McJunkin, Sturm, Ravago break; Hertz falls on repricing; Autos under pressure; NEP sets talk

By Sara Rosenberg

New York, Jan. 30 - McJunkin Corp., Sturm Foods Inc. and Ravago SA all freed for trading on Tuesday, and The Hertz Corp.'s strip of institutional bank debt softened considerably on news of a repricing and a paydown.

Also in the secondary, the auto sector felt weaker pretty much across the board as ArvinMeritor Inc. and Tenneco Inc. announced earnings results that fell short of expectations.

Meanwhile, in the primary, NEP Broadcasting LLC came out with price talk on its credit facility as the deal was launched with a bank meeting during the session.

McJunkin's credit facility freed for trading on Tuesday with the $575 million term loan B (B2/B+) closing the session at 101 bid, 101¼ offered, according to a trader.

Immediately following the break, the term loan B was quoted at par 7/8 bid, 101 1/8 offered, it then came in to par ¾ bid, 101 offered, and then it inched its way back up before the close, the trader added.

The term loan B is priced at Libor plus 225 basis points. During syndication, pricing on the paper was reduced from original talk at launch of Libor plus 275 bps.

McJunkin's $875 million credit facility also includes a $300 million ABL revolver (Ba1/BB) that is priced at Libor plus 175 bps. During syndication, the revolver was upsized from $200 million.

Goldman Sachs and Lehman are the lead banks on the deal, with Goldman the left lead.

Proceeds will be used to help fund Goldman Sachs Capital Partners' acquisition of the company.

McJunkin is a Charleston, W.Va., distributor of industrial and oilfield supplies.

Sturm breaks

Sturm Foods' credit facility was another deal to hit the secondary, with its $390 million first-lien term loan quoted at par ½ bid, 101 offered and its $150 million second-lien term loan quoted at 101½ bid, 102½ offered, according to a trader.

The first-lien term loan is priced at Libor plus 250 bps. During syndication, the tranche was upsized from $350 million and pricing was reverse flexed from original talk at launch of Libor plus 275 bps.

The second-lien term loan is priced at Libor plus 600 bps with call premiums of 102 in year one and 101 in year two. During syndication, this tranche was downsized from $170 million and pricing was reverse flexed from original talk of Libor plus 625 bps.

Sturm's $560 million senior secured credit facility also includes a $20 million revolver.

Deutsche Bank is the lead bank on the deal that will be used for a dividend recapitalization. The $20 million of additional funds raised through the first-lien term loan upsizing are being used to increase the dividend payment to the sponsor.

First-lien leverage is 4.5 times, and total leverage is now 6.2 times.

Sturm Foods is a Manawa, Wis., provider of dry food products for targeted private label and co-pack markets.

Ravago trades in mid pars

Also breaking for trading Tuesday was Ravago's credit facility, with the $160 million seven-year term loan B quoted at par ¼ bid, par ¾ offered, according to a trader.

The term loan B is priced at Libor plus 275 bps. During syndication, pricing was flexed up from original talk at launch of Libor plus 200 bps.

Ravago's $500 million credit facility also includes a $340 million five-year asset-based revolver priced at Libor plus 150 bps. The revolver spread is tied to a grid that is based on total excess availability.

Citigroup is the lead bank on the deal that will be used to help fund Ravago's equity investment in Muehlstein Holding Corp. as the two companies have agreed to create a global polymer distribution partnership.

Leverage is 3 times through the bank debt and 5 times total.

Ravago is a provider of distribution, compounding and recycling services for plastic and elastomeric raw materials.

Hertz drops on repricing, paydown

Hertz's strip of institutional bank debt fell by about three quarters of a point as the company launched a repricing and announced plans to repay some of the outstanding debt, according to a trader.

The strip of term loan B and synthetic letter-of-credit facility debt closed the day at par ¼ bid, par ¾ offered, down from previous levels of 101 bid, 101 3/8 offered, the trader said.

Under the proposal, the company is looking to reprice its term loan B and synthetic letter-of-credit facility at Libor plus 175 bps from Libor plus 200 bps with a step down to Libor plus 150 bps when leverage falls below 3.0 times.

Furthermore, the company said that it will repay $550 million of its term loan B debt.

"The 25 bps cut plus the paydown at par made this thing drop, the trader explained.

In addition to repricing the institutional bank debt, the Park Ridge, N.J, vehicle rental organization is also repricing its asset-based revolver at Libor plus 150 bps from Libor plus 175 bps.

Deutsche Bank is the lead bank on the deal.

Autos fall with disappointing earnings

For the first time in a while, the auto sector as a whole came under some pressure - with names like General Motors Corp., Ford Motor Co. and Visteon Corp. losing some ground - after ArvinMeritor and Tenneco reported lower-than-expected financial results, according to a trader.

General Motors, a Detroit-based automaker, saw its term loan close the day at 101¼ bid, 101½ offered, down about an eighth of a point, the trader said.

Ford, a Dearborn, Mich.-based automaker, saw its term loan close the day at 101 3/8 bid, 101 5/8 offered, also down an eighth, the trader continued.

And, Visteon, a Van Buren Township, Mich., automotive parts supplier, saw its term loan close the day at 101 1/8 bid, 101 3/8 offered, dropping by an eighth as well, the trader added.

"ArvinMeritor and Tenneco came out with slightly weaker numbers than people expected. It sort of had a ripple affect throughout the auto sector," the trader explained.

For the first quarter of 2007, ArvinMeritor reported income from continuing operations of $11 million, or $0.16 per diluted share, compared to $28 million, or $0.40 per diluted share, a year ago. Sales from continuing operations were $2.3 billion, a 12% increase from the same period last year. And, EBITDA, before special items, was $86 million, down $2 million from the same period last year.

For fiscal 2007, the company expects sales from continuing operations in the range of $8.9 billion to $9.1 billion, and the outlook for full-year diluted earnings per share from continuing operations to be in the range of $1.15 to $1.25.

Meanwhile, Tenneco reported fourth-quarter 2006 net income of $14 million, or $0.30 per diluted share, up from $8 million, or $0.18 per diluted share, a year ago. Excluding certain adjustments, net income was $3 million, or $0.06 per diluted share, versus $13 million, or $0.28 per diluted share, in fourth-quarter 2005. Fourth-quarter revenue was $1.2 billion, compared with $1.1 billion a year ago. EBIT was $36 million, down from $38 million the prior year.

For 2007, the company goals include maintaining SGA&E as a percent of sales at 9% of sales and achieving net debt/adjusted annual EBITDA of 2.7 times.

ArvinMeritor is a Troy, Mich., supplier of integrated systems, modules and components to the motor vehicle industry. Tenneco is a Lake Forest, Ill., designer, manufacturer and marketer of emission control and ride control products and systems for the automotive original equipment market and the aftermarket.

HCA softens

HCA Inc.'s term loan B was a touch weaker on the day with sources attributing the loss more to market technicals than to the recent repricing that was announced.

The term loan B closed the day at par 7/8 bid, 101 1/8 offered, down from 101 bid, 101¼ offered, the trader said.

On Monday, news surfaced that the company would be repricing its term loan B at Libor plus 225 bps from Libor plus 275 bps.

The company will also be repricing its term loan A at Libor plus 225 bps from Libor plus 250 bps and its European term loan at Euribor plus 225 bps from Euribor plus 250 bps.

Bank of America is the lead bank on the repricing.

HCA is a Nashville, Tenn., health care services company.

NEP price talk

Moving to the primary, NEP Broadcasting held a bank meeting on Tuesday to kick off syndication on its $355 million credit facility, and at the launch, price talk on the deal surfaced, according to a market source.

Both the $325 million term loan B and the $30 million revolver were presented to lenders with talk of Libor plus 250 bps, the source said.

The term loan is covenant-light and the revolver has one maintenance covenant, the source added.

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

Proceeds from the credit facility will be used to help fund American Securities Capital Partners, LLC's acquisition of a majority equity interest in the company from Apax Partners, LP and Spectrum Equity Investors.

NEP is a Pittsburgh-based provider of outsourced teleproduction services used in the delivery of live sports and entertainment events.

ClientLogic closes

ClientLogic Corp. completed its acquisition of Sitel Corp. for $4.25 in cash per share, according to a news release.

To help fund the transaction, ClientLogic got a new $760 million senior secured credit facility (B2/B+) consisting of a $675 million term loan B priced at Libor plus 250 bps and an $85 million revolver priced at Libor plus 275 bps.

During syndication, pricing on the term loan B was reverse flexed from original talk at launch of Libor plus 275 bps on strong investor demand.

The facility freed for trading late in the day Monday, and the term loan B was being quoted at par ¾ bid, 101 offered on Tuesday, a market source said.

Goldman Sachs and General Electric Capital Corp. acted as the lead banks on the, with Goldman the left lead.

In addition to funding the acquisition, the new credit facility refinances $321.9 million of existing ClientLogic debt.

ClientLogic, a portfolio company of Onex Corp., is a Nashville, Tenn., global business process outsourcing provider in the customer care and back office processing industries. Sitel is an Omaha, Neb., provider of outsourced customer support services.

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