Telcordia Technologies bank deal, which had to be pulled back and reworked after the company informed investors projected earnings would be lower than expected for its first quarter, finally settled on terms last week. The $570 million term loan is now priced at LIBOR plus 2 3/4% with a stepdown to LIBOR plus 2 1/2% if leverage is reduced below five times. Call protection was added to the deal at 101 for the first year with pricing locked for six months. The $300 million bond offering was priced at 10%.
J.P. Morgan and Bear Stearns are leading the credit, which was nearly three times oversubscribed in its first go around. During a conference call, the company said projected earnings for its first quarter, February through April, were off by about $20-30 million. Trading was halted on the name, which had swapped hands in the gray market as high as 101 3/4%. The "B" loan was then offered during a conference call at LIBOR plus 2 1/4% with a step down to 2%. Loan sources indicated this would not be enough to entice them back into the deal.
The debt backs the $1.35 billion acquisition of the company by Providence Equity Partners and Warburg Pincus. Telcordia is a subsidiary of Science Applications International Corp. The initial loan included a six-year, $100 million revolver; a seven-year, $570 million term loan "B" and $300 million of senior subordinated notes due 2013. Pricing had been cut during syndication to 2% from 2 1/2%. Telcordia officials did not return calls.