National Mentor breaks; Cooper shifts funds, cuts pricing; K&F greatly oversubscribed

By Sara Rosenberg

New York, Oct. 29 - National Mentor broke for trading on Friday, with the term loan B opening in the low 101 context and steadily climbing higher throughout the session. In primary happenings, The Cooper Cos. Inc. made a number of revisions to its in-market $750 million credit facility (Ba3/BB) while K&F Industries Inc.'s term loan B was multiply oversubscribed.

National Mentor's $175 million term loan B was quoted at 101 5/8 bid, 102 offered by late day, according to traders. The tranche is priced with an interest rate of Libor plus 325 basis points.

The term loan originally came to market with price talk in the Libor plus 350 basis points area but was reverse flexed Tuesday as price talk of 9 5/8% to 9 7/8% surfaced on the company's $150 million offering of eight-year senior subordinated notes. The bonds ended up pricing at 9 5/8% on Wednesday.

JPMorgan and Bank of America are the lead banks on the deal, with JPMorgan listed on the left.

The $255 million credit facility (B1/B+) also contains an $80 million six-year revolver.

Proceeds from the bank deal and the bonds will be used to refinance existing debt and redeem preferred stock held by Madison Dearborn Partners.

National Mentor is a Boston provider of community-based, residential, in-home and out-of-home services to people with developmental disabilities, children with emotional and behavioral challenges, and people with acquired brain injury.

Cooper reworks loan

Cooper Cos. shuffled around its credit facility by moving $100 million from its term loan A tranche into its term loan B tranche, and the company also reduced pricing on the institutional and pro rata paper by 25 basis points each.

The seven-year term loan B is now sized at $250 million, up from $150 million; the five-year term loan A is now sized at $225 million, down from $325 million; and the revolver remained sized at $275 million, according to a market source.

Furthermore, pricing on all three tranches went down to Libor plus 175 basis points from original price talk of Libor plus 200 basis points.

"There was definitely strong institutional appetite but that's not necessarily the reason behind the shift in funds," the source said. "It was just the company's decision."

The term loan B was offered to investors at par, while the revolver and term loan A both contained upfront fees - although the specifics of those fees are not being made public.

Allocations on the credit facility are anticipated to take place some time next week.

Key Banc Capital Markets and JPMorgan Chase Bank are the lead banks on the deal, with Key Banc listed on the left.

Security will be substantially all assets of the combined Cooper-Ocular entity.

Proceeds will be used to help fund the acquisition of Ocular Sciences Inc. in a merger for stock and cash at a cost of about $1.2 billion, to refinance existing bank debt, and to provide for working capital and general corporate needs.

Under the acquisition agreement, Cooper will pay about $600 million in cash and issue approximately 10.3 million shares of its common stock to Ocular Sciences stockholders and option holders. The transaction is expected to close in the first quarter of Cooper's 2005 fiscal year, which begins on Nov. 1, 2004.

Cooper Cos. is a Pleasanton, Calif., healthcare products company. Ocular Sciences is a Concord, Calif., manufacturer and marketer of soft contact lenses.

K&F blows out

K&F Industries' $430 million eight-year term loan B, which launched on Oct. 21, has already built a book that is somewhere around $1.5 billion strong and the commitment deadline is still almost a week away, according to market sources.

The term loan is being talked at Libor plus 275 basis points. As of now, there hasn't been any sort of discussion about a reverse flex simply because the syndicate is waiting on ratings before making any decisions, a source told Prospect News. However, based on the amount of demand, some market participants believe a price cut is inevitable.

Commitments are due Nov. 4.

The $505 million senior secured credit facility also contains a $75 million six-year revolver talked at Libor plus 250 basis points.

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

Proceeds from the credit facility, along with proceeds from a $365 million senior subordinated note issue that kicked off Friday, and a $315 million equity contribution from Aurora Capital Group, will be used to help finance Aurora's acquisition of the company for a cash purchase price of $1.06 billion.

The acquisition is scheduled to close in November.

K&F is a New York supplier to manufacturers and operators of commercial, general aviation and military aircraft. The company is jointly owned by Bernard L. Schwartz and Lehman Brothers Merchant Banking.

Choctaw reverse flex

Choctaw Resort Development Enterprise lowered pricing on its approximately $143.8 million term loan (Ba3/BB) to Libor plus 225 basis points from Libor plus 250 basis points, according to a market source.

Bank of America is the lead bank on the deal that is expected to allocate next week, with Monday being the target date.

Proceeds from the term loan, combined with proceeds from a $150 million 15-year amortizing senior note offering that priced this week at par to yield 7¼%, will be used to fund the tender offer for the company's 9¼% senior notes due 2009 and repay some existing bank debt.

The tender offer is scheduled to expire on Nov. 10.

Choctaw Resort Development Enterprise was established by the Mississippi Band of Choctaw Indians to operate the Silver Star Hotel and Casino and to develop and operate the Golden Moon Hotel and Casino.

Jarden oversubscribed

Jarden Corp.'s $850 million seven-year term loan B reached oversubscription levels over the past couple of days way ahead of the Nov. 8 commitment deadline, according to a market source.

Orders first started pouring in from institutional investors almost immediately after the deal first launched on Oct. 21, with guys throwing in big tickets under the expectation that the deal would be a blowout since the company is well known and well liked, a market source previously explained.

The term loan is talked at Libor plus 250 basis points and is being offered at par.

Jarden's $1.05 billion senior secured credit facility (B1/B+) also contains a $200 million five-year revolver talked at Libor plus 250 basis points. A commitment of $15 million on the revolver gets an upfront fee of 50 basis points.

The revolver is essentially going to get done through relationship banks and, as was previously reported, prior to the meeting Bank of America had already signed on as a co-documentation agent.

Citigroup Global Markets and CIBC World Markets are joint lead arrangers and bookrunners on the deal, with Citigroup listed on the left.

Proceeds from the credit facility will be used to refinance existing debt and help finance the acquisition of American Household Inc. for $745.6 million, including the assumption of debt. The company will also receive a $350 million equity contribution from Warburg Pincus to help fund the acquisition.

The acquisition is expected to close during the first quarter of 2005, subject to Hart-Scott-Rodino approval and other customary closing conditions.

Upon closing, total debt to adjusted EBITDA is anticipated to be around 3.75x.

Jarden is a Rye, N.Y., provider of niche consumer products. American Household is a Boca Raton, Fla., consumer products company that produces such brand names as BRK, Campingaz, Coleman, First Alert, Health o meter, Mr. Coffee, Oster and Sunbeam.

Boise Cascade closes

Madison Dearborn Partners LLC completed its acquisition of Boise Cascade Corp.'s paper, forest products and timberland assets for approximately $3.7 billion through its newly formed company named Boise Cascade LLC, according to a news release.

Boise, Idaho-based Boise Cascade LLC got a new $2.955 billion credit facility (Ba3/BB) to help fund the acquisition, consisting of a $1.33 billion seven-year term loan B with an interest rate of Libor plus 225 basis points, a $1.225 billion six-year term loan C with an interest rate of Libor plus 225 basis points and a $400 million six-year revolver with an interest rate of Libor plus 225 basis points and an undrawn fee of 50 basis points.

Originally, the term loan B was launched with pricing of Libor plus 250 basis points and the revolver was launched with a size of $350 million, but the term B reverse flexed and the revolver was upsized during syndication.

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

Dresser-Rand closes

First Reserve Corp. completed its acquisition of Dresser-Rand Co. from Ingersoll-Rand Co. Ltd. for about $1.2 billion in cash, according to a company news release.

To help finance the acquisition, Dresser-Rand got a new $700 million credit facility (B1/B+) consisting of a $300 million term loan with an interest rate of Libor plus 200 basis points, a $100 million euro term loan with an interest rate of Libor plus 275 basis points, and a $300 million revolver with an interest rate of Libor plus 250 basis points.

The $300 million term loan was originally priced at Libor plus 250 basis points but it was reverse flexed during syndication on overwhelming investor demand.

Citigroup and Morgan Stanley were the lead banks on the deal, with Citigroup listed on the left. UBS was involved as well.

Olean, N.Y.-based Dresser-Rand is a supplier of infrastructure equipment, including compressors, turbines and engines, as well as related after-market parts and services, to the energy industry.

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