Two Credit Suisse-led deals recently had their pricing flexed up in syndication. N.E.W. Customer Services, launched Aug. 1, and Evergreen International Aviation, launched July 25, both had pricing raised about 50 basis points. A Credit Suisse banker could not be reached to determine why the pricing had been changed.
N.E.W. Customer Services' $665 million credit facility, co-led by CIBC World Markets, saw pricing on the revolver and term loan "B" bumped up 50 basis points from original price talk to LIBOR plus 2 3/4%. The second lien was flexed up to LIBOR plus 7% from price talk of LIBOR plus 5 3/4-6 1/4%. The facility is being used to finance its leveraged buyout by Berkshire Partners.
Investors were less than excited about the deal at launch, citing high leverage and a bad debt structure (CIN, 8/4). Leverage is 4.5 times on the first lien and 7.5 times on the second lien. Moody's Investors Service rated the first lien Ba3 and the second lien Caa1. Standard & Poor's rated the first lien B and the second lien CCC+.
One investor said it was a decent credit, but thought investors were "getting slammed" on it considering the credit had about a 100 basis point cut from its previous deals and suggested that may have been why the banks had to increase pricing. N.E.W.'s 2004 $100 million term loan was originally priced at LIBOR plus 3 1/2%.
Evergreen International Aviation also had its pricing flexed up 50 basis points by CS. The deal now consists of a $50 million revolver and a $350 million term loan "B," both priced at LIBOR plus 3 1/4%. Pricing on a $50 million second lien did not change from its launch price of LIBOR plus 7 1/2%.
The credit is being used to refinance the company's existing debt, which consists of $250 million of bonds and a separate $100 million facility led by Wells Fargo Foothill, as well as provide capital for expenditures and flexibility for growing the business, according to a spokesman. He declined to comment further on the terms and pricing changes of the new deal.
McMinnville, Ore.-based Evergreen is a global aviation services company that operates through several subsidiaries that provide services including international airlines, helicopters, airport logistics and aircraft maintenance.