Bank loans regain some ground in thin Friday trading; Pro Mach, Magnum Hunter allocate, trade up

By Paul A. Harris

Portland, Ore., Oct. 17 – On Friday, bank loans regained ground lost earlier in the week when the leveraged loan market came under pressure carried over from volatility in the global financial markets, a trader said.

“We were definitely up today, but volumes were not huge,” said the trader, who added that a sense of fatigue seemed to have taken hold among investors during the last session of the Oct. 13 week.

Given the volatility, Thursday's news that dedicated bank loan funds saw $946 million outflows for the week to Wednesday's close came as no surprise, the trader said.

Meanwhile, the LCDX 22 index of bank loan credit default swaps ended the Friday session at 103 bid, 103½ offered, up 3/8 of a point on the day, according to a hedge fund manager.

In the primary market, Magnum Hunter Resources Corp. and Pro Mach Inc. priced and allocated loans that traded higher in the secondary market.

Magnum Hunter trades up

Magnum Hunter Resources priced its $340 million Libor plus 750 basis points five-year second-lien term loan (B1/B) at 97 on Friday.

The deal traded up 1¾ points on the break and was seen 98¾ bid, 99¾ offered in thin Friday afternoon trading, according to a trader.

The spread came on top of spread talk that was revised from earlier talk of Libor plus 500 bps.

The discount came at the rich end of the revised 96 to 97 price talk. Earlier price talk was 98.5.

“With the market off so much earlier in the week, they had to widen the spread and sweeten the price talk,” the trader said.

The deal has a 1% Libor floor.

Credit Suisse Securities (USA) LLC and BMO Capital Markets are the lead banks on the deal.

Proceeds will be used to refinance existing debt and for general corporate purposes.

Along with the term loan, the company is planning a $50 million four-year senior secured first-lien reserve-based revolving credit facility.

Pro Mach at the wide end

Pro Mach priced a $410 million Libor plus 450 basis points seven-year covenant-light first-lien term at 99.

The deal traded to 99¾ bid, par ¾ offered in thin trading on Friday afternoon, according to a trader.

The spread came at the wide end of the 425 to 450 bps spread talk. The reoffer price came on top of price talk.

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

The company’s $470 million credit facility (B2/B-) also includes a $60 million five-year revolver.

Goldman Sachs Bank USA and GE Capital Markets are the lead banks.

Proceeds will be used to help fund the buyout of the company by AEA Investors LP from the Jordan Co.

Other funds for the transaction will come from $225 million of eight-year second-lien mezzanine notes.

Closing is expected in the fourth quarter, subject to customary conditions.

Pro Mach is a Loveland, Ohio-based provider of integrated packaging and processing products for food, beverage, consumer goods, pharmaceutical and other diverse companies.

Citadel Plastics pricing

Citadel Plastics Holdings Inc. set pricing on $400 million of term loans on Thursday.

A $300 million six-year covenant-light term loan B (B2/BB-) is talked with a 400 to 425 basis points spread to Libor at 99. It features a 1% Libor floor and 101 soft call protection for six months.

A $100 million second-lien lien loan (Caa1/B-) is talked with an 800 bps spread to Libor at 99. It features a 1% Libor floor and hard calls at 102, declining to 101.

GE Capital Markets and KeyBanc Capital Markets are the leads on the deal.

The $430 million credit facility also features a $30 million six-year revolver which has a springing total net leverage covenant.

Proceeds will be used to refinance existing debt and finance an acquisition.

As part of the transaction, the sponsors, HGGC and Charlesbank Capital, will be converting about $26 million of subordinated debt to contributed equity, the source added.

Citadel Plastics is a Chicago-based provider of plastic composite compounds.

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