Investors are pushing for a price hike to LIBOR plus 41/ 4% on the institutional tranche of Dex Media East, on top of a previous 1/2% flex to LIBOR plus 4%. "Investors expect to see a flex to compensate for all the directory paper," one banker said, noting that the credit also has call protection at 102 and 101 for the first two years and is being sold at a discount of 99. J.P. Morgan has told some bankers that the $700 million "B" piece is already full, but others say it is more like two-thirds complete. The sub-underwriting phase already has snagged ING Capital, Bear Stearns, Royal Bank of Scotland, Scotia Capital, Credit Lyonnais and Commerzbank (LMW, 10/14). Bankers at J.P. Morgan did not return calls.
Another factor driving the push for a further flex is the expected pricing of the bonds. "The loan investors will look to see what the yield is," the banker said. The high-yield bond market has been weak, and there are concerns about the depth of the market to support all the large leveraged buyouts (LMW, 10/21).
Lastly, market participants are keeping a close eye on Bell ActiMedia, which is being acquired by Kohlberg Kravis Roberts & Co. and the Teacher's Merchant Bank. Scotia Capital, CIBC World Markets and Credit Suisse First Boston are holding bank meetings in Toronto and New York at the end of this month. The C$1.64 billion deal is divided into a C$100 million revolver, a C$400 million "A" term loan and a US$730 million "B" piece. Pricing has not yet been set, a banker noted.