SunGard upsizes, breaks; Georgia Gulf up on amendment; Claire's rises with numbers; Herff floats talk

By Sara Rosenberg

New York, Sept. 12 - SunGard Data Systems Inc. raised the size of its incremental senior secured term loan, firmed up the original issue discount and then freed the deal up for trading.

Meanwhile, in more secondary happenings, Georgia Gulf Corp.'s term loan headed higher on Friday on news that the company recently amended its credit facility and Claire's Stores Inc.'s term loan was better on earnings.

In other news, Herff Jones began circulating pricing guidance on its term loan B as the deal is getting ready for its Tuesday retail syndication launch, and it was revealed that the B loan would be marketed with a larger than previously expected size as the anticipated size of the term loan A was reduced.

SunGard alters term loan

SunGard came out with some changes to its incremental term loan on Friday and then allocated and broke the deal for trading in the afternoon, according to sources.

Under the changes, the size of the term loan was increased to $500 million from $300 million and the original issue discount was set at 99, the low end of initial talk of 98 to 99, sources said.

As before, pricing on the term loan is Libor plus 375 basis points with a 3% Libor floor.

The term loan was seen quoted in the secondary market at 99¾ bid, par¼ offered, a trader remarked.

Goldman Sachs and Citigroup are the joint lead arrangers on the term loan, with Goldman the left lead, and Goldman, Citi and Lehman Brothers are the bookrunners and underwriters. KKR Capital Markets is also an underwriter.

Pricing on the company's existing term loan will remain at Libor plus 175 bps and the Libor floor will not apply to this debt.

Proceeds from the loan, along with senior unsecured bonds, will be used to fund the acquisition of a majority stake in GL Trade and for general corporate purposes, including the refinancing of the company's existing 3¾% senior secured notes due Jan. 15, 2009.

The bonds were initially expected to be sized at $700 million; however, based on the term loan upsizing, it is anticipated that the bonds might be downsized to $500 million, sources added.

Closing is expected during the fourth quarter of the year, subject to clearance by the relevant competition authorities.

SunGard is a Wayne, Pa.-based provider of software and processing products for the financial services, higher education and the public sector. GL Trade is a Paris-based financial software services company.

Georgia Gulf rises

Georgia Gulf's term loan gained some ground in trading on the back of the company's late Thursday announcement that it completed an amendment to its credit facility, according to a trader.

The term loan was quoted at 95 3/8 bid, 95 7/8 offered, up three quarters of a point on the amendment news, the trader said.

Under the amendment, pricing on the facility was changed to Libor plus 500 bps from Oct. 1 to Dec. 31 and to Libor plus 550 bps after Dec. 31. Prior to Oct. 1, pricing at its highest level was Libor plus 250 bps.

Also, a 3% Libor floor was added to the deal starting on Oct. 1.

In addition, covenants were changed, with the maximum leverage ratio increased to 7.2 times from 5.75 times for the third quarter, 7.75 times from 5.25 times in the fourth quarter, and 8.0 times from 4.75 times in the first quarter of 2009, and the minimum interest coverage ratio decreased to 1.7 times from 2.0 times in the third quarter, 1.5 times from 2.25 times in the fourth quarter, and 1.45 times from 2.5 times in the first quarter of 2009.

Furthermore, the capital expenditure limitation was decreased to $65 million from $90 million in 2008 and to $65 million from $135 million in 2009, maximum quarterly cumulative permitted capital expenditures were established for each of the four quarters ending June 30, 2009, the restricted payments basket was reduced to $25 million from $50 million and the permitted sale and leaseback transactions basket was increased to $60 million from $10 million.

And, the amendment permits the company to enter into a supplemental indenture with respect to its 7 1/8% senior notes due 2013 and pay the consent fee of $1.5 million as contemplated by a settlement agreement with certain holders of the notes.

Lenders were paid a 50 bps amendment fee and another 50 bps will be paid on Dec. 31 if the facility is still outstanding.

Georgia Gulf is an Atlanta-based manufacturer and marketer of chlorovinyls and aromatics chemicals, and vinyl-based building and home improvement products.

Claire's rallies

Claire's Stores' term loan bounced up by a few points in trading after the company released second quarter and six-month earnings results, according to a trader.

The term loan was quoted at 69 bid, 69½ offered, up from Thursday's levels of 66¾ bid, 67¾ offered, the trader said.

For the second quarter ended Aug. 2, the company reported net sales of $360 million, a 1.5% decrease from $365.5 million in the 2007 second quarter. The decrease was primarily attributed to a decline in same store sales, partially offset by the growth in our new store base and the effect of foreign currency translation.

Net loss for the quarter was $16.9 million versus a net loss of $73.4 million last year.

Adjusted EBITDA in the 2008 second quarter was $58.1 million compared to $64.3 million in the 2007 second quarter.

And, the gross profit percentage was flat at 49.9% for both years' second quarters. A 290 bps increase in the merchandise margin was offset by an equal increase in occupancy and buying costs.

"In the second quarter, we saw an improvement in the tone of business as our comparable store sales improved during each month of the quarter and our merchandise margin increased," said Gene Kahn, chief executive officer, in the release.

"We also successfully completed phase one of our Pan-European Transformation project. As a result, we now have an integrated team managing our European business, and a more focused North American merchandising team, within which there are now dedicated groups responsible for each of our Claire's and Icing brands. We launched our cost savings initiative during the quarter and are on target to achieve our previously announced goals of $15 million of expense reductions this year and an annualized amount in excess of $40 million," Kahn added in the release.

At Aug. 2, the company's $200 million revolving credit facility was undrawn and fully available aside from an ongoing $5.9 million letter-of-credit. Cash and cash equivalents were $35.2 million.

For the first six months of 2008, the company reported net sales of $687 million, down 2.7% from $706.1 million last year.

Net loss for the six months was $52.5 million, compared to $44.6 million in 2007.

And, adjusted EBITDA in the six month period was $92.4 million, compared to $125 million in the first six months of 2007.

Claire's is a Pembroke Pines, Fla.-based specialty retailer offering value-priced jewelry and accessories.

Herff Jones term B price talk emerges

In more loan happenings, Herff Jones started going out with price talk on its proposed $425 million seven-year term loan B in preparation for the Tuesday bank meeting that will officially kick off syndication on the tranche, according to a market source.

The term loan B is being guided in the Libor plus 350 bps to 375 bps context with a 3% Libor floor, the source said.

The original issue discount on the term loan B is still to be determined, the source added.

Herff Jones' $735 million senior secured credit facility (Ba3/BB+) also includes a $100 million five-year revolver and a $210 million five-year term loan A, with both of these tranches talked at Libor plus 325 bps with a 3% Libor floor.

The revolver and the term loan A were already launched to commercial banks during the second week of August and, since then, have received a strong response from the banks, especially among agents, sources previously told Prospect News.

Previously it was thought that the term loan B would be sized at $300 million and the term loan A would be sized at $335 million, but based on the amount of pro rata commitments already received, the banks decided to move some funds into the B loan prior to retail launch.

Although this structure is how the deal is being marketed, term loan A and term loan B sizes are not yet final as some additional term loan A commitments may come in, the source explained.

Bank of America and Wachovia are the lead banks on the deal, with Bank of America the left lead.

Proceeds will be used to help fund the acquisition of American Achievement Group Holding Corp., an Austin, Texas-based provider of commemorative jewelry, class rings, yearbooks, letter jackets and other jewelry, from Fenway Partners.

The transaction is subject to regulatory approvals and customary closing conditions.

Herff Jones is an Indianapolis-based manufacturer and publisher of educational products, recognition awards and graduation-related items sold to schools.

Weather Channel closes

NBC Universal, Bain Capital and Blackstone Group completed their acquisition of Weather Channel from Landmark Communications for about $3.5 billion.

To help fund the transaction, Weather Channel got a new $1.22 billion credit facility (Ba2/BB), consisting of a $150 million revolver priced at Libor plus 400 bps, and a $1.07 billion term loan priced at Libor plus 400 bps with a step down to Libor plus 375 bps when total leverage is 5¼ times, a 3.25% Libor floor and an original issue discount of 97.

During syndication, the term loan was upsized from $1.02 billion and pricing was reduced from Libor plus 425 bps on strong demand.

Deutsche Bank and GE Capital Markets acted as the co-lead arrangers on the credit facility, with Deutsche the left lead.

Other financing for the buyout came from $610 million of mezzanine debt. The mezzanine was initially going to be sized at $660 million, but it was reduced as a result of the term loan upsizing.

Total leverage is 6.7 times. Senior secured leverage is 4.3 times, up from an original 4.1 times because of the additional term loan debt.

Weather Channel is an Atlanta-based weather company made up of television networks and products for radio, newspapers, digital cable services and interactive television.

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