Targus Information rises; Triple Point revises structure, pricing; Drug Royalty pulls loan

By Sara Rosenberg

New York, Oct. 12 - Targus Information Corp.'s (TargusInfo) term loan B was quoted higher in the secondary market on Wednesday on the back of the company's announcement that it is being acquired by Neustar Inc.

Over in the primary, Triple Point Technology Inc. came out with changes to its credit facility that included downsizing the funded term loan while lifting pricing and discount price, and eliminating the delayed-draw loan from the capital structure.

Also, Drug Royalty II LP1 removed its term loan from the market as the company did not want to flex pricing higher to fill out the transaction, and since it was an opportunistic refinancing, the company had the ability to put the loan on the backburner for now.

TargusInfo up on buyout

Targus Information's term loan was quoted at par bid, 102 offered on Wednesday, versus levels of 98½ bid, par ½ offered prior to the company's acquisition by Neustar being disclosed, according to traders, who said that activity is very light in the name.

The term loan was obtained early this year at a size of $175 million and with pricing of Libor plus 525 basis points with a 1.75% Libor floor. It was sold at an original issue discount of 98 and includes call protection of 102 in year one and 101 in year two.

As was previously reported, Neustar is buying the company for about $650 million in cash, including repayment of outstanding debt, and has received a commitment for a new $700 million senior secured credit facility led by Morgan Stanley Senior Funding Inc. - comprised of a $100 million revolver and a $600 million term loan B - to help fund the transaction. Closing is expected in the fourth quarter.

TargusInfo is a Vienna, Va.-based provider of real-time, on-demand information and analytics services. Neustar is a Sterling, Va.-based provider of solutions and directory services that enable communication across networks, applications and enterprises.

Triple Point tweaks deal

Moving to the primary, Triple Point Technology made a round of revisions to its credit facility that resulted in the overall deal size dropping to $185 million from $255 million, and wider coupon and discount, according to a market source.

Under the new structure, the six-year term loan is sized at $165 million and priced at Libor plus 650 bps with a 1.5% Libor floor and an original issue discount of 96, the source said. This compares to initial terms of a $185 million loan talked at Libor plus 600 bps with a 1.5% floor and a discount of 97.

As before, the term loan provides for 101 soft call protection for one year.

With the downsizing, the company also cancelled plans for a $50 million delayed-draw term loan that was available for funding until February.

Triple Point lead banks

Credit Suisse Securities (USA) LLC and GE Capital Markets are the lead banks on Triple Point's credit facility, which also includes a $20 million five-year revolver.

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

Proceeds, along with mezzanine debt and equity, will be used to fund the buyout of the company by Welsh, Carson, Anderson & Stowe. The delayed-draw loan is available for acquisition funding.

Prior to the changes, the credit facility was rated at B by Standard & Poor's.

Triple Point Technology is a Westport, Conn.-based provider of software for end-to-end commodity management.

Drug Royalty shelves deal

Drug Royalty II LP1 decided that it made more sense to put its $155 million term loan (Ba2/BB+) "on hold" than move forward with its refinancing at higher pricing, a markets source told Prospect News on Wednesday.

"Investors liked the deal, and [they] had orders to price a deal, but [the] borrower was not willing to pay a revised spread," the source said.

The deal was "put on hold because of market dislocation over the last four weeks," the source continued.

He went on to say that the transaction may resurface late this year or early in 2012, if market conditions are suitable.

Drug Royalty details

Drug Royalty launched its term loan with a bank meeting on Sept. 14 at price talk in the Libor plus 450 basis points context with a 1.25% Libor floor and an original issue discount of 99 to 991/2.

The loan included 101 call protection but only in the event of a change of control.

Macquarie Capital (USA) Inc. was leading the deal and had set an original commitment deadline of Sept. 29.

Drug Royalty is a specialty pharmaceutical royalty acquisition company that is managed by DRI Capital.

Kinetic sees interest

In other news, Kinetic Concepts Inc.'s $2.2 billion term loan B is "off to a good start" with a bunch of orders already in the books, but it is a large deal to fill out and there has been reverse inquiries from some investors about certain changes that could persuade them to get involved, according to a market source.

The source said that some CLOs have expressed an interest in a shorter-dated term loan tranche, and that there might be some bank interest too. The tranche wouldn't necessarily be an amortizing loan, but it would have a shorter maturity than the seven years currently offered on the term loan B.

While there have been some talks going on between the leads and potential investors, no decision has been made on any changes to the term loan B, and at this point, these reverse inquiries about maturity are simply just chatter, the source added.

Kinetic price talk

Kinetic Concepts' term loan B is being guided at Libor plus 575 bps with a 1.25% Libor floor and an original issue discount of 95½ to 96, and the tranche includes soft call protection of 102 in year one and 101 in year two.

Originally, based on filings with the Securities and Exchange Commission, it was thought that the B loan would be sized at $2.6 billion, but, at launch, guys were told that it would be $400 million smaller, and as a result, the company's proposed second-lien senior secured notes offering was upsized to $1.65 billion from $1.25 billion.

The company is also planning on getting $900 million of unsecured debt, although the form in which this debt comes is still to be determined. It was thought that it would be issued in the high-yield market, but the tranche was dropped earlier this week. There is a $900 million senior unsecured bridge loan backing this financing.

Kinetic getting revolver

Kinetic Concepts' $2.4 billion senior secured credit facility (Ba3/BB-), which is being marketed in the United States and in Europe, also provides for a $200 million five-year revolver.

Commitments are due on Oct. 19, and funding is expected on Nov. 4.

Bank of America Merrill Lynch, Morgan Stanley & Co. LLC, Credit Suisse Securities (USA) LLC and RBC Capital Markets LLC are the lead arrangers and bookrunners on the deal, and UBS Securities LLC is a co-manager.

Total leverage is 6.0 times last-12-months EBITDA, and leverage through the first-lien is 2.9 times.

Kinetic funding buyout

Proceeds from Kinetic Concepts' credit facility, bonds and about $1.75 billion of equity will be used to fund the purchase of the company by Apax Partners, Canada Pension Plan Investment Board and the Public Sector Pension Investment Board for $68.50 per share in cash in a transaction valued at $6.3 billion, including outstanding debt.

Closing is expected in the second half of this year, subject to certain conditions, including shareholder and regulatory approvals. It is not subject to financing.

A special meeting for shareholders to approve the transaction is set for Oct. 28.

Kinetic Concepts is a San Antonio-based medical technology company.

DigitalGlobe closes

DigitalGlobe completed its $600 million senior secured credit facility (Ba3/BB+) consisting of a $100 million revolver and a $500 million term loan B, according to a news release.

Pricing on the term loan B is Libor plus 450 bps with a 1.25% Libor floor, and it was sold at a discount of 971/2. Price talk on the loan had been Libor plus 425 bps to 450 bps with a discount of 97½ to 98.

There is 101 soft call protection for one year on the B loan.

Morgan Stanley & Co. LLC and J.P. Morgan Securities LLC led the deal that is being used to fund a tender offer for the company's $355 million of 10½% senior secured notes due 2014 and for general corporate purposes, including stock repurchases and acquisitions.

DigitalGlobe is a Longmont, Colo.-based content provider of high-resolution earth imagery products and services.

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