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Alcatel-Lucent Cuts Rate; BMC Software Prices $3.88 Billion Loan

Alcatel-Lucent USA Inc. (ALU) cut the rate on a $1.74 billion loan it’s seeking to reduce debt while BMC Software Inc. (BMC) set final pricing on $3.88 billion of loans supporting its leveraged buyout by Bain Capital LLC and Golden Gate Capital.

Telecommunications-equipment and services provider Alcatel-Lucent lowered the interest rate it will pay on a $1.74 billion, six-year term portion to 4.75 percentage points more than the London interbank offered rate with a 1 percent minimum, down from 5 percentage points, according to a person with knowledge of the transaction. A 299 million-euro ($399 million) portion, also due in six years, will pay 5.25 percentage points more than the lending benchmark, in line with what was initially proposed, said the person, who asked not to be identified because terms are private.

Lenders had to let Morgan Stanley, Credit Suisse Group AG, Deutsche Bank AG and Citigroup Inc., the banks arranging the financing, know by noon today New York time whether they would participate.

BMC, the Houston-based provider of software for corporate computer networks, set the final rate on $3.88 billion in loans to support the company’s LBO by private-equity firms, according to another person familiar with this deal. A $2.88 billion term piece and a $335 million portion intended for European borrowers will pay interest at 4 percentage points more than Libor, while a 500 million-euro loan will pay interest at 4.5 percentage points more than Euribor. Each loan, due in seven years, will have a 1 percent floor on the lending benchmark.

Booz Allen

Booz Allen Hamilton Inc., the government-consulting firm backed by private-equity firm Carlyle Group LP, increased the rate on a $1.017 billion term loan to refinance debt, according to a person with knowledge of the deal. The company will pay interest at 3 percentage points more than Libor, compared with 2.75 percentage points initially proposed. The minimum on the lending benchmark is unchanged at 0.75 percent. Lenders had to let Bank of America Corp., Credit Suisse and JPMorgan Chase & Co. know today whether they would participate in the deal.

Generic Drug Holdings Inc., a pharmaceuticals distributor, cut the rate on a $380 million term loan it’s seeking to refinance debt and fund a shareholder payout, according to a person with knowledge of the transaction. The debt will pay interest at 4 percentage points more than Libor with a 1 percent minimum, compared with a range from 4.25 percentage points to 4.5 percentage points initially proposed. Lenders, who are offered the loan at 99 cents on the dollar, must let Morgan Stanley, Credit Suisse, and Deutsche Bank know by Aug. 12 at noon in New York, whether they will participate.

Issuance Forecast

Barclays Plc increased its forecast for loan issuance this year to $340 billion to $360 billion, from $225 billion to $250 billion previously, citing retail fund inflows and new collateralized loan obligation formation. Investors have poured $30.6 billion into funds that purchase loans year to date, according to Barclays, citing Cambridge, Massachusetts-based EPFR Global. There have been $47 billion of collateralized loan obligations formed so far this year, according to the London-based bank.

Prices of leveraged loans rose 0.01 cent to 98.14 cents on the dollar today, compared with a 2013 high of 98.88 on May 9, according to the Standard & Poor’s/LSTA U.S. Leveraged Loan 100 Index.

To contact the reporter on this story: Krista Giovacco in New York at kgiovacco1@bloomberg.net

To contact the editor responsible for this story: Faris Khan at fkhan33@bloomberg.net

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