Peabody falls on repricing only to rebound by late day; Medco trades down on refinancing

By Sara Rosenberg

New York, March 1 - Peabody Energy Corp.'s term loan was seen trading lower in the beginning of the day as the company essentially wrapped its repricing of the tranche, but the paper did rebound by late afternoon. Meanwhile, Medco Health Solutions Inc. headed lower on a proposed refinancing that is expected to take out all term loan B paper.

Peabody Energy's term loan traded off to par 3/8 in reaction to the repricing, but by late day, the term loan traded back up to par 5/8 bid, par ¾ offered, according to a trader.

"The repricing just finished up. People wanted to get out at par 3/8 bid and now it's moved back up," the trader explained.

The company repriced its term loan with an interest rate of Libor plus 175 basis points from Libor plus 250 basis points.

Peabody Energy is a St. Louis private sector coal company.

Medco down on refinancing

Medco's term loan B traded down to around par from around 101 5/8 on Monday after news emerged that the company plans to obtain a new approximately sized $800 million term loan A to take out its existing term loan A and term loan B, according to a trader.

"Everybody will be taken out at par. They're looking for Libor plus 1.5%. I don't think the majority of the institutional market can even do anything with that," the trader added.

Medco is a Franklin Lakes, N.J., pharmacy benefit manager.

Goodyear active

The Goodyear Tire & Rubber Co.'s add-on to its asset-based credit facility "traded around a little bit" on Monday with quotes relatively unchanged at 99½ bid, par offered, according to one trader, while a second trader placed it even higher saying that he saw bids throughout the day at 99¾ and at par, and that the offer side had moved up to par 1/4.

"I like it because it's an asset-based deal. [There is] tons of coverage," the first trader said.

Early last week, the Akron, Ohio-based tire company's paper was said to be heavy as a couple of large accounts had too much exposure leading to technicals of better sellers than buyers. But, toward the end of the week, the heaviness lifted and the paper rebounded to the near par levels that are currently being seen.

Calpine may return

Talk was floating around the market that Calpine Corp. is going to be bringing its recently cancelled financing package back to the market but with a different underwriter this time around. Deutsche Bank was the lead bank on the pulled bond and bank deals that were going to be used to refinance the CCFC II revolver.

"I've heard rumblings but nothing concrete," a trader said.

Calls to the company to confirm this information were not returned prior by press time.

Calpine Corp.'s CCFC II revolver traded a bit with one trader saying that some trades took place in the 97½ context, while a second trader said that the level seemed a little high and placed the revolver at 96½ bid, 97½ offered.

Calpine is a San Jose, Calif., power company.

AMS Services restructured

AMS Services Inc.'s credit facility underwent a number of changes late last week including a repricing and a resizing of all tranches that ended up increasing the entire facility to $110 million from $100 million, according to a fund manager.

The four-year revolver is now sized at $20 million, increased from an original size of $10 million, and pricing on the tranche was reduced to Libor plus 325 basis points from Libor plus 350 basis points. There is a 50 basis points commitment fee on the revolver.

The four-year term loan was upsized to $70 million from $60 million and pricing was reduced to Libor plus 325 basis points from Libor plus 350 basis points.

Lastly, the six-year second lien term loan was downsized to $20 million from $30 million and pricing on the tranche was reduced to Libor plus 650 basis points from Libor plus 700 basis points, according to the fund manager.

Credit Suisse First Boston is the sole lead arranger on the recapitalization deal.

AMS Services is a Windsor, Conn., enterprise software and information services provider to the insurance industry.

Solo closes

Solo Cup Co. completed the all-cash acquisition of SF Holdings Group Inc., which was funded through a new $800 million credit facility (B1/B+), a $325 million high-yield bond offering and a $240 million equity investment from Vestar Capital Partners.

The credit facility consists of a $650 million term loan B priced with an interest rate of Libor plus 250 basis points and a $150 million revolver priced with an initial interest rate of Libor plus 275 basis points.

Originally, the term loan B was talked in the Libor plus 275 basis points area but was reverse flexed during syndication due to incredibly strong investor demand. In fact, within two days of launching the B loan was said to have received about $700 million in commitments and within five days of launching there was about $1.5 billion in commitments on the books.

Bank of America is the lead bank on the deal.

"This is an important day for Solo Cup. We are looking forward to combining Solo and Sweetheart into one great company. With this acquisition, we gain important strategic benefits, including a broader array of products, a well respected brand, innovative technologies, a more efficient distribution network, and considerable economies of scale," said Ronald L. Whaley, president and chief operating officer of the combined entity, in a company news release. "We will leverage the tremendous potential of the complementary strengths of these two companies to set a new standard in customer service for the disposable foodservice products industry."

"We're excited to be working with Solo Cup's talented management team to help it create this unique opportunity to realize value from the marriage of Solo and Sweetheart," said John R. Woodard, Vestar Capital Partners managing director, in the release. "We were also particularly pleased with the very favorable reception this strategic combination received in the financing markets."

Solo Cup is based in Highland Park, Ill., and SF Holdings is based in Owings Mills, Md. Both companies are manufacturers and distributors of disposable foodservice and beverage-related products.

Dresser closes

Dresser Inc. closed on its new $360 million credit facility consisting of a $125 million six-year senior unsecured term loan (B1/B+) with an interest rate of Libor plus 350 basis points and a $235 million five-year senior secured term loan C (Ba3) with an interest rate of Libor plus 250 basis points. Morgan Stanley and Credit Suisse First Boston were the lead banks on the deal.

Due to market demand, the amount of the senior unsecured term loan was increased to $125 million, compared to the original intention of issuing a $100 million senior unsecured term loan. There was a corresponding decrease of $25 million in the issuance of the new term loan C, according to a company news release.

Proceeds were used to refinance and fully repay the company's approximately $382 million of term loan B debt.

Dresser is a Dallas designer, manufacturer and marketer of equipment for the energy industry.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.