Department 56 lowers price talk, nets orders; Huntsman, Flowserve break; Calpine softens

By Sara Rosenberg

New York, Aug. 10 - Department 56 Inc.'s credit facility has already started to get some firm investor interest in the short time it's been in-market even though the term loan was launched with lower-than-expected price talk.

In secondary doings, Huntsman International LLC and Flowserve Corp. broke for trading in the 101 context, and Calpine Corp. headed lower as investors were disappointed by the revelation that they would not be getting a pay down soon.

Department 56's $275 million credit facility was launched with somewhat of a surprise for investors as the syndicate decided to go out with opening price talk of Libor plus 350 basis points on the $100 million six-year first-lien term loan (B1/BB-) as opposed to price talk of Libor plus 400 basis points that was previously being contemplated, according to a market source.

However, despite this pre-launch reverse flex, the deal already has a "few tickets in the book" as it launched via a "well attended" bank meeting on Tuesday, the source said.

As expected, the $175 million five-year asset-based revolver (Ba3/BB-) was launched with opening price talk of Libor plus 225 basis points.

UBS is acting as the sole lead arranger on the transaction.

Proceeds from the new credit facility will be used to help fund Department 56's acquisition of Lenox Inc. from Brown-Forman Corp. for $190 million in cash.

The collateral package is divided into two parts with the asset-based revolver having a first lien on the current assets and general intangibles, while the term loan has a first lien on all property, plant and equipment, M&E and tradenames, including the Lenox brand name.

For the 12 months ended June 30, on a pro forma basis, including Lenox, the company generated revenue of $595.4 million and adjusted EBITDA of $55.1 million.

Leverage is about 3.5x.

Department 56 is an Eden Prairie, Minn., designer, wholesaler and retailer of fine quality collectibles and other giftware products. Lenox is a Lawrenceville, N.J., designer, wholesaler, manufacturer and retailer of fine china dinnerware, crystal, flatware and other tabletop products.

Huntsman tops 101

Huntsman International's $1.725 billion U.S. term loan B freed up for trading on Wednesday, with opening and closing levels quoted at 101¼ bid, 101½ offered, according to traders. However, during the session the paper did come in a touch to 101 1/8 bid, 101 3/8 offered before bouncing back, one trader added.

"It's a big deal. [It's] just finding its feet," the trader said in explanation of the momentary softening.

The term loan is priced with an interest rate of Libor plus 175 basis points and was originally issued to investors at par. Pricing came in from original price talk at launch of Libor plus 200 basis points during syndication on strong demand.

Huntsman's facility also contains a $650 million revolver, which was upsized from $600 million during syndication, with an interest rate of Libor plus 175 basis points and a €100 million term loan B tranche, which was downsized from €150 million during syndication, with an interest rate of Libor plus 200 basis points.

Deutsche Bank and Citigroup are the lead banks on the Salt Lake City-based chemical company's deal (Ba3/BB-), with Deutsche the left lead.

Proceeds will be used to help fund the merger of Huntsman LLC and Huntsman International LLC, two subsidiaries of Huntsman Corp., into one entity with Huntsman International being the surviving entity.

The purpose of the merger is to simplify Huntsman's financing and SEC reporting structure, facilitate cost reductions for Huntsman's bank credit facilities and other financing arrangements, and for other organizational efficiencies.

As part of this merger, the existing bank debt at both Huntsman LLC and Huntsman International is being retired. As of March 31, Huntsman International had a $375 million revolver that was undrawn and about $1.178 billion of term loan B debt outstanding, as well as a €45.1 million term loan. Huntsman LLC had about $715 million of term loan B debt outstanding as of March 31 and about $61.3 million drawn under its $350 million revolver.

Flowserve breaks

Flowserve's $600 million term loan freed up for trading late Wednesday, with the paper quoted at 101 3/8 bid, 101 5/8 offered on the break, according to a trader.

The term loan is priced with an interest rate of Libor plus 150 basis points. Pricing came in from original talk of Libor plus 175 basis points during syndication.

Flowserve's $1 billion credit facility (Ba3/BB-) also contains a $400 million revolver with an interest rate of Libor plus 175 basis points.

Bank of America and Merrill Lynch & Co. are the lead banks on the deal, with Bank of America the left lead.

Proceeds will be used to refinance at a lower blended interest rate the company's existing term loan A and term loan C debt, existing revolver and its outstanding 12¼% senior subordinated notes.

Flowserve is an Irving, Texas, provider of fluid motion and control products and services.

Calpine lower

Calpine Corp.'s second-lien term loan came in by about a point or two as investors discovered they would not be getting a pay down that they had been counting on.

San Jose, Calif.-based energy company Calpine revealed in its latest 10-Q filing that some of the proceeds from the Saltend Energy Centre sale were used to purchase gas as opposed to paying down second-lien debt, according to a trader.

The bank debt was quoted at 81 bid, 83 offered by Wednesday's close, the trader added.

CSK closes

CSK Auto Corp. closed on its new $250 million asset-based five-year senior secured revolving credit facility, which is expected to be subsequently increased by an additional $75 million to a total of $325 million, according to a company news release.

The revolver carries an interest rate that can range from Libor plus 125 to 175 basis points, depending on availability.

JPMorgan acted as the lead bank on the deal that is being used to refinance existing debt, fund a common stock repurchase and for general corporate purposes.

CSK is a Phoenix-based specialty retailer of automotive parts and accessories.

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