PennEngineering B loan breaks in high pars; Portfolio auctions steal spotlight; Jobson price talk emerges

By Sara Rosenberg

New York, April 28 - PennEngineering's $240 million credit facility freed up for trading on Thursday, with the first-lien term loan B quoted in the upper par context and the second-lien term loan wrapping around mid-par. But, really stealing secondary players' focus was two portfolio auctions that were said to have gone off during the session.

Meanwhile, in the primary, price talk came out on Jobson Medical Information LLC's credit facility as the deal launched via a well attended bank meeting on Thursday.

PennEngineering's $155 million six-year first-lien term B (B2/B) opened for trading with quotes of par ½ bid, 101 offered and the $60 million seven-year second-lien term loan (B3/CCC+) opened for trading with quotes of par bid, 101 offered, according to a trader.

Levels remained pretty consistent throughout the day with the paper labeled as "not extraordinarily active" with just a couple of trades going off, the trader added.

The first-lien term loan B is priced with an interest rate of Libor plus 250 basis points. Pricing on the tranche can step down to Libor plus 225 basis points under certain conditions - a provision that was added during syndication on strong demand.

The second-lien term loan is priced 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 throughout syndication.

PennEngineering's facility also contains a $25 million five-year revolver that was upsized from $20 million during syndication. The revolver is priced with an interest rate of Libor plus 250 basis points and contains a 50 basis point commitment fee.

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 original equipment manufacturers.

Portfolios grab attention

Two portfolios were said to have been auctioned off during market hours on Thursday, stealing much of the attention from secondary participants, according to sources.

"Most guys have been concentrating on the portfolios today," a trader said.

According to one source, a $166 million portfolio was auctioned off by Credit Suisse Alternative Capital consisting mostly of par names. This portfolio was won by Credit Suisse First Boston with a cover bid of 101.27.

The second portfolio was rumored to be around $100 million in size, although details on the seller and buyer were elusive. It was however said by one source that this second portfolio was "definitely smaller" than the first portfolio.

Calpine lower

Calpine Corp.'s second-lien bank debt was very active at lower levels on Thursday as bankruptcy rumors continued to swirl around the marketplace.

The paper was quoted at 71½ bid, 73 offered at the end of the session, compared to Wednesday's closing levels of 72 bid, 74 offered, according to a trader. However, trades did get as low as 69 or 69½ during Thursday market hours, the trader added.

Calpine's CalGen second-lien paper was quoted in the 91 bid, 94 offered type of range and the CalGen first-lien paper is quoted north of par, another trader said.

The bankruptcy rumors really started last Friday, affecting equity, bond and loan markets. Calpine put out a response to the Chapter 11 buzz saying that the rumors were false, that the company is in compliance with its corporate and project indentures, and that the company has no plans to file for bankruptcy.

Prior to last Friday's bankruptcy talk, the San Jose, Calif.-based power company's second-lien debt was quoted at 80 bid, 82 offered.

Jobson price talk

Opening pricing levels surfaced on Jobson Medical Information's $115 million credit facility as the deal launched via a very successful bank meeting that was so well attended that there was standing room only, according to a market source.

The $15 million five-year revolver and $75 million 61/4-year term loan B were launched with opening pricing of Libor plus 375 basis points, and the $25 million 63/4-year second-lien term loan was launched with opening pricing of Libor plus 700 basis points, the source said.

Both term loans are being offered to investors at par.

The second-lien term loan contains call protection of 102 in year one and 101 in year two.

Harris Nesbitt and Bank of New York are the lead banks on the deal, with Harris Nesbitt the left lead.

Proceeds will be used to help fund Wicks Medical Information LLC's acquisition of Jobson Publishing LLC, a privately held and owner managed company in which Boston Ventures is an active investor and financial partner.

Jobson Publishing is a Bloomfield, N.J., specialty healthcare communications, publishing and medical education company. Wicks Medical Information operates in the medical information services market.

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