Vanguard, Summit break; Warner ponders changes; Broadlane tweaks deadline; Bolthouse sets talk

By Sara Rosenberg

New York, Jan. 26 - Vanguard Health Systems Inc.'s and Summit Materials LLC's credit facilities hit the secondary market on Tuesday, with both companies' term loans quoted above the original issue discount price at which they were sold during syndication.

In other news, Warner Chilcott plc was unofficially out with some modified terms to its amendment/repricing proposal ahead of Tuesday's consent deadline since the expectation is that the initial deal won't pass, but chatter is that lenders didn't like the revised proposal either.

Over on the new deal front, Broadlane accelerated the commitment deadline on its credit facility and Wm. Bolthouse Farms Inc. came out with price talk on its first- and second-lien facility as the deal was launched to lenders early on in the session.

In addition, Denbury Resources Inc. revealed that syndication of its proposed revolver has been successfully completed.

Vanguard frees up

Vanguard Health Systems' credit facility broke for trading during market hours, with the term loan quoted at par bid, par ½ offered on the open and then ticking up to par ¼ bid, par ¾ offered, according to a trader.

The $815 million term loan is priced at Libor plus 350 basis points with a 1½% Libor floor, and it was sold at an original issue discount of 99.

During syndication, the term loan was upsized from $765 million after the company's senior notes offering was downsized to $950 million from $1 billion, and the discount on the term loan firmed at the tight end of initial guidance of 98½ to 99.

The company's $1.075 billion credit facility (Ba2/B+) also includes a $260 million revolver priced at Libor plus 350 bps with a 1½% Libor floor as well.

Vanguard refinancing debt

Proceeds from Vanguard's credit facility will be used to refinance debt, including repaying and terminating the existing credit facility.

Meanwhile, proceeds from the company's recently priced notes, along with cash on hand, will be used to fund a tender for its 9% senior subordinated notes due 2014 and 11¼% senior discount notes due 2015, and to fund a dividend to existing stockholders.

Bank of America and Barclays are the lead banks on the deal, which is expected to close and fund on Friday.

Vanguard is a Nashville, Tenn.-based owner and operator of acute care hospitals and complementary facilities and services.

Summit Materials breaks

Also freeing up for trading on Tuesday was Summit Materials' credit facility, with the term loan trading atop its original issue discount price, according to a trader.

The $136.4 million 41/2-year term loan was quoted at par bid, 101 offered on the break and then it settled in at 99¾ bid, par ½ offered, the trader said.

Pricing on the term loan is Libor plus 475 bps with a 2% Libor floor and it was sold at an original issue discount of 99.

Summit Materials' $186.4 million credit facility (B2) also includes a $50 million four-year revolver priced at Libor plus 475 bps with a 2% Libor floor.

Summit Materials funding acquisition

Proceeds from Summit Materials' credit facility will be used to fund the acquisition of Hinkle Contracting Corp., a Paris, Ky.-based construction company.

Citigroup, UBS and Jefferies are the lead banks on the deal.

During syndication, the revolver was upsized from $37 million, the maturity on the revolver was changed from three years and the maturity on the term loan was changed from 3½ years, pricing on both tranches was reverse flexed from initial talk of Libor plus 500 bps and the 2% Libor floor was established, whereas, at launch, the floor was labeled as still to be determined.

Summit Materials is a Washington D.C.-based company that was formed in early 2009 to acquire and grow companies in the aggregates and heavy-side building materials industry.

Warner Chilcott discusses revisions

Warner Chilcott approached some lenders with unofficial modified terms to its repricing/amendment proposal in order to gauge interest, but rumor has it that even if the changes were made the deal still wouldn't succeed, according to a market source.

Under the unofficial revisions, pricing on the term loan B-1 and B-2 would still drop to Libor plus 325 bps from Libor plus 350 bps, but the Libor floor on these tranches, and the term loan A, would be 2%, down from 2.25%, instead of the originally proposed 1.75%, the source said.

Also, the prospect of adding 101 soft call protection to the deal was being discussed and an amendment fee of 12.5 bps, as opposed to no fee at all.

"No one wants to sign this either. There's no point. Most likely they'll let it run to the deadline. Hearing now that this was all Warner Chilcott, that BofA never advised them to do this," the source added.

Warner Chilcott deadline hits

Lenders were given until Tuesday to consent to Warner Chilcott's amendment after an extension was granted from the end of last week.

The source said that there is currently no talk of extending the consent deadline despite the unofficial changes that were floating around.

In order for the amendment/repricing to go through, Warner Chilcott needs majority consent from its bank loan lenders.

In connection with the amendment, the company told investors that existing term loan lenders that do not consent to the amendment will be refinanced at par plus accrued interest with the proceeds of new money replacement term loans.

Credit Suisse is the administrative agent, but Bank of America is the left lead on the deal.

Warner Chilcott is a Rockaway, N.J.-based specialty pharmaceutical company.

Broadlane moves up deadline

Moving to the primary market, Broadline pushed up the commitment deadline on its $195 million credit facility (B2/BB-) to 5 p.m. ET on Wednesday from Friday since the deal already filled out at talk, according to a market source.

The facility consists of a $15 million revolver and a $180 million term loan, with both tranches talked at Libor plus 400 bps with a 2% Libor floor.

The term loan is being offered with an original issue discount of 981/2.

Jefferies is the lead bank on the deal that will be used to refinance bank and mezzanine debt.

Broadlane is a Dallas-based technology-oriented health care services company.

Bolthouse talk emerges

Bolthouse Farms held a bank meeting on Tuesday morning at 9:30 a.m. ET, with a 10 a.m. start, to officially kick off syndication on its proposed $790 million credit facility, and in connection with the launch, price talk was announced, according to a market source.

The $500 million six-year first-lien term loan (B1/B+) was presented to lenders with talk of Libor plus 400 bps with a 2% Libor floor and an original issue discount of 99, the source said.

And, the $225 million 61/2-year second-lien term loan (Caa1/CCC+) was launched with talk of Libor plus 800 bps with a 2% Libor floor, an original issue discount of 98 and call protection of 103 in year one, 102 in year two and 101 in year three, the source continued.

The credit facility also includes a $65 million five-year revolver (B1/B+) that has a 2% Libor floor as well.

Bolthouse led by three

Bolthouse Farms' credit facility is being led by Credit Suisse, Goldman Sachs and Bank of America.

Proceeds will be used to repay the company's existing senior credit facility and holdco payment-in-kind perpetual preferred stock.

Although the official launch didn't take place until Tuesday, the banks were holding some one-on-one calls with investors earlier in the week, the source added.

Commitments from lenders are due on Feb. 4.

Bolthouse Farms is a Bakersfield, Calif.-based farmer and distributor of fresh produce, beverages and salad dressings.

Denbury wraps syndication

Denbury has completed the syndication phase of its proposed $1.6 billion four-year senior secured revolving credit facility, according to an S-4/A filed with the Securities and Exchange Commission on Tuesday.

Proceeds will be used to help fund the acquisition of Encore Acquisition Co. in a transaction valued at roughly $4.5 billion, including the assumption of debt and the value of the minority interest in Encore Energy Partners LP.

Encore stockholders will receive $50 per share, comprised of $15 in cash and $35 in Denbury common stock, subject to both an election feature and a collar mechanism on the stock portion of the consideration.

JPMorgan and Bank of America are the co-arrangers on the deal for which documentation is currently being prepared, the filing said. The debt financing commitment initially came from JPMorgan.

Subject to final documentation and satisfaction of closing conditions, Denbury anticipates finalizing this facility prior to its and Encore's stockholder meetings.

Denbury plans notes

Denbury expects to sell up to $1 billion of senior subordinated notes for acquisition financing as well, the filing continued, and these notes are backed by a commitment from JPMorgan for a $1.25 billion one-year unsecured bridge loan.

Specifically, about $827 million of borrowings under the new revolver and the notes will fund the cash portion of the acquisition, repay amounts outstanding under Denbury's existing $750 million revolver, which had about $165 million outstanding as of Jan. 15, potentially retire and replace up to $825 million of Encore's senior subordinated notes that are outstanding, all of which have a change of control put option at 101, replace Encore's existing revolver, which had $155 million outstanding as of Jan. 15, and provide additional liquidity.

Closing of the acquisition is expected to take place in the first quarter of 2010, subject to the approval of both Denbury and Encore stockholders, financing, regulatory approvals and other customary conditions.

The combined Plano, Texas-based exploration and production company will be known as Denbury Resources.

Smurfit-Stone readies allocations

Smurfit-Stone Container Corp.'s $1.2 billion six-year term loan (B2) is anticipated to allocate and free up for trading on Friday, according to a buyside source.

The deal, which was oversubscribed ahead of last Friday's commitment deadline, is expected by the source to remain at initial terms.

"It's done pretty much at those levels [and] since it an exit and there is a long settlement," the source remarked.

Pricing on the term loan is Libor plus 500 bps with a 2% Libor floor and it was being offered at an original issue discount of 981/2.

In addition, the term loan includes 101 soft call protection for two years.

The term loan effective date is expected to be Friday, but the company is targeting to emerge from Chapter 11 and fund the bank deal in April.

Smurfit-Stone lead banks

JPMorgan, Deutsche Bank and Bank of America are the lead banks on the Smurfit-Stone's term loan.

There is a $400 million accordion feature under the term loan, subject to, among other things, 25 bps MFN pricing protection.

The facility includes no maintenance covenants. However, there is a debt incurrence test of 2.0 times interest coverage.

Smurfit-Stone getting revolver

Smurfit-Stone also plans on obtaining a new $650 million four-year asset-based revolver, with proceeds from the entire $1.85 billion credit facility going towards exit financing.

Through the company's plan of reorganization, debt will be reduced by $2.9 billion. Pre-petition secured lenders will be repaid in full and there will be an equity distribution to about $3 billion face value of unsecured obligations.

The company's pro forma capital structure as of March 31 is expected to include 2.5 times total debt and 2.3 times net debt. By comparison, the company's current structure as of Dec. 31 included 8.0 times total debt and 6.5 times net debt.

Smurfit-Stone is a Chicago-based manufacturer of paperboard and paper-based packaging.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.