Community Health up with amendment chatter, iStar rises; Tekni-Plex tweaks deal; CUI delayed

By Sara Rosenberg

New York, Oct. 28 - Community Health Systems Inc.'s term loan B strengthened in an overall strong market on Thursday on buzz of a possible amend and extend transaction, and iStar Financial Inc.'s debt was up with repayment news and earnings.

Also in trading, Spansion Inc.'s term loan was better as the company launched an amendment and revealed plans for a paydown, and Las Vegas Sands Corp.'s strip of extended debt moved higher, still spurred on by the recent quarterly numbers announcement.

Over in the primary market, Tekni-Plex Inc. flexed pricing higher on its term loan B, and Cleveland Unlimited Inc. (CUI) postponed the launch of its credit facility due to some merger related issues.

In addition, MedAssets Inc. and Sheridan Holdings Inc. came out with price talk on their bank deals as both transactions were presented to lenders during the session, and SI Organization emerged with plans for a new facility.

Community Health gains ground

Community Health Systems' term loan B was noticeably higher in the secondary market after the company said in its recent earnings release that it is "exploring financing alternatives, including a possible amendment and partial extension of its existing senior secured credit facility."

The Nashville, Tenn.-based hospital company's term loan B was quoted by one trader at 98 bid, 98½ offered, up from 96¾ bid, 97¼ offered, and by a second trader at 97¾ bid, 98½ offered, up from 96¾ bid, 97¼ offered.

Also, the company announced that its net income for the quarter ended Sept. 30 was $70.4 million, or $0.76 per diluted share, compared with $59.7 million, or $0.65 per diluted share, last year.

Net operating revenues for the quarter totaled $3.3 billion, a 5.4% increase from $3.1 billion for the same period in 2009.

And, adjusted EBITDA for the quarter was $441.5 million, compared with $417.8 million in the prior year.

iStar Financial rallies

iStar Financial's second-lien and delayed-draw term loans were stronger by a few points as the company disclosed third-quarter earnings and said that it will repay in full its $1 billion first-priority credit facility due June 2012 next week, according to a trader.

The second-lien term loan was quoted at 95¼ bid, 95¾ offered, up from 93¼ bid, 94¼ offered, and the delayed-draw term loan was quoted at 99½ bid, 101 offered, up from 96¼ bid, 97¾ offered, the trader said.

For the quarter, the company reported a net loss of $83.5 million, or $0.89 per diluted common share, compared to a loss of $251.3 million, or $2.55 per diluted common share, last year.

And, revenues for the quarter were $134.4 million versus $178.2 million for the third quarter of 2009.

iStar is a New York-based finance company focused on the commercial real estate industry.

Spansion up with amendment

Spansion's term loan was bid up to 101¼ from 101 on Thursday immediately after news emerged that the company is looking for an amendment that would sweeten call protection and would pay a 50 bps fee for consents, according to a market source.

And, later in the day, a trader was seeing the loan quoted at 101½ bid, 102¼ offered, up from 101 bid, 101½ offered on Wednesday.

The term loan currently has 101 hard call protection that expires in February. With the amendment, the company would add 101 soft call protection to the loan until November 2011.

In addition, the amendment would reduce pricing on the term loan to Libor plus 475 basis points from Libor plus 550 bps and reduce the Libor floor to 1.75% from 2%.

Also, the amendment would increase the leverage ratio to 3.0 times from 2.5 times and cut the interest coverage ratio to 3.5 times from 3.75 times.

Spansion plans paydown

As part of the amendment, Spansion is asking lenders to permit the sale of $200 million of senior unsecured notes as long as proceeds are used to pay down the term loan to $250 million from $450 million. The roadshow for the notes is kicking off on Friday and pricing is expected to occur on Nov. 3 or Nov. 4.

Furthermore, the amendment would waive the requirement that the company use 50% of the net proceeds from its proposed common stock offering to repay term loan debt. Spansion intends to sell 6.75 million shares of common stock and is estimating net proceeds of $117.2 million from the offering.

If the credit facility amendment passes, all of the proceeds from the sale will be used for general corporate purposes.

Barclays is leading the amendment, which launched with a call on Thursday morning, and is asking for consents by Nov. 2.

Spansion is a Sunnyvale, Calif.-based semiconductor device company.

Las Vegas Sands rises

Las Vegas Sands' strip of extended bank debt was once again stronger as investors were still reacting to the company's positive third-quarter results, according to traders.

The strip was quoted by one trader at 94 bid, 94¾ offered, up from 93¼ bid, 93¾ offered, and by a second trader at 93¾ bid, 94¼ offered, up from 93¼ bid, 93¾ offered.

The company's earnings were released late Wednesday, at which time the strip of debt moved up from 92¼ bid, 92 5/8 and just continued that forward momentum into Thursday's session, the second trader added.

For the quarter, the Las Vegas-based developer of resorts reported net income of $168 million, or $0.21 per diluted share, compared to net loss of $123 million, or $0.19 per diluted share, in the prior year.

And, net revenue for the quarter was $1.91 billion, an increase of 67.3% compared to $1.14 billion in the third quarter of 2009.

Tekni-Plex lifts spreads

Switching to the primary, Tekni-Plex raised pricing on its $285 million six-year term loan B (B1/B) to Libor plus 700 bps from Libor plus 600 bps, while leaving the 2% Libor floor and original issue discount of 98 intact, according to a market source.

The term loan B has a springing maturity to 2013 notes, the source said.

Commitments are due on Monday at 5 p.m. ET.

Deutsche Bank and Bank of America are the lead banks on the deal that will be used to refinance existing debt.

Tekni-Plex is a King of Prussia, Pa.-based manufacturer of packaging, products and materials for the health care, consumer and food packaging industries.

Cleveland Unlimited delay

Cleveland Unlimited's $200 million senior secured credit facility, which was supposed to launch with a bank meeting on Thursday, has been pushed off, with the hope being that it will be able to come to market in a week or so, according to a market source.

The source said that the "meeting was postponed as parties are working through some merger-related issues."

The facility is in connection with the merger of Cleveland Unlimited with Coral Wireless LLC and will be used to refinance existing debt at both companies and fund working capital.

Pro forma for the merger on a last 12-months basis for the period ended June 30, the company had revenue of $191.5 million and adjusted EBITDA of $58.2 million.

And, pro forma total leverage will be 3.25 times.

Cleveland Unlimited structure

As of now, Cleveland Unlimited's credit facility consists of a $20 million four-year revolver and a $180 million six-year term loan.

Early price talk on the revolver has been circulating at Libor plus 600 bps to 650 bps, with a 75 bps unused fee, and early talk on the term loan has been Libor plus 650 bps to 700 bps with a 1.75% Libor floor and an original issue discount of 97 to 98.

SunTrust Robinson Humphrey and Moelis & Co. LLC are leading the deal.

Post merger, Cleveland-based Cleveland Unlimited will be a provider of unlimited, national wireless voice and data services for a flat monthly rate serving the Hawaiian Islands plus the Greater Cleveland, Columbus and Indianapolis markets.

MedAssets guidance emerges

MedAssets held a bank meeting on Thursday morning bank meeting at the Palace in New York to kick off syndication on its proposed $750 million credit facility (Ba3/BB-), and with the launch, price talk was revealed, according to a market source.

Both the $150 million five-year revolver and the $600 million six-year term loan B are being talked at Libor plus 400 bps to 425 bps with a 1.5% Libor floor, the source said.

The term loan B is being offered at an original issue discount of 99 and has 101 soft call protection for one year, the source continued.

Under the commitment letter, the company was allowed to split the term loan into a $150 million five-year term loan A and a $450 million six-year term loan B or keep it all as a term loan B. It was said in filings with the Securities and Exchange Commission that the term loan A would only be used if corporate credit ratings were more than Ba3/BB-.

MedAssets sees early interest

The source remarked that MedAsset's bank meeting was "well attended" and that there is a "good amount of early momentum behind this thing. Pretty well known issuer in the market. People know the credit."

Barclays and JPMorgan are the joint lead arrangers on the facility, with Barclays the left lead and administrative agent.

And, Bank of America, Raymond James and Fifth Third Bank all signed on as documentation agents prior to the bank meeting.

MedAssets buying Broadlane

Proceeds from MedAsset's credit facility, along with $360 million of senior unsecured notes, will be used to fund the acquisition of the Broadlane Group and refinance existing bank debt.

Broadlane, a Dallas-based end-to-end cost-management partner for health care providers, is being purchased for roughly $850 million in cash, with $725 million to be paid at closing and $125 million to be paid in January 2012.

The total funded debt will be 5.2 times trailing pro forma adjusted EBITDA, taking into consideration the company's estimate for cost-based synergies.

MedAssets is an Alpharetta, Ga.-based provider of technology enabled products and services for hospitals, health systems and ancillary health care providers.

Sheridan sets talk

Also on the pricing front, Sheridan Holdings announced talk of Libor plus 350 bps with no Libor floor and an original issue discount of 93½ on its $160 million incremental first-lien term loan (B1/B) that was launched with a conference call on Thursday morning, according to a market source.

Credit Suisse and Jefferies are the lead banks on the deal that will be used to fund acquisitions and repay revolver borrowings.

Commitments are due on Nov. 10.

Sheridan is a Sunrise, Fla.-based provider of physician services to hospitals and ambulatory surgical facilities.

SI readies launch

SI Organization has scheduled a bank meeting for Monday to launch its proposed $340 million credit facility that is being led by JPMorgan, according to a market source.

The facility consists of a $300 million six-year term loan and a $40 million five-year revolver, the source said, adding that price talk is not yet available.

Proceeds will be used to help fund Veritas Capital's acquisition of Lockheed Martin Corp.'s Enterprise Integration Group for $815 million.

The Enterprise Integration Group, which will be named SI Organization, is a Valley Forge, Pa.-based provider of mission-critical systems engineering and integration services and modeling, simulation, analysis and risk mitigation services to the U.S. intelligence community.

Fifth Thirds structure

Fifth Third Processing Solutions LLC revised its credit facility, shifting funds between the first- and second-lien term loan and modifying pricing, according to a market source.

The six-year first-lien term loan (Ba3/BB-) is now sized at $1.575 billion and is priced at Libor plus 400 bps with a 1.5% Libor floor and original issue discount of 99, the source said. Initially, the tranche was sized at $1.5 billion and was talked at Libor plus 425 bps to 450 bps with the floor and discount the same as the final terms.

Meanwhile, the seven-year second-lien term loan (B2/B-) is now sized at $200 million and is priced at Libor plus 675 bps with a 1.5% Libor floor and original issue discount of 99, the source continued. Initially, the tranche was sized at $275 million and was talked at Libor plus 700 bps to 725 bps with a 1.75% floor and a discount of 98.

The soft call protection of 102 in year one and 101 in year two on the second-lien term loan was unchanged.

Fifth Third lead banks

Goldman Sachs, JPMorgan, Credit Suisse, Morgan Stanley and Bank of America are the lead banks on Fifth Third Processing's credit facility.

The $1.925 billion facility also includes a $150 million revolver (Ba3/BB-) that is priced in line with initial talk at Libor plus 350 bps with a 50 bps unused fee.

Proceeds will be used to help fund the acquisition of National Processing Co. and refinance existing debt.

The transaction is expected to close in early November, pending satisfaction of customary closing conditions.

Fifth Third Processing is a Cincinnati-based provider of payment transaction processing and acceptance solutions. National Processing is a Louisville, Ky.-based merchant acquirer focused on the small and medium enterprise market.

HealthSpring closes

In other news, HealthSpring Inc. closed on its $380 million in new bank debt (Ba3/B+), consisting of a $180 million term loan A due Feb. 11, 2015 and a $200 million six-year term loan B, according to an 8-K filed with the SEC on Thursday.

Pricing on the term loan A is Libor plus 375 bps. And, pricing on the term loan B is Libor plus 450 bps with a 1.5% Libor floor, and it was sold at an original issue discount of 981/2. There is 101 soft call protection for one year on the B loan.

During syndication, the term loan A was upsized from $150 million and the term loan B was downsized from $250 million.

JPMorgan and Bank of America acted as the joint lead arrangers and bookrunners on the deal that was completed on Oct. 22, with Raymond James Bank a co-arranger.

Proceeds were used by the Nashville, Tenn.-based managed care organization to help fund the acquisition of Bravo Health Inc., a Baltimore-based operator of Medicare Advantage coordinated care plans, for $545 million.

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