GNC increases facility size, trims pricing; Building Materials cuts second-lien spread

By Sara Rosenberg

New York, March 9 - GNC Parent Corp. upsized its credit facility after downsizing its senior subordinated notes tranche, and it lowered pricing on its term loan B.

Also in the primary, Building Materials Corp. of America trimmed pricing on its recently added second-lien term loan.

GNC increased the size of its credit facility (B1/B-) to compensate for a reduction in its eight-year senior subordinated notes tranche. The company also reverse flexed pricing on the term loan B paper, according to a market source.

Under the changes, the term loan B is now sized at $675 million, up from $660 million, and pricing was reduced to Libor plus 225 basis points from original talk at launch of Libor plus 250 bps, the source said.

In addition, the revolver is now sized at $60 million, up from $50 million, the source continued.

Meanwhile, the company's subordinated notes offering was downsized to $110 million from $125 million, accounting for the $15 million upsizing to the term loan B, the source added. The company also got $300 million of seven-year senior floating-rate toggle notes (size unchanged) that priced at 99.00 this past Wednesday and carry an interest rate of six-month Libor plus 450 bps.

JPMorgan and Goldman Sachs are the lead banks on the now $735 million (up from $710 million) deal, with JPMorgan the left lead.

Proceeds from the credit facility and the bonds will be used to help fund the leveraged buyout of the company by Ares Management LLC and Ontario Teachers' Pension Plan from Apollo Management, LP in a transaction valued at around $1.65 billion, subject to certain adjustments.

GNC is a Pittsburgh-based retailer of nutritional products, vitamin, mineral, herbal and other specialty supplements and sports nutrition, diet and energy products.

Building Materials second lien flexes

Building Materials reduced pricing on its $325 million 71/2-year second-lien term loan to Libor plus 575 bps from Libor plus 600 bps, according to a market source.

This second-lien loan, which is non-callable for one year then at 101 in year two, was just added to the capital structure after the company decided to cancel its $325 million senior secured notes offering. The eliminated bond offering was being talked at Libor plus 475 to 500 bps and was expected to be non-callable for two years.

Building Materials' $1.9 billion senior secured credit facility also includes a $975 million seven-year term loan B (B2/BB-) talked at Libor plus 275 bps and a $600 million five-year ABL revolver talked at Libor plus 150 bps.

Price talk on the term loan B was recently increased from original talk at launch of Libor plus 250 bps.

Deutsche Bank, Bear Stearns and JPMorgan are the lead banks on the deal.

Proceeds from the facility will be used to help fund the acquisition of ElkCorp for $43.50 per share.

Building Materials is a Wayne, N.J.-based building products company. ElkCorp is a Dallas-based manufacturer of roofing and building products.

Move Gallery closes

Movie Gallery Inc. closed on its $900 million five-year credit facility consisting of a $100 million revolver (B1/B-) priced at Libor plus 250 bps, a $600 million first-lien term loan B (B2/B-) priced at Libor plus 350 bps, a $25 million synthetic letter-of-credit facility (B2/B-) priced at Libor plus 350 bps and a $175 million second-lien PIK toggle term loan (Caa1/CCC) priced at Libor plus 650 bps, according to a company news release.

During syndication, the first-lien term loan B was upsized from $525 million and pricing was flexed down from original talk of Libor plus 400 bps, the second-lien term loan was downsized from $250 million and pricing was flexed down from original talk of Libor plus 700 bps, and pricing on the synthetic letter-of-credit facility was flexed down from original talk of Libor plus 400 bps.

Goldman Sachs acted as the lead arranger on the deal that was used to refinance the company's existing bank debt and for general corporate purposes.

The company expects the new credit facility to result in more than $6 million of annual cash interest savings.

"We are pleased to complete this refinancing transaction, which further strengthens Movie Gallery's capital structure," said Joe Malugen, chairman, president and chief executive officer, in the release. "The strong response to this transaction by our lenders allowed an improved structure from our previous announcement and is a testament to the strong cash flow characteristics of our business.

"We expect that the favorable terms of this refinancing will provide Movie Gallery with greater liquidity while reducing annual interest expense, thereby advancing our efforts to drive profitable growth and create value for our shareholders."

Movie Gallery is a Dothan, Ala., video rental company.

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