Psychiatric Solutions sets price talk, meets with good reception; Outsourcing Solutions reworks tranching

By Sara Rosenberg

New York, June 16 - Psychiatric Solutions Inc. announced opening price talk on its proposed $475 million senior secured credit facility (B+) as the deal launched into syndication via a well attended bank meeting.

Meanwhile, Outsourcing Solutions Inc. shifted some funds from its revolving credit facility into its synthetic letter-of-credit facility, while maintaining the overall size of the $160 million credit facility.

Psychiatric Solutions came out with price talk of Libor plus 250 basis points on both its $325 million term loan due 2012 and $150 million amended and restated revolver due 2009 at its Thursday launch, according to a market source.

The term loan is being offered to investors at par.

As for the revolver, there are no upfront fees because it's an amendment and restatement of the existing $150 million revolver under which the company is seeking, among other things, permission to add the new term loan into the capital structure, the market source explained.

In order for the revolver amendment and restatement to be successful, 51% approval is needed from lenders.

Psychiatric Solutions' entrance into the term loan market on Thursday was viewed positively as the bank meeting saw strong attendance, lots of good questions were being asked at the launch and early indications regarding commitments have already been expressed by some investors - although by late afternoon there were no official commitments in the book, the source added.

Proceeds from the credit facility, along with the funds from a planned $150 million senior subordinated notes issue will be used to help fund the acquisition of 20 inpatient psychiatric facilities from Ardent Health Services and for general corporate purposes.

Citigroup is the sole lead bank on the deal.

Psychiatric Solutions is a Franklin, Tenn.-based provider of inpatient behavioral health care services.

Outsourcing Solutions shifts funds

Outsourcing Solutions moved $5 million to its synthetic letter-of-credit facility from its revolver, creating a new synthetic letter-of-credit facility size of $15 million (up from $10 million) and a new revolver size of $10 million (down from $15 million), according to a syndicate document.

Pricing on the two five-year tranches remained at Libor plus 450 basis points. The revolver contains a 50 basis point commitment fee.

Outsourcing Solutions' $160 million credit facility also contains a $135 million seven-year term loan B with an interest rate of Libor plus 450 basis points.

Credit Suisse First Boston is the sole lead arranger and sole bookrunner on the deal.

Proceeds will be used to refinance existing debt.

Outsourcing Solutions is a Chesterfield, Mo., accounts receivable management firm.

Calpine takes a breather

Calpine Corp.'s second-lien bank debt took a break on Thursday after a 2 to 3 point run-up during the previous session as no real bids and few offers seemed to materialize during market hours.

"That one was weird. I saw one offering at 86 today and that was high but that was it," a trader said. "I haven't seen a single bid."

On Wednesday, the second-lien debt closed out the session at 84½ bid, 85½ offered, but traded as high as 85¾ before settling down to those levels. By comparison, the bank debt opened Wednesday morning at 82½ bid, 83½ offered.

The rally and good trading flow were attributed to the company's announcement earlier in the week that it has entered into exclusive negotiations for the sale of four gas-fired power plants, representing nearly 850 megawatts of capacity with total proceeds from the sales estimated to be around $357 million.

Completion of these four asset sales is dependent upon the execution of definitive purchase and sale agreements for each plant and other terms and conditions, including regulatory approvals.

Net proceeds from any power plant sale would be used by the San Jose, Calif.-based power company to reduce debt and as permitted by its indentures.

Mid-Western funds, syndication

Mid-Western Aircraft Systems' $875 million credit facility funded as Onex Corp. completed its acquisition of the Wichita/Tulsa Division of Boeing Commercial Airplanes (now named Mid-Western Aircraft Systems) on Thursday.

However, the credit facility is still in the process of being syndicated - especially being that it just launched this past Tuesday.

"It was always planned that funding would happen during the syndication process," a market source said.

The facility consists of a $175 million revolver talked at Libor plus 275 basis points and a $700 million 61/2-year term loan talked at Libor plus 275 basis points.

Citigroup is the sole lead bank on the deal.

The acquisition of the Wichita/Tulsa Division of Boeing Commercial Airplanes, which was first announced in February, is valued at C$1.5 billion consisting of about C$1.1 billion in cash and the assumption of certain liabilities.

The equity investment of C$470 million will be made through Onex Partners and a number of its limited partners, including Onex Corp. itself.

Allegheny Energy closes

Allegheny Energy Inc. closed on its new $700 million senior unsecured credit facility consisting of a $400 million five-year revolver and a $300 million five-year term loan, with both tranches priced initially at Libor plus 200 basis points and containing step downs in the rate if credit ratings improve from current levels.

Citigroup Global Markets Inc. and Scotia Capital USA Inc. acted as joint lead arrangers on the deal, with Citigroup the left lead. Bank of America Securities LLC, Credit Suisse First Boston and PNC Bank acted as joint bookrunners.

Proceeds were used to refinance the company's existing credit facility and will also be used to refinance $300 million 7.75% senior notes due Aug. 1. The company intends to delay funding the term loan until Aug. 1 to coincide with the maturity of the notes.

"This refinancing will reduce interest expense by about $8 million per year," said Paul J. Evanson, chairman, president and chief executive officer, in a company news release. "The favorable interest rate on the new credit facility and the recent upgrades to our credit ratings demonstrate our improving financial condition."

Allegheny is a Greensburg, Pa., diversified utility holding company.

SBA repricing closes

SBA Senior Finance Inc. completed the repricing of its $325 million term loan B at Libor plus 225 basis points from Libor plus 275 basis points, according to an 8-K filed with the Securities and Exchange Commission.

The term loan contains 101 soft call protection for six months.

Lehman was the lead bank on the deal.

SBA is a Boca Raton, Fla., owner and operator of wireless communications infrastructure.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.