Lehman Brothers allocated the $565 million "B" loan for Corrections Corporation of America last Tuesday, after upsizing the tranche and trimming the spread. The "B" was originally $495 million and priced at LIBOR plus 4%, but after massive oversubscription from investors, $70 million was added and pricing was slashed 1/2%. The "A" term loan was downsized $50 million from $125 million to $75 million, while the revolver stayed at $75 million. A banker said bids in the secondary are above par, but exact levels could not be confirmed. Pricing on the four-year pro rata is grid-based, also at LIBOR plus 31/ 2%. Deutsche Bank, UBS Warburg and Société Générale signed on for the pro rata, said the banker.
Commenting on the institutional pricing shrinking into the pro rata neighborhood, the banker said, "The trend this year has been in this direction. Right now there is a lot of demand chasing supply." But the pro rata market is still very weak, he added. "It is all relationship-driven and if banks are not getting additional business, they won't invest. The Europeans are also not investing."
Lehman also led a seven-year senior note offering that was upsized $100 million to $250 million. The loan and notes refinance existing bank debt that carried a LIBOR plus 5% spread, the banker noted. CCA has significantly improved its balance sheet, and the loan was expected to score well with investors (LMW, 4/22). A spokeswoman for Corrrections Corp. referred calls to bankers at Lehman, who declined to comment.