JPMorgan, BofA Ready Dex Media West TLB
May 15, 2008
JPMorgan and Bank of America are gearing up to launch a $950 million term loan B for yellow pages publisher Dex Media West. Price talk is between Libor plus 350 bps and Libor plus 375 bps, with an OID in the upper 90s.
“The deal’s leverage is around 2x, which makes it kind of attractive,” a CLO manager said.
The credit facility also includes a $140 million term loan A and a $100 million revolver. The proceeds will help pay down existing debt set to mature next year. Last fall, underwriters syndicated a $400 million term loan B priced at Libor plus 200 bps for Dex Media East, Dex Media West’s sister company.
Dex Media East is a publisher of white- and yellow-page directories in Colorado, Iowa, Minnesota, Nebraska, New Mexico, North Dakota and South Dakota; meanwhile Dex Media West publishes in Arizona, Idaho, Montana, Oregon, Utah, Washington and Wyoming.
Two weeks ago, Standard & Poor’s lowered Dex Media West’s corporate rating to B+ from BB- and assigned a BB rating to all tranches in the credit facility and a recovery rating that anticipates a 90% to 100% retrieval of principal in the event of a default.
The downgrade reflects concerns over the slowing economy’s impact on Dex Media West’s 2008 operating performance at a time when the company has limited flexibility in its highly leveraged financial profile , S&P analysts said (as of March, debt to Ebitda was around 7.0x). And even though Dex Media West will continue to benefit from its incumbent market position, high cash flow generation and geographic and customer diversity, the company may face challenges in its ability to return stable Ebitda and cash over the intermediate term, they added.
Meanwhile, Moody’s Investors Service assigned a Ba1 rating to all tranches and affirmed its corporate rating at B1. However, the latter could be downgraded if the company is unable to cut costs in response to a weakening business environment, Moody’s analysts said. Also, if it can’t defend its market share, deploy cash for purposes other than debt repayment or test the financial leverage in its covenants, the ratings could be further constrained, they added.
For more information on related topics, visit the following:
