Deluxe cuts first-lien spreads, ups revolver; Vertafore oversubscribed; Jarden dips on numbers

By Sara Rosenberg

New York, Jan. 12 - Deluxe Entertainment Services Group made a round of changes to its credit facility Thursday, including reverse flexing pricing on the first-lien term loan B and revolver, upsizing the revolver and accelerating the commitment deadline for term loan B orders.

In other primary news, Vertafore Inc.'s credit facility has now already reached oversubscription levels as orders have continued to pour in since the deal first launched last week.

In secondary happenings, Jarden Corp.'s term loans backpedaled as the company announced that it now expects fourth-quarter earnings per share to fall short of analyst estimates.

Deluxe Entertainment tweaked its credit facility, lowering pricing on the first-lien term loan B as the tranche was more than two times oversubscribed, increasing the size of the revolver while at the same time lowering pricing on this tranche as well, adding a Canadian borrower under the term loan B and moving up the commitment deadline by a couple of days, according to a market source.

The $457.5 million five-year term loan B (B1) is now priced with an interest rate of Libor plus 375 basis points, compared to original price talk at launch of Libor plus 400 to 425 basis points, the source said.

In addition, a Canadian borrower was added under the term loan B for a breakdown of $405.5 million to be borrowed by the U.S. borrower and $52 million to be borrowed by the Canadian borrower.

Meanwhile, the five-year revolver (B1) was upsized to $150 million from an original size of $125 million and pricing was also reverse flexed to Libor plus 375 basis points from original price talk at launch of Libor plus 400 to 425 basis points, the source continued. The revolver carries a 100 basis point commitment fee.

There is a likelihood that a chunk of the revolver will be synthetic, but that hasn't been carved out as of yet, the source added.

Lastly, the commitment deadline for term loan B orders has been moved up to this Friday from Jan. 20 being that the book was so oversubscribed. The commitment deadline for revolver orders remained set at the originally planned date of Jan. 20.

Deluxe's $150 million 51/2-year second-lien term loan (B3) was left unchanged, with pricing remaining at Libor plus 825 basis points. This tranche was pre-sold to investors prior to the actual bank meeting.

Credit Suisse First Boston and Bear Stearns are joint lead arrangers and joint bookrunners on the $757.5 million credit facility, with CSFB also acting as administrative agent and Bear Stearns acting as syndication agent.

Proceeds from the credit facility will be used to help fund MacAndrews & Forbes Holdings Inc.'s purchase of the Deluxe film processing and creative services business from The Rank Group plc for $750 million.

The transaction is subject to obtaining clearances from U.S., Canadian and Spanish antitrust authorities and the approval of Rank shareholders at an extraordinary general meeting to be held this coming Monday.

Deluxe is a provider of products and services to the motion picture industry.

Vertafore overfills

Vertafore's credit facility is now oversubscribed with orders coming in from new and existing lenders, according to a market source.

The $335 million credit facility consists of a $30 million five-year revolver talked at Libor plus 275 basis points with a 50 basis point commitment fee, a $180 million six-year first-lien term loan B talked at Libor plus 275 basis points and a $125 million seven-year second-lien term loan talked at Libor plus 650 basis points.

The second-lien term loan contains call protection of 102 in year one and 101 in year two.

Credit Suisse First Boston and JPMorgan are joint lead arrangers and joint bookrunners on the deal, with CSFB also acting as administrative agent, JPMorgan acting as syndication agent and Wachovia acting as documentation agent.

Proceeds will be used for a dividend recapitalization.

Vertafore, a portfolio company of Hellman & Friedman LLC, is a Windsor, Conn., enterprise software and information services provider to the property and casualty insurance industry.

Jarden trades off

Jarden's term loan debt weakened by an eighth to a quarter of a point, depending on the tranche, after the company revealed that it expects fourth-quarter earnings per share to be in the range of $0.50 to $0.54, way short of analyst estimates of $0.66 per share, according to a trader.

The old term loan (term B-1) closed the session quoted at par ¼ bid, par ¾ offered, down a quarter of a point from previous levels, the trader said.

And, the new term loan (term B-2) closed the session quoted at par 5/8 bid, 101 offered, down an eighth of a point from previous levels, the trader continued. However, during market hours this tranche was softer by as much as a quarter of a point before bouncing back a little, the trader added.

"The stock hit a year low today. It closed down $3.37. But, it still feels like there's buying interest in the loan even though it was off a touch," the trader concluded.

Not all news was bad for Jarden. The company did announce that it anticipates fourth-quarter revenue will exceed $960 million, which is above analyst estimates that are in the $880 million to $890 million range.

Jarden went on to say that adjusted EBITDA for the fourth quarter is estimated to be in the range of $95 million to $100 million and adjusted earnings-per-share range for the year ended Dec. 31, 2005 are anticipated at $2.10 to $2.14.

For fiscal 2006, the company expects to generate organic sales growth in the 3% to 5% range and to meet its stated minimum as adjusted earnings-per-share growth target of 15%, while continuing to generate strong free cash flow.

Jarden is a Rye, N.Y.-based provider of niche consumer products used in and around the home.

Secondary hangs tough

The overall secondary loan market had another pleasant day of strong volume, although not as strong as has been seen over the past couple of sessions, with levels generally hanging in there despite apparent heaviness in other markets.

"It definitely felt like things held in today. Equities were off. High yield was heavy from what I gather. But the loan market still felt firm," a trader said.

"Volume is still strong but not as high as it has been. People are looking at the new deals," the trader added.

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