Acco sets talk; EnviroSolutions upsizes, cuts spread; Magellan, Coffeyville, Hercules break for trading

By Sara Rosenberg

New York, June 30 - Price talk on Acco Brands Corp. credit facility surfaced as the company launched the deal into syndication Thursday morning. And, EnviroSolutions Holdings Inc. upsized its term loan, while at the same time reducing pricing on the tranche.

In secondary doings, Magellan Midstream Holdings LP allocated its term loan, with the deal freeing up for trading in the lower 101 context. Coffeyville Resources Inc. also opened for trading, with the first-lien term loan quoted wrapped around par ½ and the second-lien term loan quoted wrapped around 102. And, Hercules Offshore LLC's term loan started trading in the low 101 area.

Acco Brands announced opening price talk of Libor plus 200 basis points on all tranches as syndication kicked off through a 10 a.m. ET Thursday bank meeting, according to a market source.

The $750 million credit facility (BB-) contains a $150 million five-year revolver, a $200 million five-year term loan A and a $400 million seven-year term loan B.

Citigroup and ABN Amro are the lead banks on the deal, with Citi left lead.

Proceeds from the term loans will be used to help fund Fortune Brands Inc.'s spin-off of Acco World Corp. and merger of Acco with General Binding Corp. to form a new entity called Acco Brands. Revolver borrowings will be available for general corporate purposes.

Immediately following the merger, Fortune Brands stockholders and Acco World's current minority stockholder will together own 66%, and General Binding's stockholders will own 34% of the shares of common stock of the new company on a fully diluted basis.

According to a recent filing with the Securities and Exchange Commission, Acco Brands will also be issuing $350 million of senior subordinated notes in a public offering, Rule 144A offering or other private placement to fund the spin-off and merger as well. The company has received a commitment for a $350 million junior secured term loan C as a back up for the bond deal.

Acco is an Illinois-based supplier of branded office products.

EnviroSolutions tweaks deal

EnviroSolutions increased the size of its term loan to $185 million from $175 million and decreased pricing on the enlarged tranche to Libor plus 350 basis points from original price talk of Libor plus 375 to 400 basis points, according to a market source.

Pricing on the $40 million revolver was left unchanged at Libor plus 350 basis points, the source added.

Deutsche Bank and Lehman Brothers are the lead banks on the now $225 million senior secured credit facility (B2/B-), with Deutsche left lead.

Proceeds will be used to refinance existing debt.

EnviroSolutions is a Chantilly, Va., integrated solid waste management company.

Mid-Western cuts spread

Mid-Western Aircraft Systems reverse flexed pricing on its $700 million 6 1/2-year term loan to Libor plus 225 basis points from Libor plus 275 basis points and has asked lenders to recommit to the deal by Friday, according to a market source.

Pricing on the $175 million revolver was left at Libor plus 275 basis points, the source added.

Citigroup is the sole lead bank on the $875 million credit facility (B1/BB-) that will be used to help fund Onex Corp.'s acquisition of the Wichita/Tulsa Division of Boeing Commercial Airplanes (now named Mid-Western Aircraft Systems).

The acquisition, which was first announced in February, is valued at $1.5 billion consisting of approximately $1.1 billion in cash and the assumption of certain liabilities.

Mylan cuts spread

Mylan Laboratories Inc. reverse flexed pricing on its $275 million term loan to Libor plus 150 basis points from Libor plus 175 basis points, according to a market source.

Merrill Lynch is the sole bookrunner on the $475 million five-year credit facility (Ba1/BBB-) that also contains a $200 million revolver.

Proceeds from the Canonsburg, Pa., pharmaceutical company's term loan will be used to help fund its Dutch auction self-tender offer for up to approximately 48.8 million shares, or up to $1 billion, of its common stock.

Under the tender offer shareholders will have the opportunity to tender some or all of their shares at a price not less than $18.00 per share or more than $20.50 per share.

Mylan also plans on issuing $500 million in 10-year unsecured senior notes via Merrill Lynch to fund the stock buyback.

Revolver borrowings will be available for general corporate purposes.

The tender offer is currently scheduled to expire on July 15.

BI-LO flex expected

Market talk is that pricing on BI-LO LLC's $345 million six-year term loan B will be going up to Libor plus 400 basis points from Libor plus 325 basis points, although no official announcement has come from the syndicate as of yet, according to a buy-side source.

And, speculation is that if the term loan flexes up to that new pricing level, the $75 million five-year revolver is likely to follow and end up with a spread of Libor plus 400 basis points as well, as opposed to the Libor plus 325 basis points rate that the tranche was launched with, the buy-side source added.

Bear Stearns is the sole lead bank on the $420 million credit facility (B1/B).

Proceeds will be used to refinance some acquisition loans that were put in place by the sponsors.

With this new deal, bank leverage will be less than 2x and total debt will be in the mid-3x area.

BI-LO is a Greenville, S.C., supermarket operator that was bought by Lone Star Funds early this year from Royal Ahold.

Magellan trades in low 101s

Magellan Midstream's $275 million term loan (Ba3/BB-) opened for trading Thursday at 101 bid, 101¼ offered and then ticked up about an eighth of a point in relatively quiet trading to 101 1/8 bid, 101 3/8 offered by late day, according to a trader.

The term loan is priced with an interest rate of Libor plus 212.5 basis points after a recent reverse flex from original price talk of Libor plus 225 basis points.

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

Proceeds will be used to refinance existing bank debt and make a distribution to owners.

Magellan Midstream is a Tulsa, Okla., transporter, storer and distributor of refined petroleum products and ammonia.

Coffeyville breaks

Coffeyville Resources' $800 million credit facility freed up for trading on Thursday afternoon, with the first-lien term loan trading in the 101 3/8 bid, 101 5/8 offered context and the second-lien term loan trading in the 101 ½ bid, 102 ½ offered context, according to a trader.

The $275 million seven-year term loan B (B1/BB-) is priced with an interest rate of Libor plus 275 basis points and the $275 million eight-year second-lien term loan (B3/B) is priced with an interest rate of Libor plus 675 basis points.

Coffeyville's credit facility also contains a $100 million six-year revolver (B1/BB-) with an interest rate of Libor plus 275 basis points and a $150 million six-year synthetic letter-of-credit facility (B1/BB-) with an interest rate of Libor plus 275 basis points.

Credit Suisse First Boston and Goldman Sachs are joint lead arrangers on the deal.

Proceeds will be used for acquisition financing.

Coffeyville Resources is a Kansas City, Kan., supplier of petroleum and nitrogen fertilizer products.

Hercules Offshore breaks

Hercules Offshore's $140 million five-year term loan B (B2/B-) freed up for trading Thursday as well, with the paper quoted at 101 bid, 101 ½ offered, according to a trader.

The term loan, which was upsized from an original size of $130 million, is priced with an interest of Libor plus 325 basis points. Pricing on the deal was reverse flexed from original price talk of Libor plus 350 basis points during syndication.

The term loan contains 101 soft call protection for one year, a provision which was also to the deal during syndication.

Citigroup and Credit Suisse First Boston are joint lead arrangers on the deal, with Citi left lead.

Proceeds from the term loan will be used to refinance existing debt.

Hercules Offshore is a Houston-based jack-up drilling and liftboat contractor.

Knology closes

Knology Inc. closed on its new $305 million senior secured credit facility, consisting of a $185 million five-year first-lien term loan B (B3) with an interest rate of Libor plus 550 basis points, a $95 million six-year second-lien term loan (Caa2) with an interest rate of Libor plus 850 basis points plus 150 basis points PIK and a $25 million five-year revolver (B3) with an interest rate of Libor plus 550 basis points and a 75 basis points commitment fee.

Originally, the first-lien term loan was sized at $165 million and price talk was Libor plus 350 basis points, but the tranche was increased and pricing was flexed up on two occasions - once to Libor plus 450 basis points and then to the final pricing level.

The second-lien term loan was originally sized at $115 million and pricing was Libor plus 850 basis points cash interest plus 100 basis points PIK interest, but the size was decreased when the first-lien was increased and pricing was upped through an increase in the PIK interest.

The revolver was also originally talked at Libor plus 350 basis points, but that too was flexed up on two occasions - once to Libor plus 450 basis points and then to the final pricing level.

Financial covenants contained in the credit agreement include ratio of total debt to EBITDA, ratio of EBITDA to cash interest, limitation on capital expenditures and, for the first-lien only, ratio of first-lien debt to EBITDA.

Both the first-and second-lien term loan contain call protection.

Credit Suisse First Boston acted as the sole lead bank on the deal that is being used to refinance the company's existing credit facility, repay existing senior notes and for general corporate purposes. The company's existing Wachovia and Cobank facilities have been paid in full and the existing 12% senior notes have been called and are expected be paid in full at par within 30 days.

"We are pleased to complete the debt refinancing transaction The new debt facilities combined with the $9.2 million equity we recently raised will significantly improve our liquidity position. In addition, the pending Cerritos market sale will further bolster our balance sheet," said Rodger L. Johnson, president and chief executive officer, in a company news release.

"Our primary goal for this transaction is to create liquidity for our business so that we can continue to grow revenue and EBITDA. We continue to work on developing the business by focusing on generating cash flows through organic growth. We believe this transaction will allow the business to grow in a way that creates value for our investors and other constituents," added Robert Mills, chief financial officer, in the release.

Knology is a West Point, Ga. provider of interactive communications and entertainment services.

URS closes

URS Corp. closed on its new $650 million credit facility (Ba1) consisting of a $300 million five-year revolver with an interest rate of Libor plus 125 basis points and a 25 basis points commitment fee, and a $350 million six-year term loan with an interest rate of Libor plus 125 basis points.

Credit Suisse First Boston and Wells Fargo acted as joint lead arrangers on the deal that is being used to repay amounts outstanding under the existing $675 million credit facility and for working capital and general corporate purposes. CSFB is the administrative agent and Wells Fargo is the syndication agent.

In addition, the company's tender offer for its outstanding 11½% senior notes due 2009 expired, and, through the expiration date, $127.175 million in principal amount of notes had been tendered, representing 97.8% of the principal amount of outstanding notes.

"Today's announcement represents the successful completion of the three actions we commenced on June 1 to further reduce the company's debt and interest expense," said Martin M. Koffel, chairman and chief executive officer, in a company news release.

"The tender offer for the notes, which was primarily financed with our recently completed follow-on equity offering, will result in significant interest cost savings, and we will realize additional savings under the new credit agreement. I am pleased with our ability to successfully complete these important transactions, which build on the significant progress we have made over the past several years to strengthen our financial position and to improve stockholder value."

URS is a San Francisco-based engineering design services firm.

Laidlaw closes

Laidlaw International Inc. closed on its new $600 million credit facility (Ba2/BBB-) consisting of a $300 million term loan due 2010 and a $300 million revolver, with both tranches priced at Libor plus 125 basis points.

Citigroup Global Markets Inc. and UBS Securities LLC acted as joint lead arrangers on the deal.

Proceeds are being used to help retire the existing public debt of approximately $560 million issued by Laidlaw and Greyhound Lines Inc., a wholly owned subsidiary, and refinance the existing revolver.

"This financing is an important element in the improvement of our balance sheet," said Kevin Benson, president and chief executive officer, in a company news release. "It enables us to use the proceeds from the sale of the healthcare assets to significantly reduce total borrowings, the costs of which benefit from the recent upgrade of our credit rating to investment grade."

Laidlaw is a Naperville, Ill., holding company for North America's largest provider of school and inter-city transport and public transit services.

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