ServiceMaster Eyes $750M Loan Sale

Memphis, TN, October 3, 2007--ServiceMaster is expected to sell a $750 million block of its $2.85 billion funded term loan B at a discount of $0.95 on the dollar.

Allocations are expected Thursday. Lead arranger Citigroup was seeking support to sell between $750 million to $1 billion of the term loan, which is covenant-light.

ServiceMaster is the latest pulled bank loan that underwriters are seeking to offload from their balance sheets at steep discounts.

ServiceMaster was one of the first major leveraged buyout deals that saw its financing stalled earlier this summer as subprime-related contagion made its way into the loan market. The company was in the process of being taken private by Clayton, Dubilier & Rice in a $5.5 billion LBO deal when weakness in the credit markets led investors to shy away from highly leveraged deals.

The issuer also was forced to postpone a $1.15 billion high yield bond offering due to market conditions.

Before the loan was stalled, pricing was flexed up for a second time by 25 basis points to 300 basis points over the London interbank offered rate on the term loan B. A step-up to 325 basis points over Libor also was added if senior secured leverage is greater than 6.5 times. The facility also benefits from 101 soft-call protection.

In addition, the loan was offered at 98-98.25, a deeper discount than the original issue discount of 98.5-99 being offered as part of an earlier set of changes.

In a previous set of changes, pricing on the term loan B was bumped by 50 basis points to 275 basis points over Libor. Also, an incurrence test was added to the term loan B, though the deal remains covenant