Zekelman, TransDigm, MKS Instruments, Generation Brands, Victory Capital free to trade

By Sara Rosenberg

New York, June 7 – Zekelman Industries increased the size of its term loan B, finalized the spread at the tight end of guidance, added a pricing step-down and adjusted the issue price before breaking for trading on Tuesday, and deals from TransDigm Inc., MKS Instruments Inc., Generation Brands Holdings Inc. and Victory Capital Operating LLC hit the secondary market as well.

In more happenings, Leidos Holdings Inc./Abacus Innovations Corp. set pricing on their term loan B at the low end of talk, removed the Libor floor and tightened the original issue discount, J.D. Power upsized its first-lien term loan and revised the spread and issue price on its first- and second-lien tranches, and Eze Software Group firmed pricing on its term loan at the tight end of guidance while modifying the original issue discount.

Also, US Foods Inc., NRG Energy Inc., Microsemi Corp., Alorica Inc. and Six Flags Entertainment Corp. revealed price talk with launch, and Prime Security Services Borrower LLC (ADT), Pomeroy Group and ExamWorks Group Inc. joined this week’s new deal calendar.

Zekelman reworked, trades

Zekelman raised its senior secured term loan B due June 2021 to $825 million from $800 million, firmed pricing at Libor plus 500 basis points, the low end of the Libor plus 500 bps to 525 bps talk, added a step-down to Libor plus 475 bps at net first-lien leverage of 2.5 times and modified the original issue discount to 99 from 98.5, according to a market source.

In addition, the incremental “freebie” was reduced to $125 million from $150 million due to the term loan B upsizing.

The term loan B still has a 1% Libor floor and 101 soft call protection for six months.

With final terms in place, the loan broke for trading late Tuesday, with levels seen at 99½ bid, par ¼ offered, the source said.

Goldman Sachs & Co. and J.P. Morgan Securities LLC are leading the deal that will be used with $375 million of secured notes, downsized from $425 million, and a $25 million ABL facility draw to refinance debt.

Zekelman, formerly known as JMC Steel, is a Chicago-based manufacturer of industrial steel pipe and tubular products.

TransDigm tops OID

TransDigm’s $1.74 billion seven-year covenant-light term loan F also made its way into the secondary market, with the $790 million of amended and extended debt quoted at 99 5/8 bid, par 1/8 offered and the strip of $500 million of funded and $450 million of delayed-draw debt quoted at 99½ bid, par offered, according to a trader.

Once the delayed-draw term loan funds, all three term loan F tranches will become one fungible tranche.

Pricing on the term loan F debt is Libor plus 300 bps with a 0.75% Libor floor, and it was sold at an original issue discount of 99.25. There is 101 repricing protection for one year.

During syndication, the $790 million of amended and extended term F debt was added, pricing firmed at the low end of the Libor plus 300 bps to 325 bps talk and the discount was changed from 99.

Credit Suisse Securities (USA) LLC is the left lead on the deal.

TransDigm buying ILC

Proceeds from TransDigm’s term loan F, along with $950 million of senior subordinated notes, will be used to fund the $1 billion purchase of ILC Holdings Inc., the parent company of Data Device Corp., from Behrman Capital; for general corporate purposes, including potential future acquisitions or dividends and, as a result of the addition of the amended and extended tranche, to repay a portion of the company’s existing term loan C.

In connection with the term loan F, the company is amending its existing credit agreement, for which lenders were offered a 5-bps consent fee, and pricing on the existing term loan E is being lifted to Libor plus 300 bps from Libor plus 275 bps.

Closing on the acquisition is expected before the end of fiscal 2016, subject to regulatory approvals and customary conditions.

TransDigm is a Cleveland-based designer, producer and supplier of highly engineered aircraft components for use on commercial and military aircraft. ILC is a Bohemia, N.Y.-based supplier of databus and power supply products for the military and commercial aerospace markets.

MKS frees up

MKS Instruments’ repriced $730 million covenant-light term loan B due April 29, 2023 began trading too, with levels quoted at par 1/8 bid, par 5/8 offered, a trader remarked.

Pricing on the loan is Libor plus 350 bps with a 0.75% Libor floor, and it was issued at par. The debt has 101 soft call protection for six months.

The repricing is taking the term loan B pricing down from Libor plus 400 bps with a 0.75% Libor floor, and lenders are getting repaid at 101 with the repricing as a result of existing call protection.

In addition, the term loan size is being reduced from a current amount of $780 million as the company is prepaying $50 million of the debt with cash, a source added.

Barclays is leading the deal.

MKS is an Andover, Mass.-based provider of instruments, subsystems and process control solutions that measure, control, power, monitor and analyze critical parameters of advanced manufacturing processes.

Generation Brands breaks

Generation Brands’ credit facility was another deal to free up for trading, with the $180 million six-year first-lien term loan (B1/B) quoted at 99¼ bid, par offered and the $80 million 6.5-year second-lien term loan (Caa1/CCC+) quoted at 97 bid, 98 offered, according to a trader.

The first-lien term loan is priced at Libor plus 500 bps with a 1% Libor floor, and it was sold at an original issue discount of 99. There is 101 soft call protection for one year.

Recently, pricing on the first-lien term loan was lowered from Libor plus 550 bps and the call protection was extended from six months.

Pricing on the second-lien term loan is Libor plus 1,000 bps with a 1% Libor floor, and it was sold at a discount of 97. The debt has hard call protection of 103 in year one, 102 in year two and 101 in year three.

The company’s $310 million credit facility also includes a $50 million ABL revolver.

Deutsche Bank Securities Inc., Barclays and ING are leading the deal that will be used to help fund the buyout of Generation Brands, a designer and provider of lighting fixtures, by AEA Investors.

Victory hits secondary

Victory Capital’s $135 million fungible add-on term loan due Oct. 31, 2021 broke as well, with levels seen at 98¾ bid, 99¾ offered, a trader said.

Pricing on the loan is Libor plus 750 bps with a 1% Libor floor, and it was sold at an original issue discount of 98.5. The debt includes 101 soft call protection for one year.

During syndication, the size of the loan was adjusted downward from an initial amount at launch of up to $146 million because of available cash, and the discount was tightened from 98.

RBC Capital Markets is leading the deal that will be used to help fund the acquisition of RS Investments from Guardian Life Insurance Co. of America and the investment professionals and employees of RS.

With the add-on loan, pricing on the existing term loan due Oct. 31, 2021 is being lifted to Libor plus 750 bps with a 1% Libor floor from Libor plus 600 bps with a 1% Libor floor.

Closing is expected on June 30.

Victory Capital is a Brooklyn, Ohio-based asset management firm. RS is a San Francisco-based provider of investment management solutions.

Leidos changes emerge

Back in the primary market, Leidos/Abacus finalized the spread on the $1,131,450,000 seven-year covenant-light term loan B at Abacus at Libor plus 275 bps, the low end of the Libor plus 275 bps to 300 bps talk, eliminated the 0.75% Libor floor so there is no Libor floor and revised the original issue discount to 99.75 from 99.5, a market source said.

As before, the term loan B has 101 soft call protection for six months and a ticking fee of half the spread from days 31 to 60 and the full spread thereafter.

Recommitments were due at 5 p.m. ET on Tuesday, the source added.

The company’s $3,281,450,000 senior secured credit facility (Ba1/BBB-) also includes a $750 million five-year revolver at Leidos, a $690 million five-year term loan A at Leidos, a $400 million three-year term loan A at Abacus and a $310 million five-year term loan A at Abacus, all priced at Libor plus 225 bps.

Citigroup Global Markets Inc., MUFG, Bank of America Merrill Lynch, JPMorgan, Goldman Sachs, Scotiabank and Wells Fargo Securities LLC are leading the deal.

Leidos, Abacus merging

The Leidos/Abacus credit facility is being done in connection with the merger of Leidos with Lockheed Martin Corp.’s Bethesda, Md.-based realigned information systems and global solutions business (Abacus).

Proceeds from the Leidos credit facility will be used with cash on hand to pay a special dividend to Leidos stockholders in an amount not to exceed $1.03 billion and to repay existing debt, and the Abacus credit facility will be used to make a special cash payment of $1.8 billion to Lockheed Martin.

At closing, Lockheed Martin shareholders will receive about 50.5% of the combined company on a fully diluted basis, with pre-transaction Leidos shareholders owning the balance.

Closing is expected in August, subject to approval by the shareholders of Leidos, regulatory approvals and customary conditions.

Leidos is a Reston, Va.-based provider of technology and sector expertise to customers in national security, health and engineering.

J.D. Power modifies deal

J.D. Power increased its seven-year first-lien covenant-light term loan (B1) to $410 million from $385 million, cut pricing to Libor plus 425 bps from Libor plus 500 bps and changed the original issue discount to 99.5 from 99, while leaving the 1% Libor floor and 101 soft call protection for six months intact, according to a market source.

Furthermore, pricing on the company’s $120 million eight-year second-lien covenant-light term loan (Caa1) was reduced to Libor plus 850 bps from Libor plus 900 bps, the discount was tightened to 98.5 from 98, and the call protection was revised to 102 in year one and 101 in year two from 103 in year one, 102 in year two and 101 in year three, the source said. This tranche still has a 1% Libor floor.

The company’s now $565 million credit facility also includes a $35 million revolver.

Commitments are due at noon ET on Wednesday.

J.D. Power being acquired

Proceeds from J.D. Power’s credit facility will be used to help fund its acquisition by XIO Group from McGraw Hill Financial Inc. for $1.1 billion.

Other funds for the transaction will come from equity, the amount of which was reduced with the first-lien term loan upsizing, the source added.

Credit Suisse is the lead bank on the deal.

Closing on the acquisition is expected in the third quarter, subject to regulatory approvals and customary conditions.

J.D. Power is a Costa Mesa, Calif.-based consumer data and analytics company.

Eze updates pricing

Eze Software set the spread on its $115 million non-fungible incremental first-lien covenant-light term loan B-2 (B1/B+) due April 4, 2020 at Libor plus 350 bps, the low end of the Libor plus 350 bps to 375 bps talk, and tightened the original issue discount to 99.5 from 99, according to a market source.

The term loan still has a 1% Libor floor.

Recommitments were due at 5 p.m. ET on Tuesday, and allocations are targeted for Wednesday.

Bank of America Merrill Lynch, Morgan Stanley Senior Funding Inc., Jefferies Finance LLC and Deutsche Bank are leading the deal that will be used to fund a one-time distribution to shareholders.

Eze Software is a Boston-based provider of investment technology to support the front, middle and back office.

US Foods launches

Also in the primary, US Foods on its call on Tuesday approached lenders with a $2.3 billion seven-year senior secured covenant-light term loan B talked at Libor plus 325 bps to 350 bps with a 0.75% Libor floor, an original issue discount of 99.25 and 101 soft call protection for six months, according to a market source.

Commitments are due at noon ET on June 14 and closing is expected on or before June 30, the source said.

Citigroup, Deutsche Bank, Bank of America Merrill Lynch, BMO Capital Markets, Natixis, Wells Fargo, ING, JPMorgan and Morgan Stanley are leading the deal.

Proceeds from the term loan will be used with additional senior unsecured debt and cash on hand to refinance an existing $2.04 billion term loan B, $258 million of senior notes and a $472 million CMBS facility.

US Foods is a Chicago-based broadline foodservice distributor.

NRG terms surface

NRG Energy held its lender call, launching its $1.9 billion seven-year senior secured covenant-light term loan B (BB+) with talk of Libor plus 250 bps to 275 bps with a 0.75% Libor floor, an original issue discount of 99.5 and 101 soft call protection for six months, a market source remarked.

Commitments are due at 5 p.m. ET on Monday, and closing is expected during the week of June 20, the source added.

Citigroup and Morgan Stanley are leading the deal that will be used to refinance an existing senior secured term loan B due in 2018.

NRG Energy is a wholesale power generation company with headquarters in Princeton, N.J., and Houston.

Microsemi sets guidance

Microsemi held its lender calls in the morning, launching its $250 million incremental senior secured term loan A due Jan. 15, 2021 with talk of Libor plus 250 bps, subject to a grid, with no Libor floor and an original issue discount of 99.625, according to a market source.

The company also launched the repricing of its $854 million senior secured covenant-light term loan B due Jan. 15, 2023 with talk of Libor plus 325 bps with a 0.75% Libor floor, a par issue price and 101 soft call protection for six months, the source said.

Term loan B amendments/commitments are due at 5 p.m. ET on Thursday, and term loan A commitments are due at noon ET on June 17.

Morgan Stanley is leading the $1,104,000,000 of term loans (BB).

Proceeds from the term loan A will be used to refinance a portion of the existing term loan B.

Microsemi is an Aliso Viejo, Calif.-based provider of semiconductor solutions.

Alorica discloses talk

Alorica hosted its bank meeting in the afternoon, and shortly before the event started, talk on its $450 million six-year first-lien term loan B came out at Libor plus 500 bps with a 0.75% Libor floor, an original issue discount of 99 and 101 soft call protection for one year, a market source said.

Commitments are due on June 21.

The company’s $1.12 billion credit facility (B1/BB) is also expected to include a $225 million revolver and a $445 million term loan A.

Credit Suisse, Bank of America Merrill Lynch, Bank of the West, BNP Paribas Securities Corp. and Wells Fargo provided the financing commitments that will be used to fund the acquisition of Expert Global Solutions from One Equity Partners.

Closing is expected in the third quarter, subject to customary conditions, including regulatory requirements.

Alorica is an Irvine, Calif.-based provider of services, including customer relationship management and back office support. Expert Global Solutions is a Plano, Texas-based customer service organization.

Six Flags repricing

Six Flags held a lender call to launch a repricing of its term loan B talked at Libor plus 250 bps with a 0.75% Libor floor, a par issue price and 101 soft call protection for six months, according to a market source.

The repricing will take pricing on the term loan down from Libor plus 275 bps with a 0.75% Libor floor, and the company will remove the existing step-down to Libor plus 250 bps.

Currently, it is expected that the repriced term loan B will be sized at about $545 million after a planned $150 million paydown with proceeds from a $300 million senior unsecured notes offering.

Notes proceeds will also be used to fund repurchases of the company’s common stock from time to time, and if not used for stock repurchases, the funds can be used for strategic initiatives.

Wells Fargo is leading the repricing for the Grand Prairie, Texas-based regional theme park company.

Commitments are due on June 14, the source added.

Prime Security on deck

Prime Security Services set a lender call for Wednesday to launch a $2,772,000,000 of term loans, according to a market source.

The loans are split between a $1,092,000,000 first-lien term loan due 2021, a $1,555,000,000 first-lien term loan due 2022 and a $125 million incremental first-lien term loan due 2022, the source said.

Barclays, Deutsche Bank and RBC are leading the deal that will be used to reprice the company’s existing first-lien term loans and to repay $125 million of existing second-lien term loan borrowings due 2022.

Prime Security is a security services company.

Pomeroy readies deal

Pomeroy Group scheduled a bank meeting for 2 p.m. ET on Thursday to launch a $280 million credit facility consisting of a $40 million revolver and a $240 million first-lien term loan, a market source said.

Natixis is leading the deal that will be used to help fund the merger of Pomeroy and Tolt Solutions.

The company is also getting a $75 million second-lien term loan that was privately placed.

As part of the transaction, Clearlake Capital Group LP entered into a definitive agreement to acquire Pomeroy and simultaneously back the combination of Pomeroy with Tolt Solutions.

First-lien leverage is 3.7 times and total leverage is 4.8 times, the source added.

Pomeroy Group is a provider of IT infrastructure solutions and managed services.

ExamWorks coming soon

ExamWorks set a bank meeting for Wednesday to launch a $920 million credit facility split between a $150 million five-year revolver and a $770 million seven-year first-lien covenant-light term loan, according to a market source.

Bank of America Merrill Lynch, Barclays, Deutsche Bank and SunTrust Robinson Humphrey Inc. are leading the debt that will be used with equity and cash on hand to fund the buyout of the company by Leonard Green & Partners LP for $35.05 per share in cash, or about $2.2 billion.

Closing is expected in the third quarter, subject to stockholder approval, the receipt of regulatory approvals and other customary conditions.

ExamWorks is an Atlanta-based provider of independent medical examinations, peer reviews, bill reviews, Medicare compliance services, case management services, record retrieval services, document management services and other related services.

Cengage closes

In other news, Cengage Learning Inc. completed its $1.96 billion credit facility that consists of a $1.71 billion seven-year senior secured covenant-light term loan B (B1/BB-) and a $250 million amended and restated five-year senior secured asset-based revolver, according to a news release.

Pricing on the term loan B is Libor plus 425 bps with a 1% Libor floor, and it was sold at an original issue discount of 99. The debt has 101 soft call protection for six months.

During syndication, the term loan was upsized from $1.59 billion as the company’s notes offering was downsized to $620 million from $740 million and pricing was lowered from talk of Libor plus 450 bps to 475 bps.

Morgan Stanley, Credit Suisse, BMO, Citigroup, Goldman Sachs, Wells Fargo, Deutsche Bank and KKR Capital Markets LLC led the loan that was used to refinance debt and fund a distribution to shareholders.

Cengage is a Boston-based educational content, technology and services company for the higher education and K-12, professional, library and workforce training markets.

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