Federal IT trades at 101 on break; Mapco oversubscribed; Carmeuse cuts term loan pricing

By Sara Rosenberg

New York, April 20 - Federal Information Technology Inc. allocated its $100 million credit facility (B2/B+) on Wednesday, with the term loan B bid in the high par context.

Meanwhile, in the primary market, Mapco Express Inc.'s credit facility was comfortably oversubscribed ahead of Wednesday's commitment deadline, PennEngineering made some modifications to its deal, including a step down in pricing to its first-lien term loan, and Carmeuse North America lowered pricing on its term loan by 25 basis points.

Federal IT's $90 million term loan B traded a couple of times at 101 level and then came in to be bid at par 5/8 by day's end with really no offers, according to a fund manager.

The tranche, which was originally issued at par, is priced with an interest rate of Libor plus 275 basis points with a step down to Libor plus 250 basis points if net leverage is less than 2.75x.

Originally, the deal was launched with a size of $80 million and priced at Libor plus 300 basis points, but the size was increased and pricing came down as the tranche was more than three times oversubscribed. In fact, the deal was going so well that the book had to be shut down about a week early.

And, with such strong demand, allocations were expected to be pretty weak and were described as "fair at best" when they were given out on Wednesday, the fund manager said.

Federal IT's facility also contains a $10 million revolver, but that tranche is not being sold as the two lead banks on the deal - Bear Stearns and Wachovia, with Bear Stearns the left lead - have decided to account for that portion of the transaction.

Proceeds from the facility will be used to help fund the acquisition of Sensor Systems Inc. Federal IT is currently a Kelso portfolio company but with this transaction, Pegasus Advisors is being added as an equity sponsor.

Following closing of the transaction total leverage will be around 3.7x.

Federal IT is a Morristown, N.J.-based provider of information technology services to the intelligence defense sector. Sensor Systems is a Sterling, Va.-based developer of image exploitation and analysis software primarily for the intelligence community.

Mapco oversubscribed

Mapco Express Inc.'s $165 million six-year term loan was heard to be two times oversubscribed with more commitments expected before Wednesday's end-of-day commitment deadline, according to a fund manager.

The term loan is currently priced with an interest rate of Libor plus 275 basis points.

The $205 million credit facility (B2/B+) also contains a $40 million five-year revolver with an interest rate of Libor plus 225 basis points.

Lehman is the sole lead bank on the deal. Bank Leumi and SunTrust joined on as agents.

Proceeds will be used to refinance existing debt and to fund a small dividend to the parent company.

Mapco is a Franklin, Tenn., convenience store and wholesale petroleum distribution company.

PennEngineering adds step down

PennEngineering added a step down in pricing to the $155 million six-year first-lien term B (B2/B) and increased the size of its revolving credit facility (B2/B) to $25 million from $20 million, according to a market source.

The first-lien term loan is priced with an interest rate of Libor plus 250 basis points - the same spread as the deal was originally launched with - but can now step down to Libor plus 225 basis points under certain conditions, the source said.

Pricing on the upsized five-year revolver remained unchanged at Libor plus 250 basis points with a 50 basis point commitment fee.

The facility also contains a $60 million seven-year second-lien term loan (B3/CCC+) with an interest rate of Libor plus 600 basis points. This tranche, which carries call protection of 102 in year one and 101 in year two, was left unchanged in terms of size and pricing throughout syndication.

Credit Suisse First Boston and PNC Bank are joint lead arrangers on the deal, with CSFB the left lead.

Proceeds from the $240 million credit facility will be used to help fund the leveraged buyout of PennEngineering by PEM Holding Co., an affiliate of Tinicum Capital Partners II LP.

PEM is acquiring the company from Penn Engineering & Manufacturing Corp. in a cash transaction valued at about $330 million. Under the terms of the agreement, stockholders of PennEngineering will receive $18.25 in cash for each share of PennEngineering common stock and class A common stock. The acquisition is expected to be completed in the first half of this year.

PennEngineering is a Danboro, Pa., provider of value-added solutions to computer, electronics, telecommunications and automotive OEMs.

Carmeuse cuts spread

Carmeuse North America reverse flexed pricing on its $180 million term loan to Libor plus 175 basis points from Libor plus 200 basis points; however, the tranche still has the ability to step up to Libor plus 200 basis points, along with the ability to step down to Libor plus 150 basis points, under certain conditions, according to a market source.

The $230 million credit facility also contains a $50 million revolver.

BNP Paribas is the lead bank on the deal that will be used to refinance debt.

Carmeuse is a Pittsburgh-based producer of lime and limestone products.

Midwest Generation closes

Midwest Generation LLC completed its refinancing, getting a new $300 million revolving credit facility with an interest rate of Libor plus 225 basis points and repricing its term loan, according to an 8-K filed with the Securities and Exchange Commission Wednesday.

The company drew all $300 million under the new revolver and used the proceeds to pay down an equivalent portion of its existing term loan.

Following this paydown, pricing on the now approximately $343 million term loan went down to Libor plus 200 basis points from Libor plus 325 basis points.

On Tuesday, one day after Midwest Generation closed on the total refinancing package, indirect parent company Edison Mission Energy contributed $300 million in equity to Midwest Generation and Midwest Generation used the proceeds of this equity contribution to repay the new revolver's outstanding balance.

The new revolver carries a commitment fee of 50 basis points.

Midwest Generation's existing $200 million working capital facility due 2009 remained in place.

Citibank and Credit Suisse First Boston acted as joint lead arrangers on the Chicago electric company's deal, with Citibank the left lead and administrative agent.

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