Ineos, Vertafore, USI break; Huntsman dips on sale rumors; Goodyear off; Century Theatres sets talk

By Sara Rosenberg

New York, Jan. 31 - Ineos Group Ltd., Vertafore Inc. and United Subcontractors Inc. (USI) allocated their credit facilities on Tuesday, with the Ineos dollar-denominated term loan pieces trading above 101, the Vertafore first-lien term loan tranche wrapping around 101 and the United Subcontractors' first-lien term loan trading in the low-pars.

In other secondary doings, Huntsman Corp.'s term loan came in closer to par as rumors of buyout talks filled the markets and Goodyear Tire & Rubber Co.'s second-lien loan weakened on the heels of the release of disappointing projected fourth-quarter results.

In the primary, Century Theatres Inc. came out with price talk on its credit facility as the deal was launched into syndication with a Tuesday bank meeting.

Ineos' credit facility started trading in the secondary loan market early Tuesday, with the dollar-denominated term loan B and term loan C carve outs quoted in the 101¼ bid, 101½ offered context pretty steadily from the break till the close, according to market sources.

The dollar-denominated term loan B and C carve outs are trading as a strip since they were sold on a pro rata basis, one source added.

The approximately $732 million U.S. dollar term loan B carve out is priced with an interest rate of Libor plus 225 basis, and the approximately $732 million U.S. dollar term loan C carve out is priced with an interest rate of Libor plus 275 basis points. Both dollar tranches contain 101 soft call protection for one year, which was added to the deal during the syndication process.

Also, during syndication, pricing on the U.S. portion of the term loan B was reverse flexed from Libor plus 275 basis points and pricing on the U.S. portion of the term loan C was reverse flexed from Libor plus 325 basis points.

The full structure of Ineos' €7.395 billion senior secured credit facility is comprised of a €1.775 billion term loan B (including the U.S. carve out) with the euro portion priced at Euribor plus 250 basis points (Ba3/B+), a €1.775 billion term loan C (including the U.S. carve out) with the euro portion priced at Euribor plus 300 basis points (Ba3/B+), a €1.57 billion term loan A priced at Euribor plus 225 basis points (Ba3/B+), a €700 million revolver priced at Euribor plus 225 basis points (Ba3/B+), a €400 million 91/2-year second-lien term loan priced at Euribor plus 375 basis points (B1) and a €1.175 billion securitization facility (Ba3/B+).

The second-lien term loan is non-callable for one year, then at 102 in year two and 101 in year three.

During syndication, the term loan B and term loan C tranche sizes were increased from €1.6 billion, although the size of the U.S. carve outs were left unchanged, pricing on the euro portion of the term loan B was reverse flexed from original price talk of Euribor plus 275 basis points, pricing on the euro portion of the term loan C was reverse flexed from original price talk of Euribor plus 325 basis points and the second-lien term loan was added to the capital structure.

Funds added to the €7.395 billion credit facility, up from an original size of €6.645 billion, were shifted out of the company's bond offering, which is now sized at €2.355 billion as opposed to €3.105 billion that was originally planned.

Morgan Stanley, Merrill Lynch and Barclays are the lead banks on the credit facility, which was already funded prior to syndication.

Proceeds from the credit facility were used for the $9 billion acquisition of Innovene from BP plc that was completed on Dec. 16.

Ineos is a U.K.-based manufacturer of specialty petrochemicals. Innovene is an olefins, derivatives and refining group.

Vertafore breaks

Vertafore also allocated its credit facility on Tuesday, with the $200 million six-year first-lien term loan B quoted at par ¾ for $2 million bid, 101¼ for $2 million offered, according to a market source.

The first-lien term loan B is priced with an interest rate of Libor plus 250 basis points. During syndication, the first-lien term loan B was upsized from $180 million, while pricing was reverse flexed from Libor plus 275 basis points.

Vertafore's $360 million credit facility also contains a $30 million five-year revolver with an interest rate of Libor plus 250 basis points and a 50 basis point commitment fee, a $25 million delayed-draw term loan that has an unused ticking fee of 125 basis points and, once it is funded, will act like the first-lien term loan B debt, carrying an interest rate of Libor plus 250 basis points, and a $105 million seven-year second-lien term loan with an interest rate of Libor plus 600 basis points.

During syndication, pricing on the revolver was reverse flexed from Libor plus 275 basis points, the delayed-draw term loan was added to the capital structure and the second-lien term loan was downsized from $125 million, while pricing was reverse flexed from Libor plus 650 basis points.

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

The delayed-draw term loan will be available for six months to complete two unannounced acquisitions.

Credit Suisse and JPMorgan are joint lead arrangers and joint bookrunners on the deal, 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.

USI trades in low-pars

United Subcontractors' credit facility broke for trading after a relatively long syndication process, with the $295 million first-lien term loan (B2/B+) quoted at par bid, par ½ offered, according to various sources.

The first-lien term loan is priced with an interest rate of Libor plus 300 basis points and contains 101 soft call protection for one year. During syndication, pricing on this tranche was raised from original talk of Libor plus 250 basis points and the call premium was added.

The company's $400 million credit facility also contains a $40 million revolver (B2/B+) and a $65 million second-lien term loan (Caa1/B-). The second-lien term loan is priced with an interest rate of Libor plus 725 basis points and contains call protection of 102 for one year and 101 the following year, with the premium kicking in only after six months has passed. Pricing on the second-lien loan was flexed up from Libor plus 650 basis points during syndication.

Citigroup is the lead bank on the deal that will be used to refinance existing debt and fund a dividend payment. The deal was launched in November 2005.

United Subcontractors is a Salt Lake City-based installer of residential and commercial insulation systems and provider of related products and services.

Huntsman softens on rumors

Huntsman's term loan moved in a little closer to par as rumors of possible buyout talks circulated around, creating some thoughts of potential par paydowns in the future, according to a trader.

The term loan closed out the session quoted at par ½ bid, 101 offered, down from previous levels of par 7/8 bid, 101 1/8 offered, the trader said.

On Tuesday, the Wall Street Journal reported that the company is in serious discussions to be bought out, and Apollo Management LP was named as a leading candidate for the purchase. The news report valued the potential Huntsman purchase at more than $4.3 billion.

Then, late in the day, Huntsman confirmed that it has received an indication of interest regarding an acquisition of all of the outstanding stock of the company.

The company said that in response to this indication of interest, the board of directors engaged financial and legal advisers to assist it in evaluating a sale of the company and other alternatives to enhance shareholder value, including continuing to execute its business plan. At this time, the company continues to review its strategic alternatives, which could include a possible sale of the company or remaining an independent public company.

Huntsman is a Salt Lake City-based manufacturer and marketer of commodity and differentiated chemicals.

Goodyear lower on numbers

Goodyear's second-lien term loan came in by about a quarter of a point on Tuesday in reaction to the company's late-Monday release of projected fourth-quarter numbers that will fall short of expectations, according to a trader.

The second-lien loan closed out the session quoted at 101 bid, 101 3/8 offered, down from previous levels of 101¼ bid, 101¾ offered, the trader said.

Late in the day Monday, Goodyear announced that, excluding the impact of hurricanes in the U.S. Gulf Coast region, it expects fourth-quarter segment operating income of about $238 million, basically in line with results from the prior-year period.

"Most people were expecting a positive quarter for them - not for them to fall in line," the trader explained.

For the full-year, Goodyear anticipates sales of almost $20 billion. Sales for the fourth quarter are expected to be more than $4.9 billion.

The Akron, Ohio-based tire company will release its fourth-quarter 2005 financial results prior to market open Feb. 16.

Century Theatres spread guidance

Shifting over to the primary, Century Theatres came out with opening price talk of Libor plus 200 basis points on both its $75 million revolver and its $360 million term loan as the deal was launched with a bank meeting on Tuesday, according to a market source.

Morgan Stanley and Bank of America are joint lead arrangers on the deal, with Morgan Stanley acting as the bookrunner.

Proceeds from the $435 million credit facility (Ba3/B+) will be used to refinance existing debt and fund a sizable dividend payment to the owners.

Century Theatres is a San Rafael, Calif., regional theatrical exhibition company.

Warnaco closes

The Warnaco Group Inc. completed its acquisition of 100% of the shares of the companies that operate the licenses and related wholesale and retail businesses of Calvin Klein jeans and accessories in Europe and Asia and the CK Calvin Klein "bridge" line of sportswear and accessories in Europe, according to a company news release.

To fund the purchase, Warnaco got a new $180 million seven-year term loan B (Ba2/BB) with an interest rate of Libor plus 150 basis points. Pricing on the tranche was flexed down on Monday from Libor plus 175 basis points.

Citigroup Global Markets Inc. and JPMorgan acted as the lead banks on the deal, with Citi the left lead.

Warnaco is a New York-based intimate apparel, sportswear and swimwear company.

AmeriPath closes

AmeriPath Inc. completed its acquisition of Specialty Laboratories Inc. for $13.25 per share, according to a company news release.

To fund the transaction and refinance the existing credit facility, AmeriPath got a new $298.5 million credit facility (B1/BB-) consisting of a $203.5 million term loan with an interest rate of Libor plus 200 basis points and a $95 million revolver with an interest rate of Libor plus 225 basis points.

During syndication, pricing on the term loan was reverse flexed from Libor plus 225 basis points.

Wachovia, Citigroup, Deutsche Bank and UBS acted as the lead banks on the deal.

AmeriPath is a Riviera Beach, Fla.-based provider of physician-based anatomic pathology, dermatopathology and molecular diagnostic services. Specialty Laboratories is a Valencia, Calif.-based hospital-focused clinical reference laboratory.

DRS closes

DRS Technologies Inc. completed its acquisition of Engineered Support Systems Inc. for approximately $1.3 billion in cash, according to a company news release. Total consideration for the acquisition, including approximately $74 million of ESSI's net debt at closing, was approximately $1.97 billion before transaction fees and expenses.

To help fund the transaction, DRS got an amended and restated $756.9 million credit facility (Ba3/BB+/BB+) consisting of a $356.9 million term loan B and a $400 million revolver, with both tranches priced at Libor plus 175 basis points.

During syndication, the revolver was upsized from $350 million when the company's bond offering was downsized by $50 million.

Wachovia and Bear Stearns acted as the lead banks on the deal.

DRS is a Parsippany, N.J.-based provider of technology products and services to defense, government intelligence and commercial customers. ESSI is a St. Louis-based diversified supplier of integrated military electronics, support equipment and technical services.

Madison River closes

Madison River Capital LLC closed on its repricing amendment, under which the company took down the term loan spread to Libor plus 225 basis points from Libor plus 250 basis points, according to a news release.

The repriced term loan contains 101 soft call protection for one year.

The repricing is effective as of Jan. 27.

Furthermore, after the company completes an initial public offering, pricing on the term loan will drop to Libor plus 175 basis points.

Merrill Lynch was the bookrunner on the transaction.

The company also received an extension until May 31 for filing its 2005 year-end and 2006 first-quarter reports.

Madison River is a Mebane, N.C., operator of rural local telephone companies.

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