Veresen Midstream breaks; Weight Watchers falls on numbers; Community Health launches

By Sara Rosenberg

New York, Feb. 27 – Veresen Midstream LP’s term loan B freed up for trading on Friday above its original issue discount, and Weight Watchers International Inc.’s term loan B-2 continued to decline on the back of disappointing earnings news.

Meanwhile in the primary market, Community Health Systems approached lenders with a term loan F that will extend and amend its existing term loan E, and Headwaters Inc. joined the near-term calendar.

Veresen hits secondary

Veresen Midstream’s $575 million seven-year term loan B (Ba3/BB-) began trading on Friday, with levels quoted at 99 bid, 99½ offered on the break and then it moved up to 99½ bid, par offered, according to a trader.

Pricing on the term loan is Libor plus 500 basis points with a 1% Libor floor and it was sold at an original issue discount of 98½. There is 101 soft call protection for one year.

During syndication, the term loan was downsized from $600 million to adjust for Canadian and U.S. dollar rate movements, the discount was tightened from 98 and the MFN sunset provision was eliminated so that there is 50 bps MFN for life.

RBC Capital Markets, TD Securities (USA) LLC and HSBC Securities (USA) Inc. are leading the deal.

The company’s senior secured credit facility also includes a C$75 million revolver that will be available for operating and working capital requirements and a C$1,275,000,000 non-revolving expansion facility that will be largely undrawn initially and available to fund future growth.

Veresen funding acquisition

Proceeds from Veresen Midstream’s term loan B will be used to finance the purchase of certain natural gas gathering and compression assets supporting Montney development in the Dawson area of northeastern British Columbia from Encana Corp. and the Cutbank Ridge Partnership for $600 million, plus actual costs accrued in 2015.

Closing is expected this quarter, subject to receipt of approvals under the Competition Act and the Investment Canada Act and other customary conditions.

The company is a joint venture being formed by Veresen Inc. and Kohlberg Kravis Roberts & Co. LP.

Veresen will fund its interest in Veresen Midstream by contributing its Hythe/Steeprock gathering and processing assets valued at $920 million, and in exchange will receive from Veresen Midstream $420 million, resulting in a 50% equity position valued at $500 million, and KKR will fund its 50% interest in Veresen Midstream by contributing $500 million in cash.

Weight Watchers softens

Also in trading, Weight Watchers’ term loan B-2 dropped to 52½ bid, 54½ offered from 58½ bid, 60½ offered as investors reacted to fourth quarter numbers that came out late Thursday, a trader remarked.

On Thursday morning, before numbers were released, the term loan B-2 was quoted at 62 bid, 64 offered, the trader added.

For the fourth quarter, the company reported revenues of $327.8 million, down 10.4% from $366.1 million in the prior year period, and a net loss of $16.1 million, or a loss of $0.28 per share, compared to net income of $30.8 million, or $0.54 per share in the previous year.

For full year 2015, the company provided earnings guidance of between $0.40 and $0.70 per fully diluted share.

Weight Watchers is a New York-based provider of weight management services.

Community Health extension

Switching to the primary market, Community Health launched without a call on Friday a $1.66 billion term loan F due December 2018 that will be used to refinance/extend the existing $1.66 billion term loan E due in January 2017, according to a market source.

The term loan F is talked at Libor plus 325 bps with no Libor floor, which matches current term loan E pricing, and is offered at an original issue discount of 99, the source said.

Also, the term loan F has 101 soft call protection for six months.

Credit Suisse Securities (USA) LLC is leading the deal for the Nashville, Tenn.-based hospital company.

Along with the term loan F, the company is looking to amend its existing credit agreement to change the springing maturity to three months prior to any material debt maturity, and consenting term loan D lenders are being offered a 5 bps amendment fee.

Commitments are due at noon ET on Wednesday and consents are due at noon ET on Thursday, the source added.

Headwaters on deck

Headwaters emerged with plans to hold a bank meeting at 10 a.m. ET in New York on Tuesday to launch a $425 million seven-year covenant-light term loan B that has 101 soft call protection, according to a market source.

Deutsche Bank Securities Inc. is leading the deal.

Proceeds will be used to refinance 7 5/8% senior secured notes.

Headwaters, a South Jordan, Utah-based manufacturer of light building products and heavy construction materials, expects to close on the term loan in March.

Axiall wraps

In other news, Axiall Corp. completed its $250 million senior secured term loan B (Ba1/BBB-) due in February 2022, a news release said.

Pricing on the loan is Libor plus 325 bps with a 0.75% Libor floor and it was sold at an original issue discount of 99½. There is 101 soft call protection for six months.

During syndication, pricing on the term loan was reduced from Libor plus 350 bps.

Wells Fargo Securities LLC and RBC Capital Markets are leading the debt that is being used to refinance an existing term loan due in 2017 and for general corporate purposes.

Axiall is an Atlanta-based chemicals and building products company.

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