CRC upsizes B loan, cuts spread; Vertafore reverse flexes, tweaks tranching; Lear steers higher on earnings

By Sara Rosenberg

New York, Jan. 25 - CRC Health Group decided to move some funds out of its bond offering and into its well received term loan B, while at the same time reducing pricing on the newly upsized institutional tranche.

In other primary happenings, Vertafore Inc. made a number of changes to its credit facility, including taking pricing down on all tranches, shifting some funds out of the second-lien term loan and into the first-lien term loan and adding a delayed-draw piece to the capital structure.

In the secondary, Lear Corp.'s bank debt was driven to higher ground as the company released fourth-quarter and full-year results that were considered OK - a positive in this company's particular sector.

CRC Health came out Wednesday morning with a couple of changes to its term loan B, including increasing the size of the tranche and reducing pricing, according to a market source.

The term loan B is now sized at $245 million, up from an original size of $225 million, and pricing on the paper came down to Libor plus 225 basis points from original price talk at launch of Libor plus 250 basis points, the source said.

The $20 million that was added to the term loan B came out of the company's proposed bond offering, which has now been reduced to a size of $200 million from $220 million, the source continued.

CRC's now $345 million credit facility (B1/B) also contains a $100 million revolver that was left unchanged in terms of size and pricing - which is set at Libor plus 250 basis points, the source added.

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

Proceeds will be used to help fund Bain Capital's leveraged buyout of the company. Bain is purchasing CRC from North Castle Partners and DLJ Merchant Banking Partners in a transaction valued at $720 million.

CRC is a Cupertino, Calif., provider of drug and alcohol treatment services.

Vertafore reworks deal

Vertafore tweaked its in-market credit facility due to the massive oversubscription that the deal had already reached a while ago, bringing all spreads lower, shifting funds between tranches and adding a new delayed-draw term loan, according to a market source.

The six-year first-lien term loan B is now sized at $200 million, up from an original size of $180 million, and pricing on the tranche came down to Libor plus 250 basis points from original price talk at launch of Libor plus 275 basis points, the source said.

Meanwhile, the seven-year second-lien term loan is now sized at $105 million, down from an original size of $125 million, and pricing on the tranche was reverse flexed to Libor plus 600 basis points from original price talk at launch of Libor plus 650 basis points, the source continued. Call protection on this second-lien tranche remained at 102 in year one and 101 in year two.

In addition, pricing on the company's $30 million five-year revolver (size unchanged) was also reverse flexed to Libor plus 250 basis points from original price talk at launch of Libor plus 275 basis points. The revolver contains a 50 basis point commitment fee.

Lastly, the syndicate added a $25 million delayed-draw term loan that will be available for six months to complete two unannounced acquisitions, the source said. The delayed draw has an unused ticking fee of 125 basis points and, once it is funded, it will act like the first-lien term loan B debt, carrying an interest rate of Libor plus 250 basis points.

Credit Suisse and JPMorgan are joint lead arrangers and joint bookrunners on the now $360 million credit facility, with Credit Suisse 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.

American Media cuts spread

American Media Inc. reverse flexed pricing on its term loan, added a step-up provision based on leverage and put in a one-year call protection premium, according to a market source.

The $450 million term loan due 2013 is now priced with an interest rate of Libor plus 275 basis points, down from original price talk at launch of Libor plus 325 basis points, the source said. Pricing on the tranche can now step-up to Libor plus 300 basis points if leverage exceeds 8x.

In addition, 101 soft call protection for one year was added to the term loan tranche, the source continued.

Pricing on American Media's $60 million revolver due 2012 remained at Libor plus 325 basis points, the source added.

J.P. Morgan Securities Inc. and Deutsche Bank Securities Inc. are the lead arrangers on the $510 million credit facility (B1/B), with Bear Stearns, Lehman Brothers and General Electric Capital Corp. acting as co-agents.

Proceeds will be used to refinance the company's existing senior secured bank debt.

American Media is a Boca Raton, Fla., magazine publisher.

Lear trades up

In the secondary loan market, Lear's bank debt closed the session up by about half a point as fourth-quarter and full-year numbers, while not being fantastic, were decent, which came as a relief to investors being that the company operates in the relatively tumultuous auto sector, according to a trader.

The bank debt ended the day quoted at 99 bid, 99¾ offered, up from morning opening levels of 98½ bid, 99½ offered, the trader said.

"At first glance the numbers looked bad but once you added back in all the charges it wasn't that bad. People didn't know what to expect so when they came in OK, it was a positive," the trader explained.

For the fourth quarter of 2005, Lear reported net sales of $4.4 billion and a loss before income taxes of $340.1 million. Excluding impairments, restructuring and other special charges, pretax income was $83.6 million. These results compare with net sales of $4.3 billion and pretax income of $159.5 million for the fourth quarter of 2004.

Net loss for the quarter was $596.6 million, or $8.88 per share, including impairments, restructuring and other special charges, compared with net income of $123 million, or $1.70 per share, for the fourth quarter of 2004.

The fourth-quarter pretax impairments, restructuring and other special charges referred to consist of goodwill and fixed asset impairment charges of $351.3 million related to the company's interior segment, costs related to restructuring actions of $42.6 million and a loss related to the capital restructuring of two minority-owned joint ventures of $29.8 million. In total, these items amounted to $423.7 million before taxes.

For the full-year 2005, Lear reported net sales of $17.1 billion and a loss before income taxes of $1.181 billion. Excluding impairments, restructuring and other special charges, pretax income was $102.6 million. These results compare with net sales of $17 billion and pretax income of $550.2 million for the full year 2004.

Net loss for the full year was $1.376 billion, or $20.48 per share, including impairments, restructuring and other special charges, compared with net income of $422.2 million, or $5.77 per share, for the full-year 2004.

The full-year pretax impairments, restructuring and other special charges consist of goodwill and fixed asset impairment charges of $1.095 billion related to the company's interior segment, costs related to restructuring actions of $102.8 million, litigation charges of $39.2 million and losses resulting from the sale of one and the capital restructuring of two other joint ventures of $46.7 million. In total, these items amounted to $1.284 billion before taxes.

In addition, in 2005 Lear had a one-time tax benefit of $17.8 million in the first quarter and a tax charge of $298.2 million in the fourth quarter.

Lear is a Southfield, Mich.-based automotive interior systems supplier.

Ameritrade closes

Ameritrade Holding Corp. completed its acquisition of TD Bank Financial Group's U.S. brokerage business, TD Waterhouse. The combined company is now operating under the name TD Ameritrade.

To help fund the purchase, Ameritrade got a new $2.2 billion credit facility (Ba1/BB/BB) consisting of a $1.65 billion seven-year term loan B, a $250 million six-year term loan A and a $300 million five-year revolver, with all tranches priced with an interest rate of Libor plus 150 basis points.

Originally, the term loan B was launched with price talk of Libor plus 175 basis points but was reverse flexed during syndication on strong demand.

Citigroup acted as the lead bank on the deal.

Ameritrade is an Omaha, Neb.-based provider of securities brokerage services and technology-based financial services.

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