Lehman Brothers launched the $845 million refinancing for Corrections Corporation of America last week, consisting of $695 million in bank debt and $150 million of senior notes. By press time the "B" loan was 60% full, due in part to strong reverse inquiry from investors on the previous deal, a banker stated. Deutsche Bank, UBS Warburg and Société Générale are co-agents on the loan, which has a B+/B1 rating. "It was always expected the bank debt would be refinanced now, as the maturity approaches," said a banker.
The spread is being cut from LIBOR plus 51/ 2% for the previous revolver, which was converted into a term loan to LIBOR plus 4% for the $495 million six-year "B" term loan. The four-year pro-rata deck is priced at LIBOR plus 31/ 2%, split between a $75 million revolver and a $125 million "A" term loan. A banker said, the cheaper pricing can be attributed to the improved credit profile of the company (see story, page 7). Officials at CCA referred calls to Lehman bankers, who declined comment.
Lehman has also flexed pricing on the "B" loan for Tesoro Petroleum after the deal was oversubscribed by three times. The spread is now LIBOR--at a minimum of 3%--plus 23/ 4%.