Asurion shifts funds, ups first-lien spread; Movie Gallery falls on numbers; Yell breaks

By Sara Rosenberg

New York, Aug. 10 - In primary news Thursday, Asurion Corp. tweaked its credit facility structure, moving some funds between the first- and second-lien term loans and increasing pricing on the first lien.

In the secondary, Movie Gallery Inc.'s term loan B fell by about 2 points after the company reported disappointing second-quarter earnings, and Yell Group plc's credit facility freed for trading.

Asurion made a round of changes to its $980 million credit facility, shifting some funds out of the first-lien term loan B and into the second-lien term loan and raising pricing on the first-lien debt, according to a market source.

The first-lien term loan B is now sized at $615 million, down from an original size of $740 million, and pricing was flexed up to Libor plus 300 basis points from original talk at launch of Libor plus 275 basis points, the source said.

On the flip side, the second-lien term loan is now sized at $290 million, up from an original size of $165 million, the source continued. Pricing on this tranche remained at initial talk of Libor plus 625 basis points.

Asurion's credit facility also contains a $75 million revolver.

Under the modifications, the opening first-lien leverage covenant is now 4.75x as opposed to the originally contemplated 5.25x and the fixed charge coverage ratio is now 1.15 as opposed to the originally proposed 1.2x, the source added.

Commitments are due on Friday.

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

Proceeds will be used to refinance existing debt and fund a $680 million dividend payment.

Asurion is a Nashville, Tenn., provider of mobile protection services for the wireless telecommunications industry.

Thermo Fluids adds step

Thermo Fluids Inc. added a step down provision under its $79 million five-year term loan, under which pricing can drop from Libor plus 300 basis points (which has been the talk since launch) to Libor plus 275 basis points when total leverage falls below 4x, according to a market source.

At close of this transaction, total leverage will be around 5.3x.

Thermo Fluids' $99 million credit facility also includes a $10 million revolver and a $10 million unfunded acquisition line, with both of these tranches also priced with an interest rate of Libor plus 300 basis points.

The acquisition line carries an undrawn fee of 75 basis points that can drop to 50 basis points if more than $5 million is drawn. It is available for two years, with a five-year final maturity.

In addition, the company is getting $24 million of eight-year mezzanine debt at 12% cash pay and 1% pay-in-kind. The PIK amount was reduced from original talk of 2% at launch.

RBS Securities is the lead arranger and bookrunner on the deal that will be used to back the already completed acquisition of Thermo Fluids by CIVC Partners, LP.

Thermo Fluids is a Phoenix-based producer of commercial fuel oil from recovered used oil.

Rexair allocates add-on

Rexair Inc. allocated its $55 million term loan B add-on (B1/B) on Thursday and is now scheduled to close on the transaction on Friday, according to a market source.

The add-on is priced with an interest rate of Libor plus 425 basis points, in line with existing term loan B pricing.

Proceeds from the incremental bank debt are being used to repay the company's second-lien term loan and fund a dividend payment.

During syndication, the add-on was upsized by $5 million from $50 million resulting in a $5 million increase to the dividend being paid.

Credit Suisse and Goldman Sachs are the lead banks on the deal.

Rexair is a Troy, Mich.-based manufacturer of the Rainbow vacuum cleaner system for the global direct sales market.

Movie Gallery slides on earnings

In secondary happenings Thursday, Movie Gallery announced second-quarter numbers that disappointed investors, causing its term loan B to weaken, along with its bonds and equity, according to a trader.

The term loan B bounced around throughout the session, with some quoting it as low as 95½ bid, 96½ offered by the end of the day, while others said that levels closed more around the 96¼ bid, 96¾ offered context. Either way, the paper was definitely down from Wednesday's closing levels of 97 1/8 bid, 97 5/8 offered, traders remarked.

For the second quarter, the company reported a net loss of $14.9 million, or $0.47 per diluted share, compared with a loss of $12.2 million, or 39 cents per share, during the same period last year.

Other second-quarter results included total revenues of $601.3 million as compared to $504.7 million in the comparable period last year and adjusted EBITDA of $57.6 million.

Year to date, Movie Gallery's net income was $25.5 million, or $0.80 per diluted share, revenues were about $1.3 billion and adjusted EBITDA was $174.4 million.

The Dothan, Ala.-based video rental company also announced on Thursday that it has hired Merrill Lynch & Co. as an adviser to explore opportunities to strengthen its balance sheet.

In addition, Alvarez & Marsal Inc. has been hired to immediately fill several vacancies in Movie Gallery's accounting and finance functions, to shorten the lead time for implementing specific turnaround initiatives, to assist in the remediation of previously identified material weaknesses and deficiencies in internal control over financial reporting, to facilitate the ongoing integration process and improve overall operating performance.

"Our business continues to be affected by a weak home video release schedule and other industry-wide challenges, but we are making great progress on a number of internal initiatives intended to improve Movie Gallery's financial and operational performance," said Joe Malugen, chairman, president and chief executive officer, in a company news release.

"In the meantime, Movie Gallery is aggressively pursuing opportunities to increase revenues and further improve operating efficiencies. We have engaged Merrill Lynch to advise us on ways to improve our capital structure as well as Alvarez & Marsal, a leading turnaround management, restructuring and corporate advisory firm," Malugen added in the release.

Yell frees to trade

Yell Group's credit facility freed for trading on Thursday with the U.S. portion of the term loan B quoted at par 3/8 bid, par 7/8 offered and the euro portion of the term loan B quoted around the 101-type area, according to a trader.

The £1.2 billion term loan B is priced with an interest rate of Libor plus 200 basis points.

Yell's £4.6 billion credit facility also contains a £3.6 billion term loan A and a £400 million revolver, with both of these tranches priced at Libor plus 175 basis points.

Citigroup, Deutsche, Goldman Sachs and HSBC acted as the lead banks on the deal.

Yell is a Reading, England-based publisher of directories.

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