Hertz, Compass Minerals, Axia break; Amscan adds call premium, OID; EaglePicher retranches, reprices

By Sara Rosenberg

New York, Dec. 20 - The Hertz Corp. allocated its institutional bank debt on Tuesday, with the strip trading atop 101 throughout the session. Also breaking for trading was Compass Minerals Group, with the term loan quoted in the upper-pars, 101 type context. And Axia Inc.'s new deal freed up as well, with the term loan quoted atop par.

In primary happenings, Amscan Holdings Inc. added call protection and an original issue discount to its first-lien term loan tranche, and at the same time detailed the call protection and original issue discount on its recently added second-lien term loan tranche.

Also in the primary, EaglePicher Inc. shifted some funds from its second-lien term loan into its "second-out" term loan, combined its revolver and letter-of-credit facility into one revolver tranche, and revised pricing.

Hertz's $2.25 billion strip of institutional bank debt freed for trading early in the session Tuesday, with levels quoted at 101½ bid, 101¾ offered on the break (which was actually the high of the day) and then coming in to the 101 to 101 1/8 bid context, 101¼ to 101 3/8 offered context, depending on which trader was asked, by the end of the day.

"It was very active. [It was] trading around quite a bit," one source remarked.

The institutional portion of the credit facility (Ba2/NA/BBB-) consists of a $1.707 billion funded term loan, a $293 million delayed-draw term loan and a $250 million synthetic letter-of-credit facility.

The $1.707 billion funded term loan and the $250 million letter-of-credit facility are priced with an interest rate of Libor plus 225 basis points and contain a step down to Libor plus 200 basis points upon the company meeting a leverage test. During syndication, pricing was reverse flexed on these tranches from original price talk at launch of Libor plus 250 to 275 basis points and the step down was added.

The delayed-draw term loan tranche has a 112.5 basis point ticking fee, and once it is funded it will carry the same terms and pricing as the other term loan debt.

Originally, the company was planning on the full $2 billion of term loan debt to be funded debt; however, Hertz recently decided to carve this $293 million delayed-draw piece out of the term loan because $293 million of bonds were not redeemed in its tender offer.

Hertz's $3.85 billion credit facility also contains a $1.6 billion asset-based revolver (Ba2/NA/BBB) with an interest rate of Libor plus 200 basis points. Pricing on this tranche was reduced from Libor plus 225 basis points during syndication.

Deutsche Bank, Lehman Brothers and Merrill Lynch are the lead banks on the deal, with Deutsche the left lead.

Proceeds from the loan, along with bond proceeds, will be used to help fund the acquisition of Hertz by Clayton, Dubilier & Rice Inc., The Carlyle Group and Merrill Lynch Global Private Equity.

The equity sponsors are purchasing the Park Ridge, N.J, vehicle rental organization from Ford Motor Co. in a transaction valued at $15 billion.

Compass Minerals frees for trading

Compass Minerals allocated its credit facility as well, with the $350 million term loan quoted in the upper-par to 101 region, with levels varying depending on the trader asked. One trader had the paper at par ¾ bid, 101¼ offered, while a second trader had it quoted at par 5/8 bid, par 7/8 offered and a third trader had it quoted at par ½ bid, 101 offered.

The term loan is priced with an interest rate of Libor plus 150 basis points. During syndication, pricing on the tranche was reverse flexed from Libor plus 175 basis points.

Compass Minerals' $450 million senior secured credit facility (B1/BB-) also contains a $100 million revolver with an interest rate of Libor plus 175 basis points.

JPMorgan and Goldman Sachs are joint lead arrangers on the deal, with JPMorgan the left lead.

Proceeds from the facility will be used to help fund the tender offer for the company's $325 million 10% senior subordinated notes due 2011.

Compass is an Overland Park, Kan., producer of salt and sulfate of potash.

Axia breaks atop par

Axia's credit facility also freed up for trading on Tuesday, with the $150 million seven-year term loan quoted at par ¼ bid, no offers in early afternoon hours and through the remainder of the session, according to a fund manager.

The term loan is priced with an interest rate of Libor plus 325 basis points. Pricing on the tranche was flexed up from original price talk at launch of Libor plus 275 basis points - with the official Intralinks posting emerging on Monday but word of mouth news of the flex surfacing at the start of last week.

Axia's $175 million credit facility (B2/B) also contains a $25 million five-year revolver.

UBS is the lead bank on the deal that will be used, along with an equity contribution, to fund the purchase of Axia by Aurora Capital Group.

Axia is a Houston-based manufacturer of packaging and other industrial equipment and construction machinery through three business units.

Amscan adds call, OID

Amscan added call protection and an original issue discount to its first-lien term loan and posted details on second-lien term loan hard call protection and original issue discount provisions - which were always expected to be a part of the second-lien credit agreement but were previously to be determined, according to a buyside source.

The $325 million first-lien term loan (B2/B) will now carry call premiums of 102 in year one and 101 in year two, and will be issued to investors at a discount of 99, the source said. Pricing on the tranche, however, remained unchanged at Libor plus 300 basis points.

"They haven't clarified if the first-lien call protection is hard or soft," the source said. "I've told them I prefer it to be hard call. They're going to come back to me and let me know what the final decision is."

Meanwhile, the $65 million second-lien term loan (B3/B) will be non-callable for two years, and then callable at 102 in year three and 101 in year four, the source added. Furthermore, the second-lien term loan will be issued to investors at a discount of 98. Pricing on the tranche was left at Libor plus 500 basis points.

Last week, Amscan added the second-lien term loan to the credit structure and reduced the size of its first-lien term loan by $95 million from $420 million. When the second-lien term loan was first added to the deal, investors were told that there would be some sort of original issue discount on the tranche and call protection, but specifics had not bee announced.

Amscan's $475 million credit facility also contains an $85 million revolver (B2/B) with an interest rate of Libor plus 300 basis points.

Goldman Sachs and Bank of America are the lead banks on the deal that will be used to help back the leveraged buyout of Party City Corp. by Berkshire Partners LLC and Weston Presidio - who already owns Amscan.

To compensate for the $95 million first-lien downsizing and only $65 million second-lien addition, the sponsor will contribute an additional $30 million of equity, on top of the already committed $132 million equity contribution.

Under the terms of the LBO agreement, Party City shareholders will receive $17.50 per share in cash for each share of common stock outstanding for total consideration of about $360 million.

Party City is a Rockaway, N.J., party goods chain. Amscan is an Elmsford, N.Y., designer, manufacturer and distributor of decorative party goods.

EaglePicher tweaks deal

EaglePicher restructured its $295 million senior secured debtor-in-possession financing facility that is convertible into an exit financing facility upon court approval of a plan of reorganization, by shifting funds between various tranches and raising pricing on the term loan tranches.

With the changes, the company's "first-out" revolver is now sized at $70 million, up from $40 million as the $30 million synthetic letter-of-credit facility was removed altogether from the loan structure, according to a market source. Furthermore, pricing on the revolver has now been set at Libor plus 250 basis points.

Meanwhile, the "second-out" term loan has been upsized to $160 million from $150 million and pricing has been flexed up to Libor plus 450 basis points from Libor plus 400 basis points, the source said.

On the flip side, the second-lien term loan has been downsized to $65 million from $75 million and pricing has been flexed up to Libor plus 900 basis points from Libor plus 750 basis points, the source added.

Goldman Sachs is the lead bank on the deal.

Proceeds will be used to repay in full the company's existing bank debt and current DIP financing.

In addition, EaglePicher has received a commitment for $50 million of junior secured DIP financing at Libor plus 1,250 basis points on a payment-in-kind basis from Angelo, Gordon & Co. LP and Tennenbaum Capital Partners LLC.

EaglePicher is a Phoenix-based diversified manufacturer.

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