Managing agents on CIBC World Markets' and Credit Suisse First Boston's $1.2 billion deal for SpectraSite Communications are wringing their hands and hoping a strong institutional showing will charge up a sluggish syndication. The co-leads have postponed selling the $850 million pro rata chunk and are out to institutional investors hoping that the $350 million "B" tranche will oversubscribe enough to downsize the pro rata. David Tomick, cfo of SpectraSite in Cary, N.C., did not return calls seeking comment. While some bankers are optimistic about the institutional market welcoming the credit, there are concerns about hold levels and credit quality. "It's a virtual certainty we're going to hold all [$50 million]," said one managing agent on the deal. "I didn't want to do a $50 million ticket. I thought it was stupid to do that size without leading the deal," said the banker. Another lender chimed in, "Credit quality is obviously on everyone's mind, but I would suspect, because of the industry and sector, ultimately these tower companies are stable, revenue-generating cash cows. It's a B+, but it will improve over time." Officials at CIBC and CSFB did not return calls.
Deutsche Bank, Barclays Capital, Bank of Nova Scotia and Bank of New York have signed on as managing agents, according to a banker familiar with the deal. Morgan Stanley Dean Witter has passed on the deal, citing credit quality and hold levels as concerns. One rival banker following the deal remarked, "If there is enough interest on the "B" tranche, I'm sure they'll reallocate money from the pro rata." He declined further comment. An MSDW official did not return calls. Bank of Montreal and Toronto Dominion Bank signed on as co-documentation agents two weeks ago. Officials at those banks and the managing agent banks either declined to comment or did not return calls.
Retail syndication has been rough for the co-leads and was momentarily halted despite revised perks for lenders. The banks have upped commitment fees to 13/8% from 1% on pro rata commitments for utilization of less than 33%. For utilization between 33% and 66%, fees are 1%, up from 3/4%. The commitment fee of 1/2% if utilization exceeds 66% has not changed. Managing agents have netted 1% in fees, instead of 1% on new commitments and 1/2% on rollover money.
The deal backs the company's acquisition of 4,000 wireless towers from SBC Communications (LMW, 9/4). The credit is structured as a $350 million revolver, a $500 million, delayed-draw, term loan "A" and a $350 million term loan "B." The pro rata matures after six-and-a-half years, while the "B" tranche expires after seven. Pro rata pricing is based on an undisclosed grid, and opens at 23/4% over LIBOR with a commitment fee of 1%. The term loan "B" is priced at 31/2% over LIBOR and is not grid-based.