Hanger Orthopedic cuts spread; Dollarama tweaks repricing, trades higher; Visteon nets early orders

By Sara Rosenberg

New York, May 19 - In primary happenings, Hanger Orthopedic Group Inc. lowered pricing on its term loan tranche as the deal saw strong investor interest. Also, Dollarama Inc. modified its term loan B repricing proposal, softening the spread cut, which in turn, resulted in higher trading levels in the secondary market.

Also on the primary front, Visteon Corp.'s term loan is catching early attention from market players as commitments already found their way into the book quickly after the deal was launched.

Hanger Orthopedic reverse flexed pricing on its $230 million term loan by 25 basis points on Friday as the deal was well oversubscribed, according to a market source.

The term loan is now priced with an interest rate of Libor plus 250 basis points, down from original talk at launch of Libor plus 275 basis points, the source said.

Hanger Orthopedic's $305 million credit facility (B2/B) also contains a $75 million revolver.

Lehman and Citigroup are the lead banks on the deal, with Lehman the left lead. Citi is the administrative agent.

Proceeds from the credit facility, along with proceeds from a $50 million private placement of 3.33% convertible perpetual preferred stock to Ares Corporate Opportunities Fund LP and up to $190 million of senior unsecured notes, will be used to refinance all of the company's outstanding bank and bond debt and preferred stock.

Of the total amount of proceeds, about $166 million will be used to repay revolver and term loan debt, $200 million will be used to refinance its 10 3/8% senior notes due 2009, $16 million will be used to refinance its 11¼% senior subordinated notes due 2009 and about $65 million will be used to redeem its outstanding 10% redeemable preferred stock.

Each of the proposed transactions will be conditioned upon, among other things, the consummation of each other component of the refinancing.

Hanger Orthopedic is a Bethesda, Md.-based provider of orthotic and prosthetic patient-care services.

Dollarama reworks repricing, trades up

Dollarama changed its repricing request to make the spread reduction somewhat more palatable to lenders, while adding a step down so that the company has the ability to achieve lower pricing upon meeting a leverage test, according to a market source.

On the heels of the changes, the company's term loan B debt traded up during Friday's session, closing the day quoted at par 3/8 bid, par 7/8 offered, up from a previous context of par 1/8 bid, par 5/8 offered, according to a trader.

Under the revised proposal, Dollarama is looking to lower the interest rate on its term loan B to Libor plus 200 basis points from current pricing of Libor plus 225 basis points, the source said.

By comparison, under the original proposal the company was looking to lower the interest rate by 50 basis points to Libor plus 175 basis points.

The revised proposal does allow for the term loan B spread to eventually step down to Libor plus 175 basis points, but the company must meet a leverage test, as defined under the credit agreement, of 4.75x in order for that event to happen, the source explained.

Currently, Dollarama is in the mid-5x under that leverage test.

Citigroup is the lead bank on the repricing deal for the Montreal-based franchise retail chain of dollar stores.

Visteon nabs attention

Visteon's $800 million seven-year term loan is seeing good momentum in terms of syndication as a number of commitments from lenders had already been placed for the deal by Friday afternoon - the same day that the actual bank meeting to launch the deal took place, according to a market source.

The term loan is talked at Libor plus 300 basis points and contains call protection of 102 in year one and 101 in year two on optional prepayments.

Visteon's $1.5 billion secured credit facility also contains $700 million in revolver tranches that will be divided into two five-year facilities for the United States and Europe.

The revolvers have not been launched into syndication as of yet and are not expected to be for a couple of weeks as field work is still being done on the ABL facilities, the source added.

JPMorgan and Citigroup are the lead banks on the deal that will be used to repay amounts outstanding under the company's existing secured facilities that are scheduled to mature in June 2007, and for general corporate purposes.

The bank debt that will be refinanced includes the company's $241 million term loan, $350 million term loan and its revolving credit facility.

Visteon is Van Buren Township, Mich., automotive supplier.

Secondary tone improves

In trading, the overall market felt better on Friday than it had all week, as a couple of buyers tentatively entered the market to create some, although not a huge amount of, volume, according to a trader.

"People are cautious as to if this is the bottom or if the market will drop a little more," the trader said. "Buyers have stepped in. Nothing changed drastically since buyers were in small size, for small demand. But, it definitely felt better than it has the rest of the week. There was really little volume this past week. It was one of the slowest weeks so far.

"We'll see how things open up on Monday," the trader added.

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