The $850 million credit backing the merger of US LEC and PAETEC found enough investor support to drop the second lien and bump up the size of the term loan, according to a banker. The deal now consists of an $800 million term loan and a $50 million revolver that did not change. Pricing remains at LIBOR plus 3 1/2%. It is expected to break for trading this week.
"We had good receptivity in the market," said Keith Wilson, PAETEC cfo. "People recognize this is a strong credit and it has a fair yield on it." The Fairport, N.Y.-based competitive local exchange carrier chose to drop it's LIBOR plus 6 1/2% second lien because pricing was cheaper and there was enough investor demand on the term loan. "We had adequate demand to have it all placed in the first-lien piece," Wilson said. "It was a good thing to do for the company. We're happy the market was so receptive to it." Standard & Poor's affirmed its B bank loan rating and 5 recovery rating on the increased term loan.
The deal was launched Jan. 16 by Deutsche Bank, Merrill Lynch and CIT Group as a five-year, $50 million revolver; a six-year, $625 million term loan "B" and a seven-year, $175 million second lien (CIN, 1/19).