Hologic breaks; Claire's dips as president goes; LCDX better, cash unchanged to down; FTD tweaks deal

By Sara Rosenberg

New York, July 8 - Hologic Inc.'s credit facility freed up for trading on Tuesday, with the term loan B bid above the original issue discount price at which it was sold, and Claire's Stores Inc.'s term loan B headed lower on news that the president has left the company.

Also in trading, LCDX 10 was stronger with the equity market, while cash was unchanged to a touch softer on the day.

In other news, FTD Group Inc. made a round of changes to its credit facility, including reducing the pro rata and increasing the institutional loan size - although not by the equivalent amount - and adding a pricing step down to the institutional piece.

Hologic's credit facility hit the secondary market during the trading session, with the $150 million term loan B quoted slightly north of its original issue discount price, according to a market source.

The term loan B was seen bid at 991/4, the source said.

Pricing on the term loan B is Libor plus 325 basis points and the paper was sold at an original issue discount of 99.

Hologic's $800 million credit facility also includes a $200 million revolver and a $450 million term loan A, with both of these tranches priced at Libor plus 250 bps.

The upfront fee on the term loan A was 1 bps per $1 million.

The structure on the deal as outlined by the credit facility commitment letter was slightly different, with the entire $600 million of term loan debt said to be a term loan A tranche with initial pricing on it and the revolver expected at Libor plus 275 bps.

The company, however, said in a filing with the Securities and Exchange Commission that the term loan A was expected to carry pricing in the area of Libor plus 250 bps to 275 bps with a potential for some modest upfront fee.

Goldman Sachs is the lead arranger and bookrunner on the deal that will be used to help fund the acquisition of Third Wave Technologies Inc. for $11.25 per share, or about $580 million.

Hologic is a Bedford, Mass.-based developer, manufacturer and supplier of diagnostics, medical imaging systems and surgical products dedicated to serving the health care needs of women. Third Wave is a Madison, Wis.-based provider of DNA and RNA analysis products to clinical, research and agricultural customers.

Claire's trades down

Claire's Stores' term loan B gave up some ground in trading after news emerged that the company's president quit, according to a trader.

The term loan B was quoted at 70½ bid, 72 offered, down from 72 bid, 73 offered, the trader said.

On Tuesday, the company said in an 8-K filed with the SEC that its president, John A. Zimmermann, resigned for personal reasons, effective July 7.

Claire's is a Pembroke Pines, Fla.-based specialty retailer of value-priced jewelry and accessories.

LCDX outperforms cash

LCDX 10 traded higher on Tuesday, but the cash market was unchanged to lower, depending on the name, according to a trader.

The index was quoted at 96.85 bid, 96.95 offered, up from 96.50 bid, 96.60 offered, as stocks were better, the trader said.

Nasdaq closed up 51.12 points, or 2.28%, Dow Jones Industrial Average closed up 152.25 points, or 1.36%, S&P 500 closed up 21.39 points, or 1.71%, and NYSE closed up 115.58 points, or 1.38%.

Meanwhile, the cash market wasn't quite as positive, with some names ending the day in line with previous levels and others falling.

For example, Georgia-Pacific Corp., an Atlanta-based manufacturer and marketer of tissue, packaging, paper, building products and related chemicals, saw its term loan B quoted at 93 7/8 bid, 94 1/8 offered, down from 94½ bid, 94¾ offered, the trader said.

"It was down with the rest of the cash market today. It was one name that was down a bit more than the others," the trader remarked, adding that there was no credit-specific news causing the drop.

Other names that were noticeably weaker included LyondellBasell Industries, Harrah's Entertainment Inc. and Las Vegas Sands Corp.

LyondellBasell, a Netherlands-based polymers, petrochemicals and fuels company, saw its term loan quoted at 85 bid, 86 offered, down from 85½ bid, 86½ offered. The trader said that this loan has been ticking lower recently on technical pressure, explaining that on average the whole market is down about four points over the last couple of weeks and this is just one of the names that has felt the squeeze.

Also, Harrah's, a Las Vegas-based provider of branded casino entertainment, saw its term loan B-2 quoted at 87 bid, 88 offered, down from 88 bid, 89 offered.

And, Las Vegas Sands, a Las Vegas-based developer of multi-use integrated resorts, saw its term loan quoted at 87½ bid, 88½ offered, down from 88½ bid, 89½ offered, the trader remarked.

Interestingly, Penn National Gaming Inc., a Wyomissing, Pa., owner and operator of casino and horse racing facilities who's term loan B had been under pressure since late last week when its proposed leverage buyout fell through, was unchanged on the day with levels of around 94 bid, 94½ offered, the trader added.

FTD reworks structure

Moving to the primary, FTD came out with some revisions to its credit facility that resulted in the overall deal size coming down to $425 million from $450 million, and tweaked pricing possibilities on the term loan B, according to a market source.

With the changes, the six-year term loan B was upsized to $300 million from $200 million, and while pricing remained at Libor plus 450 bps, a step down was added under which the spread can drop to Libor plus 425 bps when total leverage is at or below 2½ times, the source said.

The term loan B is still being sold to investors at an original issue discount of 98.

At launch, pricing guidance on the term loan B came out in the context of Libor plus 400 bps to 450 bps, with a 3% Libor floor and an original issue discount in the 98 to 99 range, but it was said that the actual talk would be dependant on credit ratings, and once those private ratings were obtained last month, the price talk became more focused.

Other new modifications made to the deal included resetting sizes on the term loan A and the revolver. The five-year term loan A is now $75 million, down from $175 million, and the five-year revolver is now $50 million, down from $75 million, the source remarked.

Pricing on the term loan A and the revolver remained at Libor plus 350 bps and lenders are still being offered upfront fees on these tranches that range from 50 bps to 100 bps depending on the commitment level.

The term loan B, the term loan A and the revolver all still have a 3% Libor floor.

Financial covenants under the credit facility include a leverage ratio, a fixed-charge coverage ratio and a maximum capital expenditures requirement.

The decision to move $100 million of funds from the A loan to the B loan was made because 1) the company prefers more term loan B since there's less amortization and 2) the term loan B was about 2½ times oversubscribed, the source explained.

As for the revolver downsizing, it was done because the company decided it didn't need the whole $75 million revolver and it was trimmed it to better suit FTD's needs, the source continued.

Recommitments from lenders are due by the close of business on Wednesday.

Wells Fargo is the lead arranger, bookrunner and administrative agent on the deal that will be used to help fund United Online Inc.'s acquisition of FTD for $7.34 in cash, 0.4087 of a share of United Online common stock and $3.31 principal amount of United Online 13% senior secured notes due 2013 per share.

The total consideration to FTD stockholders will be about $456 million, consisting of $222 million in cash, 12.35 million shares of United Online stock and $100 million total principal amount of notes.

The remaining purchase price consists of repayment of FTD debt and expenses incurred in connection with the transaction.

Upon closing of the transaction, the former FTD stockholders will own about 15% of United Online.

Total and senior leverage at close will be 3.6 times.

The acquisition is anticipated to be completed in mid-to-late September, subject to approval of FTD stockholders, a financing condition and customary closing conditions.

Being that it will be a while before the credit facility funds, term loan B lenders are being paid a 1% ticking fee, the source added.

After the closing of the transaction, FTD will continue to operate as a wholly owned subsidiary of United Online from FTD's existing facilities, including its U.S. headquarters in Downers Grove, Ill., and its international headquarters in the United Kingdom.

FTD is a provider of floral related products and services. United Online is a Woodland Hills, Calif., provider of consumer internet and media services.

Sorenson ups pricing

Sorenson Communications Inc. raised pricing on its $215 million holdco loan, according to a market source.

The loan is now priced at Libor plus 1,200 bps PIK, up from initial talk of Libor plus 1,100 bps PIK, the source said.

In addition, pricing can step up to Libor plus 1,500 bps after three years if leverage at the holdco is still greater than 4.0 times, the source continued.

As before, the deal has a 3% Libor floor and an original issue discount of 97.

Call protection on the holdco deal is non-callable for one year, then at par in year two, 104 in year three, 102 in year four and 101 in year five.

Goldman Sachs and Morgan Stanley are the lead banks on the deal, with Goldman the left lead.

Proceeds from the loan will be used to fund a dividend to sponsors.

Sorenson is a Salt Lake City-based provider of video relay services and equipment for the deaf and hard-of-hearing community.

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