Boart tweaks structure; Wesco cuts pricing, shift funds; Dura slide continues; Chiquita softens

By Sara Rosenberg

New York, Sept. 25 - Boart Longyear Co. reworked the structure of its credit facility resulting in lower leverage multiples, as the first-lien 18-month term loan was removed, the first-lien term loan B was upsized and an unsecured 18-month term loan at the holding company level was added.

In other primary news, Wesco Aircraft Hardware Corp. lowered pricing on its first- and second-lien term loans and also moved some funds around between the two tranches.

Switching over to the secondary, Dura Automotive Systems Inc.'s second-lien bank debt dropped another couple of points on general sector nervousness and Chiquita Brands International Inc.'s term loan weakened slightly after the company revealed that recent business challenges are expected to significantly impact third-quarter financial results.

Boart Longyear made some changes to its credit facility structure, including increasing the size of the first-lien term loan B, adding a new holdco unsecured term loan and eliminating the 18-month first-lien term loan, according to a market source.

With the tweaks, the six-year first-lien term loan B is now sized at $770 million, up from an original size of $650 million, but, the company will still be required to amortize $120 million of first-lien debt within the first 18 months, the source said. Pricing on this tranche was left unchanged at Libor plus 325 basis points.

In addition, under the changes, a new $200 million senior unsecured 18-month holdco term loan was added to the capital structure with price talk set at Libor plus 850 basis points cash pay, the source continued.

Meanwhile, the company's $320 million 18-month first-lien capital markets term loan that was being talked at Libor plus 325 basis points was removed from the deal altogether, the source added.

These modifications reduce operating company leverage to 4.8 times total from 5.7 times under the original structure and first-lien leverage to 3.4 times from 4.4 times.

Boart's $1.395 billion credit facility also includes a $125 million five-year revolver talked at Libor plus 325 basis points and a $300 million seven-year second-lien term loan talked at Libor plus 700 basis points with call protection of 102 in year one and 101 in year two. Both the revolver and the second lien are unchanged since launch.

Previously it was whispered around the market that existing Boart investors were unhappy with the original structure of the deal, saying that it was over levered and that they weren't fond of the 18-month first-lien capital markets term loan.

With the modifications announced Monday, it seems like the syndicate addressed those issues as leverage was brought down and the controversial tranche was removed.

Credit Suisse is bookrunner on the deal that will be used to help fund the acquisition of a majority interest in Boart Longyear by an investor group led by Macquarie Bank Ltd.

Macquarie's investor group will own a 51% stake in the business, while existing sponsors Advent International, Bain Capital and management will roll over $200-plus million and retain a 49% stake in the company.

Concurrently, Boart Longyear is acquiring two businesses, Northwest Drilling and Drillcorp, increasing Sept. 30 last-12-month EBITDA to $225 million.

Boart Longyear is a Salt Lake City-based drilling-services provider.

Wesco trims spreads

Wesco Aircraft also came out with some changes to its credit facility on Monday, as pricing on the first- and second-lien term loans was reverse flexed and $15 million was moved out of the second lien and into the first lien, according to a fund manager.

The seven-year first-lien term loan B (Ba3/B+) is now sized at $450 million, up from an original size of $435 million, and pricing on the paper came down to Libor plus 225 basis points from original talk at launch of Libor plus 250 basis points, the fund manager said.

As for the 71/2-year second-lien term loan (Caa1/B-), that is now sized at $150 million, down from an original size of $165 million, and pricing on the paper came down to Libor plus 575 basis points from original talk at launch of Libor plus 650 basis points, the fund manager added.

These term loan tranches were heard to be hugely oversubscribed as of last week, making the reverse flexes somewhat unsurprising.

Wesco Aircraft's $675 million credit facility also contains a $75 million six-year revolver (Ba3/B+) with an interest rate of Libor plus 250 basis points, in line with original price talk.

Lehman Brothers and Bank of America are the lead banks on the facility, with Lehman the left lead.

Proceeds will be used to help fund leveraged buyout of Wesco Aircraft by The Carlyle Group.

Wesco Aircraft is Valencia, Calif., distributor of aerospace hardware and provider of inventory management services.

Applied Systems cuts B pricing

Applied Systems Inc. reverse flexed pricing on its $220 million seven-year first-lien term loan B to Libor plus 275 basis points from Libor plus 300 basis points as the tranche was five times oversubscribed, according to a market source.

At launch the term loan had been talked at Libor plus 275 to 300 basis points, but during the syndication process pricing seemed to firm up at the high end of guidance, at which point commitments came flying in from investors leaving room for the reverse flex.

Applied Systems' credit facility also includes a $30 million six-year revolver with an interest rate of Libor plus 300 basis points. This tranche was also originally launched with talk of Libor plus 275 to 300 basis points.

Credit Suisse and JPMorgan are the lead banks on the credit facility, with Credit Suisse the left lead.

Proceeds will be used to help fund the leveraged buyout of Applied Systems by Bain Capital Partners from Vista Equity Partners, LLC. Chairman and chief executive officer James P. Kellner will remain a significant investor in the company.

In addition to the credit facility, the company will be getting $165 million of eight-year mezzanine debt for acquisition financing.

Applied Systems is a University Park, Ill., provider of insurance agency and broker management system software.

California Check upsizes

California Check Cashing Stores increased the size of its six-year first-lien term loan to $65 million from $60 million and decreased the amount of funding that would be needed under its $10 million six-year revolver, according to a market source.

Pricing on the term loan and the revolver remained unchanged at Libor plus 350 basis points, the source added.

California Check Cashing's now $90 million credit facility also includes a $15 million seven-year second-lien term loan with an interest rate of Libor plus 725 basis points No changes have been made to this second-lien tranche.

UBS is the lead bank on the deal that will be used to help fund Golden Gate Capital's leveraged buyout of the company.

California Check Cashing is an Oakland, Calif., retailer of alternative financial services including check cashing, short-term consumer loans, wire transfers via Western Union and bill payment services

Exco ups price talk

Exco Resources Inc. increased price talk on its $750 million five-year second-lien term loan to Libor plus 500 to 550 basis points from original talk at launch of Libor plus 450 basis points, according to a market source.

This is the second change made to the term loan since it first launched on Sept. 11 - the first change being the addition of a cash flow sweep and a capital expenditures requirement.

Exco's $1.5 billion senior secured credit facility also includes a $750 million four-year revolver with pricing ranging from Libor plus 100 to 175 basis points based on utilization. Initial pricing on the revolver will be Libor plus 175 basis points.

The revolver was already launched to senior managing agents in late July.

JPMorgan and Credit Suisse are leading the second-lien term loan, with JPMorgan the left lead. JPMorgan is the lead bank on the revolver. Goldman Sachs and Bear Stearns are co-managers.

The credit facility is being borrowed by a wholly owned unrestricted subsidiary of Exco to fund the acquisition of Winchester Energy Co. Ltd. from Progress Energy, Inc. for $1.2 billion in cash, subject to purchase price adjustments. The debt will be non-recourse to Exco Resources.

Credit statistics for the transaction include first-lien net debt to EBITDA of 2.5 times and net debt to EBITDA of 5.4 times.

Exco's existing amended and restated revolving credit facility will remain in place following this transaction.

The acquisition is expected to close on Oct. 2, subject to customary conditions to closing and governmental clearance.

Exco is Dallas-based independent energy company.

Dura drops again

In trading happenings, Dura Automotive's second-lien bank debt continued to slide lower on Monday as investors still seem to be coming to grips with the recent influx of negative sector news, according to a trader.

The second-lien paper closed the day at 89 bid, 91 offered, down from Friday's closing levels of 92½ bid, 93½ offered, the trader said.

"It's all technical related," the trader added.

Dura's bank debt has been on people's radars since talk of a potential bankruptcy filing surfaced the other week, as well as talk that the company is having a hard time lining up debtor-in-possession financing on favorable terms.

Then, late last Tuesday, Dura was informed that that it was in danger of being delisted from the Nasdaq Global Market, since its stock price has been below $1 per share for at least 30 consecutive days. But, the company has six months to fix the situation.

And then on Wednesday, Dura's ratings were lowered by Moody's Investors Services, including the second-lien ratings, which were dropped to Caa2 from Caa1 by Moody's.

But, also affecting Dura's performance is the recent barrage of disappointing news that has come from other auto related companies. For example, last week, Lear Corp. lowered its previously issued net sale and core operating earnings guidance because of production cuts, Ford Motor Co. got downgraded deeper into junk by both Moody's and Standard & Poor's, and DaimlerChrysler AG's Chrysler Group announced delivery reductions.

Dura is a Rochester Hills, Mich.-based automotive parts maker.

Chiquita weakens

Chiquita's term loan was slightly lower in trading on Monday after the company announced that third-quarter financials are expected to be significantly impacted by difficult market conditions and continuing uncertainties, according to a trader.

These difficult conditions include changes in the rules regarding banana imports into the European Union, markedly lower banana prices, lower sales and unforeseen costs due to current industry concerns regarding the safety of fresh spinach and the need to invest additional funds to reinforce consumer confidence in the quality of its products and food safety standards.

Chiquita also said on Monday that it is working on two initiatives designed to enhance financial flexibility and reduce debt - the exploration of strategic alternatives for the sale and long-term management of its shipping assets and shipping-related logistics activities, and the suspension of its quarterly dividend.

The company has been working with Fortis Securities as a financial adviser to support the exploration of strategic alternatives.

On the heels of these announcements, Chiquita's term loan closed the day quoted at 99¾ bid, par 1/8 offered, down by maybe an eighth of a point, the trader said.

Chiquita is a Cincinnati-based marketer and distributor of bananas and fresh produce products.

Directed Electronics closes

Directed Electronics Inc. closed on its $407 million credit facility, consisting of a $307 million term loan that includes $141 million of tack-on debt and $166 million of existing debt, and a $100 million revolver that includes $50 million of tack-on debt and $50 million of existing debt, according to a company news release.

The $50 million revolver add-on is seasonal, for the peak working capital months of October through February.

Both the term loan and the revolver are priced with an interest rate of Libor plus 250 basis points.

CIBC and JPMorgan acted as co-lead arrangers and bookrunners on the deal.

Proceeds were used to fund the approximately $136 million cash acquisition of Polk Audio and refinance existing debt.

Directed Electronics is a Vista, Calif.-based designer and marketer of consumer branded vehicle security and convenience systems.

Orthofix closes

Orthofix International NV closed on its new $375 million credit facility (Ba3/BB-) consisting of a $330 million term loan and a $45 million revolver, with both tranches priced at Libor plus 175 basis points, according to a company news release.

During syndication, pricing on the transaction was reverse flexed from original talk of Libor plus 200 basis points on strong investor demand.

Wachovia and Citigroup acted as the lead banks on the deal.

Proceeds were used to fund the acquisition of Blackstone Medical, Inc.

Orthofix is a Curacao, the Netherlands-based diversified orthopedic products company.

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