Serena upsizes B loan, cuts spread; Aearo Tech moves launch; O2 Arena, Dave & Buster's break

By Sara Rosenberg

New York, March 6 - Looking at the primary market Monday, Serena Software Inc. increased the size of its term loan B tranche while at the same time lowering pricing and adding a step down based on leverage.

Also, Aearo Technologies Inc. rescheduled its bank meeting, pushing the official launch off by one day.

Switching to the secondary, O2 Arena's term loan allocated and freed for trading during Monday's session, with the bank debt quoted in the 101's, and Dave & Buster's Inc. hit the secondary as well with its term loan quoted atop par.

Serena Software upsized its term loan B in reaction to a decision to downsize its bond offering, and then proceeded to reverse flex pricing on the term loan tranche with the addition of a step down, according to a market source.

The seven-year term loan B is now sized at $400 million, up from an original size of $375 million, and pricing came down to Libor plus 225 basis points from original price talk at launch of Libor plus 250 basis points, the source said.

In addition, pricing on the term loan B can now drop to Libor plus 200 basis points once leverage is less than 5.5x, the source continued.

On the flip side, the company downsized its senior subordinated notes offering to $200 million from $225 million, the source added.

Serena's $75 million six-year revolver was left unchanged in terms of size and pricing, which is initially set at Libor plus 250 basis points. The revolver contains a pricing grid that allows for rates to range anywhere from Libor plus 175 basis points to Libor plus 250 basis points.

Lehman Brothers, Merrill Lynch and UBS Securities are the joint lead arrangers on the credit facility, with Lehman acting as the administrative agent.

Proceeds from Serena's now $475 million credit facility (B1/B), along with bond proceeds, will be used to help fund Silver Lake Partners' leveraged buyout of the company.

Under the LBO agreement, Silver Lake Partners has agreed to acquire Serena for about $1.2 billion. Serena stockholders will receive $24 in cash in exchange for each share of stock. Any of Serena's existing $220 million of convertible notes that are not converted to Serena common stock prior to completion of the proposed transaction will be exchanged for cash in an amount of $24 for each share of Serena common stock.

Closing on the credit facility is scheduled for the end of this week.

Serena is a San Mateo, Calif., provider of software products for managing process and controlling change across the information technology environment.

Aearo Tech resets launch

Aearo Technologies decided to push off the bank meeting that was going to officially launch its proposed $570 million credit facility into syndication to Tuesday from the originally scheduled date of Monday, according to a market source.

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

The facility consists of a $60 million revolver, a $340 million first-lien term loan and a $170 million second-lien term loan.

As of about mid-last week, the transaction was heard to be almost fully subscribed even though the official launch hasn't actually taken place.

Proceeds from the credit facility will be used to help fund Permira's leveraged buyout of the company.

Under the acquisition agreement, Permira will purchase Aearo Technologies for about $765 million from Bear Stearns Merchant Banking and other investors.

The transaction is subject to financing, regulatory approvals and other customary closing conditions.

Aearo Technologies is an Indianapolis-based personal protection equipment company.

O2 Arena tops 101

Moving on to secondary news, O2 Arena's £265 million six-year term loan B freed for trading Monday, with the bank debt quoted at 101¼ bid, 101¾ offered, according to a trader.

The term loan is priced with an interest rate of Libor plus 350 basis points. During syndication, the term loan was upsized from £225 million and pricing was reverse flexed from original talk at launch of Libor plus 375 to 400 basis points.

Credit Suisse is the lead bank on the term loan.

Proceeds from the loan are being used to fund the redevelopment of the Millennium Dome in London as an entertainment complex by Phil Anschutz (90%) and Rupert Murdoch. O2 is a wireless company that bought the naming rights to the arena.

Dave & Buster's trades atop par

Continuing with the breaking-for-trading theme, Dave & Buster's freed for trading Monday as well, with its $100 million term loan quoted at par ¼ bid, par ½ offered, according to a trader.

The term loan is priced with an interest rate of Libor plus 250 basis points. During syndication pricing was reverse flexed from Libor plus 275 basis points.

The company's $160 million credit facility (B-) also contains a $60 million revolver.

JPMorgan is the lead bank on the deal that will be used, along with an equity contribution from Wellspring Capital Management LLC and bond proceeds, to fund the leveraged buyout of Dave & Buster's and to refinance any debt that may become due as a result of the LBO.

Under the transaction agreement, Wellspring will acquire all of Dave & Buster's outstanding shares for $18.05 per share in cash. The total transaction value is about $375 million, including the assumption of Dave & Buster's debt.

Completion of the transaction, which is expected for the second quarter of 2006, is subject to customary conditions and regulatory approvals, and the approval of Dave & Buster's shareholders. Financing is not a condition of the acquisition.

Dave & Buster's is a Dallas-based operator of upscale restaurant/entertainment complexes.

Bon-Ton closes

The Bon-Ton Stores Inc. closed on its new $1 billion senior secured revolver (NA/NA/B+) that was led by Bank of America, according to a company news release.

Borrowings under the revolver, $510 million of 10.25% senior notes and a $260 million mortgage loan were used to fund the acquisition of Saks Inc.'s Northern Department Store Group and to refinance existing debt.

Under the purchase agreement, Bon-Ton paid $1.05 billion in cash, reflecting certain purchase price adjustments, for the Northern Department Store Group, which generated net sales in fiscal 2005 of $2.2 billion.

Bon-Ton is a York, Pa., regional department store chain.

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