to $755 million and cutting pricing to LIBOR plus 2 1/2%, according to Markit data.

It could not be determined why CS was not on the new deal.

Standard & Poor's rated the term loan B-, affirmed the company's B+ corporate credit rating and changed outlook to negative from stable based on changes in the company's financial policy despite its initial intention of reducing leverage as rapidly as possible. Calls to Thomas Williams, cfo, were not returned.

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