Formula One frees up; DaVita down with merger news; AMC Entertainment improves on buyout

By Sara Rosenberg

New York, May 21 - Formula One's credit facility made its way into the secondary market on Monday, with the term loan B trading above its original issue discount price.

Also, DaVita Inc.'s term loans weakened as the company announced plans to purchase HealthCare Partners with a substantial amount of the financing for the transaction coming from new debt, and AMC Entertainment Holdings Inc.'s term loan B-3 was better following news that it is being bought out by Dalian Wanda Group Co.

Moving to the primary, AmWINS Group Inc. shifted funds from its second-lien term loan into its first-lien term loan and accelerated the commitment deadline, and Ascena Retail Group Inc. nailed down timing on the launch of its term loan B.

Furthermore, Wastequip LLC surfaced with new deal plans and SXC Health Solutions Corp. launched its credit facility with an all pro rata structure and released price talk on the transaction.

Formula One breaks

Formula One's credit facility began trading on Monday, with the $1.3 billion six-year term loan B seen at 98½ bid, 99¼ on the open and then it moved to 98¾ bid, 99¼ offered, according to a trader.

Pricing on the B loan is Libor plus 350 basis points with a 1% Libor floor, and it was sold at an original issue discount of 98. There is 101 soft call protection for one year and a ticking fee of 100 bps per annum that will be in effect until the company completes its initial public offering of stock, which is a condition to closing on the credit facility, or the credit agreement commitment termination date is reached.

During syndication, pricing on the term B firmed on the wide side of unofficial guidance of Libor plus 325 bps to 350 bps with a 1% Libor floor and a discount of 99, and the ticking fee was added.

The company's $1.8 billion credit facility also includes a $50 million five-year revolver and a $450 million five-year term loan A.

Formula One repaying debt

Proceeds from Formula One's credit facility will be used to refinance existing debt, including a credit facility that was just completed in April.

The existing facility consists of a $1,383,000,000 term loan B priced at Libor plus 450 bps with a 1.25% Libor floor that was sold at an original issue discount of 99, an $817.5 million term loan C priced at Libor plus 500 bps with a 1.25% Libor floor, and a $70 million revolver.

Goldman Sachs & Co., RBS Securities Inc., Morgan Stanley Senior Funding Inc. and UBS Securities LLC are the lead banks on the new deal.

Formula One is the organizer of the Formula One World Championship (F1) and owner of the commercial rights to F1 motorsports racing.

DaVita softens

DaVita's term loans headed lower in trading on Monday with news that the company will get $3.8 billion of new debt to fund its purchase of HealthCare Partners, bringing pro forma leverage to 3.7 times, according to a trader.

The term loan A was quoted at 99¼ bid, par ¼ offered, down from 99½ bid, par ½ offered, and the term loan B was quoted at 99½ bid, par ¼ offered, down from 99 7/8 bid, par 5/8 offered, the trader said.

The financing that will be used for the acquisition will be comprised of new senior secured loans and unsecured debt - with both components being led by J.P. Morgan Securities LLC.

Also, with the transaction, the company will amend its existing senior secured credit facility to allow for the new debt.

DaVita acquisition details

DaVita is buying HealthCare Partners for about $4.42 billion, comprised of $3.66 billion in cash and around 9.38 million shares of common stock. The price is subject to post-close adjustments and contingent consideration, such as an additional up to $275 million cash payment if certain performance targets are achieved in 2012 and 2013 by HealthCare Partners.

Closing is expected early in the fourth quarter, subject to receipt of Hart-Scott-Rodino approval, obtaining the approval of HealthCare Partners' owners and other customary conditions.

At closing, the combined company will be named DaVita HealthCare Partners Inc.

DaVita is a Denver-based provider of kidney care services for those diagnosed with chronic kidney disease. HealthCare Partners is a Torrance, Calif.-based operator of medical groups and physician networks.

AMC Entertainment rises

AMC Entertainment's term loan B-3 moved to 99 3/8 bid, 99 7/8 offered from 98 7/8 bid, 99 5/8 offered after the company revealed that it is being acquired by Dalian Wanda for about $2.6 billion, a trader said.

With the transaction, AMC will either amend its senior secured credit facility to permit the change-of-control resulting from the purchase or refinance the debt in full, according to an 8-K filed with the Securities and Exchange Commission on Monday.

Also, the Kansas City, Mo.-based movie exhibitor will need to make a change-of-control offer for each series of its outstanding debt securities or ask for a waiver of the requirement.

Financing commitments to fully fund the transaction have been provided to AMC from Dalian Wanda.

Closing is subject to customary conditions and the receipt of U.S. and China regulatory approvals.

AmWINS retranches

Switching to new deal happenings, AmWINS lifted its seven-year first-lien term loan to $345 million from $295 million, cut its 71/2-year second-lien term loan to $300 million from $350 million and revised the commitment deadline to 5 p.m. ET on Monday from Tuesday, according to sources.

As before, the first-lien term loan is talked at Libor plus 450 bps with a 1.25% Libor floor and an original issue discount of 99 and has 101 repricing protection for one year, and the second-lien loan is talked at Libor plus 800 bps with a 1.25% Libor floor and a discount of 98 and includes call protection of 103 in year one, 102 in year two and 101 in year three.

The company's $720 million credit facility also provides for a $75 million five-year revolver.

AmWINS lead banks

Credit Suisse Securities (USA) LLC, Goldman Sachs & Co., Macquarie Capital and Wells Fargo Securities LLC are leading AmWINS' credit facility.

Proceeds will help fund the buyout of a majority stake in the company by New Mountain Capital from Parthenon Capital Partners through a recapitalization valued at about $1.3 billion.

Employee shareholders will continue to own more than 30%, valued at over $160 million, of AmWINS equity at the conclusion of the recapitalization.

Closing is subject to regulatory approvals and customary conditions.

AmWINS is a Charlotte, N.C.-based specialty insurance broker.

Ascena timing emerges

Also in the primary, Ascena Retail Group firmed timing on its $300 million six-year term loan B, setting a bank meeting for 10 a.m. ET on Wednesday in New York to present the deal to investors, according to a market source.

The source said that price talk is not yet out; however, when announcing the transaction early this month, the company disclosed that it expects pricing to be in the area of Libor plus 325 bps to 350 bps.

J.P. Morgan Securities LLC and Bank of America Merrill Lynch are leading the deal.

Proceeds will be used to help fund the purchase of Charming Shoppes Inc. for $7.35 per share, or about $890 million.

Ascena upsizing revolver

With the transaction, Ascena Retail Group expects to increase its ABL revolver to $250 million from $200 million and use $175 million of those funds for the acquisition. Pricing on this debt can range from Libor plus 200 bps to 250 bps.

Closing is expected in the second quarter, subject to customary conditions and approvals and the tender of at least 80% of the shares.

Ascena Retail Group is a Suffern, N.Y.-based specialty retailer of apparel for women and tween girls. Charming Shoppes is a Bensalem, Pa.-based retailer specializing in women's plus-size apparel.

Wastequip readies deal

Wastequip also scheduled a bank meeting for Wednesday, at which time it will launch a proposed $190 million senior secured credit facility that is being led by Goldman Sachs & Co., according to a market source.

The facility consists of a $40 million revolver (Ba2/BB-) and a $150 million term loan B (B3/BB-), the source said.

Proceeds will fund a recapitalization that will result in first-lien lenders getting a roughly 90% equity stake in the company.

Wastequip is a Charlotte, N.C.-based manufacturer of waste handling equipment and recycling equipment.

SXC comes to market

SXC Health Solutions launched its $1.8 billion five-year senior secured credit facility as a $700 million revolver and a $1.1 billion term loan A, a big change from the structure outlined in filings with the Securities and Exchange Commission, according to a market source.

Price talk on the revised credit facility is Libor plus 200 bps, the source said.

By comparison, it was previously thought that the deal would consist of a $350 million five-year revolver, a $650 million five-year term loan A and an $800 million seven-year term loan B, with pricing on the pro rata debt expected at Libor plus 250 bps and term B pricing expected at Libor plus 325 bps with a 1% Libor floor. The term loan B would have had 101 soft call protection for one year.

J.P. Morgan Securities LLC is the left lead on the deal, and Bank of America Merrill Lynch, Barclays Bank Inc. and SunTrust Robinson Humphrey Inc. were added as commitment providers.

SXC buying Catalyst

Proceeds from SXC's credit facility will be used to fund the $4.4 billion cash and stock acquisition of Catalyst Health Solutions Inc. and to refinance debt at both companies. Catalyst shareholders will get $28 in cash and 0.6606 of a share of SXC stock per share, which implies a purchase price of $81.02 per share.

Closing is expected in the second half of the year, subject to approval by shareholders at both companies, U.S. antitrust approval and other customary conditions.

SXC is a Lisle, Ill.-based provider of pharmacy benefits management and health care information technology services. Catalyst is a Rockville, Md.-based provider of pharmacy benefits management.

Compass Minerals closes

In other news, Compass Minerals International Inc. completed its $387 million term loan (Ba1/BBB) that is priced at Libor plus 175 bps, according to a news release.

J.P. Morgan Securities LLC led the deal.

Proceeds were used to refinance existing term loan borrowings.

Compass Minerals is an Overland Park, Kan.-based producer and marketer of inorganic mineral products.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.