Huntsman, Bally break at plus 101 levels; Boise Cascade term loans oversubscribed

By Sara Rosenberg

New York, Oct. 13 - Huntsman LLC and Bally Total Fitness Holding Corp. both made their way into the secondary loan market and both saw their institutional tranches head into the plus 101 arena. Meanwhile, on the primary side, although the commitment deadline hit at the end of business Wednesday for Boise Cascade LLC's deal, there were no worries as the $2.5 billion plus of institutional paper portion is oversubscribed.

Huntsman's $715 million term loan B (B2/B) was quoted at 101¼ bid, 101½ offered by one trader and closer to 101 3/8 bid, 101 5/8 offered by a second trader. Although sources agreed that the deal was probably reasonably active during market hours, no one had seen specific volume information.

The term loan is priced with an interest rate of Libor plus 350 basis points and contains soft call protection of 101 in year one against a refinancing. Originally the tranche was launched with price talk of Libor plus 350 to 375 basis points.

Huntsman's $1.065 billion credit facility also contains a $350 million asset-based revolver (B1/BB-) with an interest rate of Libor plus 225 basis points.

Deutsche Bank is the lead bank on the Salt Lake City chemical company's refinancing deal.

Bally tops 101

Bally's term loan was quoted "surprisingly strong," according to a market source, who placed the bid at 101 5/8 with no offers. However, a second trader claimed that there were definitely offers in the market and that the more accurate context for levels was 101½ bid, 102 offered.

"It's a small deal so it hasn't really traded actively," the second trader added.

The tranche is priced with an interest rate of Libor plus 475 basis points and contains soft call protection of 102 in year one and 101 in year two that only applies in the context of a refinancing. Originally, the term loan was launched with pricing of Libor plus 450 basis points but was flexed up with the addition of the soft call toward the end of last week.

At that time, the syndicate also added a grid to the existing revolver that provides for pricing of Libor plus 400 basis points as long as leverage is greater than 5.25x and revolver lenders were paid a 10 basis point amendment fee for approving the transaction.

J.P. Morgan Securities Inc. is the lead arranger on the deal that will be used to refinance existing debt including the existing $100 million securitization facility.

The term loan will increase the company's liquidity by $75 million, which will be used for general corporate purposes.

Bally Total Fitness is a Chicago-based commercial operator of fitness centers.

Boise oversubscribed

Boise Cascade LLC's $1.33 billion seven-year term loan B and $1.225 billion six-year term loan C are "pretty significantly oversubscribed," according to a market source, an impressive feat being that there was so much institutional paper to be soaked up.

The B loan is talked at Libor plus 250 basis points, and the C loan is talked at Libor plus 225 basis points. The tranches, which were offered at par, were sold as a package, meaning that all commitments that came in were sold on a proportional basis, the source explained.

The reason behind the 25 basis point variation in pricing between the term loan B and the term loan C has to do with a repayment provision. If the company sells the timberland assets, proceeds repay the term loan C in its entirety before going toward the term loan B, and there are plans to sell the assets, a source previously explained.

Boise Cascade LLC, a new company formed by Madison Dearborn Partners LLC that will be based in Boise, Idaho, is getting this new credit facility to acquire Boise Cascade Corp.'s paper, forest products and timberland assets for about $3.7 billion.

Under the timberland portion of the acquisition, Boise Cascade LLC will own or control about 2.3 million acres of timberland in the United States, 35,000 acres of eucalyptus plantations in Brazil, and a 16,000-acre cottonwood fiber farm near Wallula, Wash.

Also being acquired is Boise Building Solutions, a producer of plywood, lumber, particleboard and engineered wood products, and Boise Paper Solutions, a manufacturer of uncoated free sheet papers.

Boise's $2.905 billion credit facility (Ba3/BB), which launched Sept. 29, also contains a $350 million six-year revolver talked at Libor plus 225 basis points. The revolver "which is coming in nicely," according to the market source, has an undrawn fee of 50 basis points. Revolver commitments of $15 million get 75 basis points upfront.

In addition to getting the new credit facility, the company is selling $650 million of bonds to help fund this transaction as well. The acquisition is expected to close by mid-November.

JPMorgan and Lehman Brothers are joint lead arrangers on the loan, with JPMorgan listed on the left. Deutsche Bank and Goldman Sachs are agents.

United Subcontractors filling up

The books on United Subcontractors Inc.'s $211 million credit facility "are almost full," according to a market source, who said that the deal seems to be progressing well.

Although the Sept. 28 bank meeting was well attended, it did appear as if it took investors a couple of days to get comfortable with the transactions before placing any orders.

The facility consists of a $30 million revolver talked at Libor plus 325 basis points, a $155 million first-lien term loan talked at Libor plus 325 basis points and a $26 million second-lien term loan talked at Libor plus 700 basis points.

Royal Bank of Scotland and Citigroup are the lead banks on the deal, with Royal Bank of Scotland listed on the left.

Proceeds from the credit facility, along with $34 million of mezzanine debt, will be used to help fund Wind Point Partners' leveraged buyout of United Subcontractors.

United Subcontractors is a Salt Lake City-based installer of residential and commercial insulation systems and provider of complementary products and services related to the industry.

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