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Technical Olympic (TOUSA) has flexed pricing up on its USD 500m credit facility and improved call protection to address investor concerns, said a source close to the situation and a buysider.
Pricing on the company’s new USD 200m first lien term loan due 2012 increased to Libor+ 375bps from 350bps, while the cash coupon option on its USD 300m second lien term loan due 2013 flexed up to Libor+ 725bps from 650bps, said the source close to the situation. The pay-in-kind (PIK) premium on the second lien flexed up to 75bps from 50bps, the source said. That brings the PIK option coupon to Libor+ 800bps from 700bps initially announced.
The company plans to exercise the Libor+ 800bps PIK option out of the gate, said the source close. The new facility will break for trading either Thursday or Friday, said the source.
TOUSA also tinkered with the call protection on the second lien, making it non-call for the first year, callable at 102 the second year, 101 the third year and par thereafter, said the source. The second lien was previously callable at 102 the first year, and 101 the second. The first lien’s soft-call protection remained unchanged at 101 for the first two years, said the source.
The deal has a full covenant package including a maximum interest coverage ratio, and the first lien piece will rank pari passu to an existing USD 700m revolver. The credit facility is secured by the company’s assets and the stock of its subsidiaries.
Proceeds from the new issuance will take out USD 400m in existing senior secured debt of the company’s Transeastern JV, pursuant to a settlement with the JV’s lenders, the company previously reported.
TOUSA will also issue new USD 20m PIK senior sub notes, USD 117.5m PIK preferred convertible shares, to holders of Transeastern’s senior mezzanine debt, the company previously announced. Transeastern’s junior mezzanine debt holders will receive warrants to purchase common shares with estimated fair value of USD 16.25m at issuance.
Technical Olympic’s USD 200m 7.5% senior sub notes due 2015 were up four points Thursday at 57 from Wednesday’s low of 53, according to TRACE. That’s still well below the recent high of 65 on 10 July when the Florida-based home-builder launched the deal.
The company’s USD 125m 7.5% senior subordinated notes due 2011 also rebounded this morning to 60.50 from yesterday’s low of 57.5, but are still heavy in comparison to the 71.125 level Trace quoted on 10 July.
Its USD 185m 10.375% senior subordinated notes due 2012 popped to 68 Thursday from Wednesday’s 61.75, but still down from 10 July’s high of 79. Finally, TOUSA’s USD 300m 9% senior unsecured notes due 2010 are trading lightly, but up to 88 from 84.75, Trace showed Wednesday. Those levels are still down from 10 July levels of 94.25.
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