Wendy's/Arby's dips on possible divestiture; UCI breaks; Del Monte, Styron, TowerCo set talk

By Sara Rosenberg

New York, Jan. 20 - Wendy's/Arby's Group Inc.'s term loan headed lower in trading on Thursday following the company's news that it is considering the sale of Arby's Restaurant Group Inc. as investors are expecting funds from the possible asset sale to be used to pay down bank debt.

In more trading happenings, UCI International Inc.'s credit facility allocated and freed up for trading, with the term loan quoted well above its par issue price.

Switching to the primary, Del Monte Foods Co., Styron, TowerCo, Encompass Digital Media Inc., Affordable Care Inc. and Walter Energy Inc. released price talk as their new deals were presented to investors during market hours, and National Mentor Holdings Inc. launched as well.

Also, Allied Security Holdings LLC (AlliedBarton) began circulating pricing guidance on its upcoming first- and second-lien credit facility, and J. Crew Group Inc. firmed up timing on the launch its new loan.

Wendy's/Arby's softens

Wendy's/Arby's term loan weakened as the company announced that it is exploring strategic alternatives for Arby's Restaurant, a quick-service sandwich chain, including selling the brand, according to traders.

Following the news, the company's term loan was quoted by traders at 101 bid, 101 ¾ offered, down from 101½ bid, 101 7/8 offered.

One trader explained that the debt fell because guys are thinking that if a sale of Arby's is completed, there will be a repayment on the loan at par.

UBS Investment Bank is assisting the company in the strategic alternatives process.

Wendy's/Arby's realigns focus

Wendy's/Arby's chairman Nelson Peltz explained in a news release on Thursday that the company is looking at divesting Arby's Restaurant in an effort to "maximize shareholder value" by focusing all "management and financial resources on continuing to build the Wendy's brand."

"Arby's is a good business, and we are making progress improving its performance, as evidenced by the 3.1% increase in company-operated same-store sales in the fourth quarter of 2010.

"However, despite Arby's positive momentum, the reality is that the Wendy's brand, given its relative size and scope, is the key driver of shareholder return, and we believe we should focus on the execution of the compelling growth opportunities at Wendy's," Peltz added.

Wendy's/Arby's is an Atlanta-based quick-service restaurant company.

UCI starts trading

UCI International's $300 million 61/2-year term loan hit the secondary market on Thursday, with levels quoted at par ¾ bid on the open and then they moved up to 101 3/8 bid, 101 7/8 offered, according to a trader.

Pricing on the loan is Libor plus 400 basis points with a 1.5% Libor floor, and it was sold at par.

During syndication, the loan was downsized from $450 million, pricing was reduced from Libor plus 450 bps, the Libor floor was cut from 1.75%, the offer price was changed from 99 and the initially proposed 101 one-year soft call protection was removed.

The reduction in term loan debt resulted from the company's decision to upsize its senior unsecured notes offering to $400 million from $250 million. The notes priced at par to yield 8 5/8%.

UCI getting revolver

UCI International's $375 million senior secured deal (Ba2/B+) also includes $75 million revolver that is priced at Libor plus 400 bps with a 1.5% Libor floor, and was sold with a 2% upfront fee.

Pricing on the revolver was also revised from initial talk of Libor plus 450 bps with a 1.75% floor.

Credit Suisse, HSBC and Nomura are the lead banks on the deal that will be used, along with the notes, about $320 million of equity and cash on hand to fund the acquisition of the company by Rank Group Ltd.

UCI is an Evansville, Ind.-based supplier to the light- and heavy-duty vehicle aftermarket for replacement parts.

Del Monte talk emerges

Moving to the primary, Del Monte Foods held a bank meeting in the morning to kick off syndication on its proposed credit facility, and in connection with the event, price talk was announced, according to a market source.

The $2.5 billion term loan was presented with talk of Libor plus 400 bps with a 1.5% Libor floor and an original issue discount of 99, the source said.

Commitments are due on Feb. 3.

The company's $3.25 billion credit facility also includes a $750 million ABL revolver.

The size of the credit facility is a bit larger than previously expected, as the company's filings with the Securities and Exchange Commission had the revolver amount at $500 million.

JPMorgan, Barclays, Morgan Stanley, Bank of America and KKR Capital Markets are leading the financing.

Del Monte being acquired

Proceeds from Del Monte's credit facility will be used to help fund the acquisition of the company by Kohlberg Kravis Roberts & Co. LP, Vestar Capital Partners and Centerview Partners for $19.00 per share in cash. The transaction is valued at $5.3 billion, including the assumption of $1.3 billion in net debt.

Based on the SEC filings, other funds for the transaction are expected to come from $1.6 billion of senior notes, which are backed by a commitment for a $1.6 billion senior unsecured increasing rate bridge loan, and $1.7 billion of equity.

Completion of the transaction is anticipated by the end of March, subject to customary closing conditions, including receipt of shareholder and regulatory approvals.

Del Monte is a San Francisco-based branded pet and consumer products company.

Styron reveals guidance

Styron also held a bank meeting in the morning, at which time it, too, came out with price talk on its proposed financing, according to a market source.

The company launched its $1.3 billion 61/2-year term loan with talk of Libor plus 500 bps with a 1.5% Libor floor and an original issue discount of 99, the source said, adding that there's 101 soft call protection for one year.

Deutsche Bank, HSBC, Barclays and BMO are the lead banks on the deal that will be used to refinance an existing term loan, repay revolver borrowings, take out seller notes and fund a dividend.

Styron is a diversified chemical manufacturer of emulsion polymers and plastics.

TowerCo price talk

TowerCo set talk of Libor plus 375 bps to 400 bps with a 1.5% Libor floor and an original issue discount of 99 to 99½ on its $350 million six-year term loan as the deal launched in the afternoon, according to a market source.

The company's $390 million credit facility (Ba3/BB) also provides for a $40 million four-year revolver.

Morgan Stanley, TD Securities and Fifth Third Bank are the lead banks on the deal that will be used to refinance existing debt and fund a dividend.

TowerCo is a Cary, N.C.-based owner and leaser of communication towers.

Encompass guidance

Talk on Encompass Digital Media surfaced as well, with its $195 million senior secured credit facility (B+) launched at Libor plus 550 bps with a 1.75% Libor floor and an original issue discount of 981/2, according to a market source.

The facility, which kicked off with a bank meeting Thursday morning, consists of a $20 million revolver and a $175 million term loan B.

Macquarie Capital is the arranger and bookrunner on the deal that will be used to fund the acquisition of the content distribution business of Ascent Media Corp. for a total consideration of about $120 million, including about $113 million in cash and the assumption of certain debt and obligations totaling roughly $7 million.

Encompass rolling mez

In connection with Encompass' purchase of the Ascent business, Tennenbaum Capital Partners, a current lender and equity holder in the company, will roll over $95 million of existing mezzanine debt into a new second-lien term loan that will not be syndicated.

Furthermore, Encompass has received a commitment from lenders under its existing secured credit facility for an amendment that would support the consummation of the acquisition.

Closing is expected in February, subject to approval by Ascent shareholders, regulatory clearances and the transfer of certain FCC licenses.

Senior leverage at close will be 3.4 times and total leverage will be 5.3 times.

Encompass Digital Media is a Los Angeles-based digital media services provider.

Affordable Care pricing

Affordable Care released talk of Libor plus 500 bps with a 1.5% Libor floor and an original issue discount of 98½ on its $155 million senior credit facility in connection with its Thursday meeting, according to a market source.

The facility consists of a $10 million revolver and a $145 million term loan, the source said.

GE Capital, NXT Capital and Golub Capital are leading the transaction that will be used to refinance existing debt and pay dividend to sponsor, American Capital.

Commitments are due in two weeks, the source added.

Affordable Care is Kinston, N.C.-based provider of practice management services and on-site denture laboratories focused exclusively on dentures.

Walter pro rata rates

Walter Energy launched its $375 million five-year revolver and $600 million five-year term loan A at a senior managing agent bank meeting on Thursday and announced price talk of Libor plus 300 bps with no Libor floor on the tranches, according to a market source. The revolver has a 50 bps unused fee.

The company's $2.725 billion senior secured credit facility also includes a $1.75 billion seven-year term loan B with price talk still to be determined. A retail bank meeting to launch the B loan has not yet been scheduled.

Price talk on the pro rata debt is different than what the company had previously outlined in filings with the SEC. The filings said that the revolver, term loan A and term loan B were all expected at Libor plus 350 bps if corporate ratings are Ba3/BB- and Libor plus 375 bps if the ratings are lower, adding that the term loan B would have a 1.5% Libor floor.

Walter buying Western

Proceeds from Walter Energy's credit facility will be used to help fund the acquisition of Western Coal Corp. for C$11.50 per share, to refinance existing debt and for working capital. The transaction represents a total enterprise value of C$3.3 billion, net of cash on the balance sheet for Western Coal.

Morgan Stanley, Credit Agricole and the Bank of Nova Scotia are the lead arrangers on the credit facility, with Morgan Stanley the administrative agent.

Financial covenants include a minimum interest coverage ratio and a maximum leverage ratio.

Walter Energy is a Tampa, Fla.-based producer and exporter of metallurgical coal for the steel industry. Western Coal is a Vancouver, B.C.-based producer of metallurgical coal.

National Mentor launches

Another company to hold a bank meeting on Thursday was National Mentor, as it launched a $580 million senior secured credit facility (B1) led by UBS, Barclays and Jefferies, with UBS the left lead.

As was previously reported, the facility consists of a $75 million five-year revolver and a $505 million six-year term loan B, with both tranches talked at Libor plus 550 bps with a 1.75% Libor floor. The term loan B is being offered at an original issue discount of 981/2.

Proceeds, along with $275 million of senior notes, will be used to refinance the company's existing credit facility and fund tender offers for its $180 million of 11¼% senior subordinated notes due 2014 and roughly $224 million of senior floating-rate toggle notes due 2014.

The tender offers expire on Feb. 16.

National Mentor is a Boston-based provider of home and community-based health and human services.

Allied Security floats talk

Allied Security started disclosing price talk on its proposed credit facility as the deal is getting ready to launch on Friday with a conference call, revised from plans for a bank meeting, according to a market source.

The $395 million six-year first-lien term loan is being talked at Libor plus 400 bps and the $190 million seven-year covenant-light second-lien term loan is being talked at Libor plus 750 bps, the source said. Both loans have a 1.5% Libor floor and are being offered at an original issue discount of 99.

In addition, the second-lien loan has call protection of 103 in year one, 102 in year two and 101 in year three, the source continued.

The Conshohocken, Pa.-based security services company's $660 million credit facility also includes a $75 million five-year revolver.

Credit Suisse and Bank of America are the lead banks on the deal that will be used to refinance existing bank and mezzanine debt.

J. Crew timing surfaces

J. Crew nailed down timing on the launch of its proposed $1.25 billion senior secured credit facility with the scheduling of a bank meeting for Wednesday at the Palace hotel in New York at 2 p.m. ET, according to a market source.

Initially, the deal was labeled as January business. Then when the go-shop period for the company's buyout by TPG Capital and Leonard Green & Partners LP was extended to Feb. 15 from Jan. 15 as part of a lawsuit settlement, it was thought that the deal may find its way into February business. However, the banks decided to go ahead with the launch now even though the go-shop hasn't expired yet.

The facility consists of a $250 million asset-based revolver and a $1 billion term loan, and according to filings with the SEC, pricing on the revolver is expected at Libor plus 250 bps, while pricing on the term loan is expected at Libor plus 450 bps with a 1.5% Libor floor.

J. Crew lead banks

Bank of America and Goldman Sachs are the joint lead arrangers and joint bookrunners on J. Crew's buyout financing credit facility.

The company is being acquired for $43.50 per share in cash, or a total of about $3 billion.

Other funds for the transaction will come from $600 million of senior unsecured notes, which are backed by a commitment for a $600 million senior unsecured bridge loan priced initially at Libor plus 800 bps with a 1.5% Libor floor, and roughly $1.1 billion in equity.

A special shareholders meeting to vote on the acquisition is scheduled for March 1. The company has received notice from the Federal Trade Commission granting early termination of the mandatory waiting period under the Hart-Scott-Rodino Antitrust Improvements Act.

J. Crew Group is a New York-based retailer of women's, men's and children's apparel, shoes and accessories.

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