Michaels Stores slides on incremental loan news; ION, Compass Diversified, Curo revise deals

By Sara Rosenberg

New York, June 2 - Michaels Stores Inc. saw its term loan B soften in the secondary market on Monday as plans for an incremental tem loan emerged, and Alcatel-Lucent's term loan C was unchanged to lower on repayment news.

Moving to the primary, ION Trading Technologies Sarl reworked its first- and second-lien term loan sizes for a second time, tightened the offer price on its euro tranche and reduced the spread on its second-lien tranche, and Compass Diversified Holdings LLC upsized its term loan B while reducing pricing.

In addition, Curo Health Services widened spreads and original issue discounts on its first- and second-lien term loans, sweetened call protection on the second-lien tranche and shortened maturities.

Furthermore, Hillman Group Inc. and Shearer's Foods LLC revealed price talk on their deals with launch, and V.Group joined this week's calendar.

Michaels Stores slides

Michaels Stores' term loan B weakened in trading on Monday following word that a new $850 million covenant-light term loan due January 2020 will be launched with a call at 10:30 a.m. ET on Tuesday, according to a market source.

The term loan B was quoted at 99½ bid, par offered, down from par bid, par 3/8 offered, the source said.

Deutsche Bank Securities Inc. is the left lead bank on the new term loan that will be used to refinance existing senior notes due 2018.

Michaels Stores is an Irving, Texas-based arts and crafts specialty retailer.

Alcatel steady to softer

Alcatel-Lucent's term loan C was quoted by traders at par bid, par ½ offered after the company announced plans to pay down its senior secured loan debt with proceeds from convertible notes. One trader noted that Monday's levels were down from par 1/8 bid, par 5/8 offered on Friday, while another trader said that it was unchanged from par bid, par ½ offered on Friday.

The roughly €1.04 billion convertibles offering came in two tranches and may be increased to a total of about €1.15 billion if over-allotment options are exercised in full.

Currently, the company expects that the paydown will occur on Aug. 19.

Alcatel is a Paris-based telecommunications services and equipment company.

ION restructures again

Over in the primary, ION Trading trimmed its U.S. first-lien term loan to $170 million from a revised amount of $300 million and an initial size of $400 million, and it extended the maturity to seven years from six years while keeping pricing at Libor plus 325 basis points with a 1% Libor floor and a par offer price, according to a market source. This tranche still has 101 soft call protection for one year.

On the flip side, the company lifted its euro first-lien term loan to €500 million from a revised amount of €400 million and an initial amount of €300 million, revised the offer price to par from 99¾ and extended the maturity to seven years from six years, the source said. Pricing remained at Euribor plus 350 bps with a 1% floor, and the 101 soft call protection for one year was unchanged.

In addition, the second-lien term loan was reduced to $250 million from a revised size of $260 million and an initial amount of $300 million, pricing was cut to Libor plus 625 bps from Libor plus 675 bps, and the maturity was pushed out to eight years from seven years, the source continued. The 1% Libor floor, par offer price and call protection of 102 in year one and 101 in year two were left intact on this tranche.

ION shuts books

Recommitments for ION Trading's credit facility, which also includes a $40 million five-year revolver, were due at 5 p.m. ET on Monday, the source added.

UBS AG is leading the deal that will be used to refinance existing debt.

The company also plans on using $15 million of additional equity for the refinancing, increased from $10 million with the latest term loan size changes, the source added.

ION Trading is a provider of trading software.

Compass revisions emerge

Compass Diversified lifted its seven-year term loan B to $325 million from $280 million and reduced pricing to Libor plus 325 bps from Libor plus 350 bps while keeping the 1% Libor floor, original issue discount of 99½ and 101 soft call protection for one year unchanged, a market source said.

Also, the maximum leverage covenant was set at 3.5 times with a permitted step-up to 4.25 times, modified from 4 times, for the first three fiscal quarters following a permitted eligible acquisition, the source remarked.

Recommitments were due by 5 p.m. ET on Monday, and allocations are expected on Wednesday.

Bank of America Merrill Lynch and SunTrust Robinson Humphrey Inc. are leading the deal that will be used to refinance existing bank debt.

Compass Diversified is a Westport, Conn.-based owner and manager of middle-market businesses.

Curo reworks deal

Curo Health Services lifted pricing on its $335 million first-lien term loan B (B2/B) to Libor plus 475 bps from Libor plus 425 bps, widened the original issue discount to 97½ from 99, shortened the maturity to six years from seven years and added a first-lien net leverage covenant to the originally covenant-light tranche, according to a market source. The 1% Libor floor and 101 soft call protection for one year were unchanged.

As for the $115 million second-lien term loan (Caa2/CCC+), pricing was increased to Libor plus 875 bps from talk of Libor plus 775 bps to 800 bps, the discount was changed to 97 from 981/2, the call protection was beefed up to 103 in year one, 102 in year two and 101 in year three from 102 in year one and 101 in year two, and the maturity was shortened to 6½ years from 7½ years, the source said. The tranche still has a 1% Libor floor.

Other changes made were cutting the incremental debt basket to $50 million from $75 million, changing the incremental debt incurrence leverage ratios to 4 times net first-lien and 5.5 times net total from 4.5 times net first-lien and 6 times net total, lowering the general restricted payments basket to $10 million, subject to event of default blocker, from $20 million, and revising the restricted payments incurrence test to 5.5 times from 6 times.

Curo getting revolver

Along with the term loans, Curo Health Services' $485 million credit facility provides for a $35 million five-year revolver (B2/B).

Recommitments are due at 5 p.m. ET on Tuesday, the source added.

J.P. Morgan Securities LLC, GE Capital Markets, SunTrust Robinson Humphrey and Jefferies Finance LLC are leading the deal that will be used to fund the acquisition of SouthernCare Inc., to refinance existing debt and for general corporate purposes.

Curo Health is a Mooresville, N.C.-based provider of home health-care and hospice services. SouthernCare is a Birmingham, Ala.-based hospice provider.

Hillman sets talk

Also in the primary, Hillman held its bank meeting on Monday, launching its $610 million seven-year covenant-light term loan B with talk of Libor plus 375 bps with a 1% Libor floor, an original issue discount of 99 and 101 soft call protection for one year, according to a market source.

The company's $680 million senior secured deal (B1/B) also includes a $70 million five-year revolver.

Commitments are due on June 12, the source said.

Barclays, Morgan Stanley Senior Funding Inc. and GE Capital Markets are leading the deal that will be used with $270 million of eight-year senior unsecured notes and about $545 million of equity to fund the $1,475,000,000 buyout of the company by CCMP Capital Advisors LLC from Oak Hill Capital Partners.

Senior secured leverage is 4.6 times, and total opco leverage is 6.5 times.

Closing is expected this quarter or next quarter, subject to regulatory approvals and customary conditions.

Hillman is a Cincinnati-based distributor of fasteners, key duplication systems, engraved tags and related hardware items.

Shearer's releases guidance

Shearer's Foods came out with talk of Libor plus 375 bps with a 1% Libor floor, an original issue discount of 99½ and 101 soft call protection for six months on its $290 million seven-year first-lien covenant-light term loan that launched with a bank meeting during the session, a market source said.

In addition, talk on the $225 million eight-year second-lien covenant-light term loan surfaced at Libor plus 700 bps with a 1% Libor floor, a discount of 99 and call protection of 102 in year one and 101 in year two, the source continued.

The company's $590 million credit facility also includes a $75 million ABL revolver.

Commitments are due on June 16.

Shearer's lead banks

Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc. and UBS AG are leading Shearer's Foods' credit facility that will be used to fund the $430 million acquisition of Private Brands and two manufacturing facilities from Snyder's-Lance Inc.

Closing is expected in the second quarter, subject to regulatory approvals, financing and customary conditions.

Shearer's Foods is a Massillon, Ohio-based national contract manufacturing and private label supplier in the snack industry. Private Brands is a Massillon, Ohio-based provider of private label snacks.

V.Group on deck

V.Group emerged with plans to hold a bank meeting on Wednesday to launch a $420 million credit facility that will be used to refinance existing debt and fund a dividend, according to a market source.

The facility consists of a $35 million five-year revolver, a $260 million seven-year first-lien term loan and a $125 million 71/2-year second-lien term loan, the source said.

Commitments are due on June 18.

RBC Capital Markets and Goldman Sachs Bank USA are leading the deal, with RBC left on the first-lien loan and Goldman left on the second-lien loan.

V.Group is a supplier of specialist outsourcing services to asset owners and operators in the shipping, offshore, leisure and defense sectors.

Grede closes

In other news, the buyout of Grede Holdings LLC by American Securities LLC has been completed, a news release said.

For the transaction, Grede got a new $675 million credit facility (B1) consisting of a $75 million revolver and a $600 million term loan.

Pricing on the term loan is Libor plus 375 bps with a 1% Libor floor, and it was sold at an original issue discount of 991/2. There is 101 soft call protection for one year.

During syndication, the spread on the term loan finalized at the high end of the Libor plus 350 bps to 375 bps talk and the call protection was extended from six months.

Goldman Sachs Bank USA, GE Capital Markets, Nomura and RBC Capital Markets led the deal.

Grede is a Southfield, Mich.-based producer of engineered iron castings to the automotive, medium and heavy truck and industrial markets.

Post completes loan

Post Holdings Inc., a St. Louis-based consumer packaged goods holding company, closed on its $885 million seven-year senior secured term loan, according to an 8-K filed with the Securities and Exchange Commission.

Pricing on the term loan is Libor plus 300 bps with a 0.75% Libor floor, and it was sold at an original issue discount of 991/2. There is 101 soft call protection for six months.

During syndication, the term loan was increased from a revised amount of $735 million and an initial size of $635 million, pricing was decreased from Libor plus 325 bps and the Libor floor was cut from 1%.

Barclays, Credit Suisse, Wells Fargo Securities LLC, Goldman Sachs Bank USA, BMO Capital Markets and Nomura are leading the deal that is being used to help fund the $2.45 billion purchase of Michael Foods, a Minnetonka, Minn.-based food products company, from GS Capital Partners, Thomas H. Lee Partners and other owners, to pre-fund the acquisition of PowerBar and for general corporate purposes.

Senior secured leverage is 1.5 times, and net total leverage is 6.4 times.

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