US Airways trades up; Nielsen sees resistance; Gentiva stays open; Express Scripts sets talk

By Sara Rosenberg

New York, July 21 - US Airways Group Inc.'s term loan headed higher during Wednesday's trading session after the company announced quarterly results that showed a year-over-year improvement in net income and revenues.

In other news, market chatter is that Nielsen Co.'s recently launched term loan extension proposal is being met with some pushback from lenders as a result of the spread that is being offered on the extended debt.

Also, Gentiva Health Services Inc. has opted to keep its books open past the commitment deadline, details surfaced on the structure and price talk on Express Scripts Inc.'s credit facility now that the deal has been presented to banks, and Vertafore Inc.'s credit facility is oversubscribed.

In addition, Airvana Inc. has firmed up timing on the launch of its term loan, and Concho Resources Inc. is getting ready to bring its revolver add-on to market, with the anticipation being that the event will take place this summer.

US Airways rises

US Airways' term loan gained some ground in trading following the release of positive second-quarter results, according to traders.

The term loan was quoted by one trader at 81 7/8 bid, 82 3/8 offered, up from 81 bid, 82 offered, and by a second trader at 81 5/8 bid, 82 1/8 offered, up from 81 bid, 82 offered.

For the second quarter, US Airways reported net income of $279 million, or $1.41 per diluted share, compared to net income of $58 million, or $0.42 per diluted share, in the previous year.

Revenues for the quarter were $3.171 billion, up 19.3% from $2.658 billion in the second quarter of 2009.

And, the Tempe Ariz.-based airline company's unrestricted cash and investments balance increased by $451 million to $2.1 billion versus March 31. As of June 30, the company had $2.5 billion in total cash and investments, of which $442 million was restricted.

Nielsen unnerves some lenders

Talk is that Nielsen's term loan extension offer has some lenders upset since they are being offered lower pricing on the extended debt than the existing tranche B carries, according to a market source.

"People were expecting to be offered to roll into the tranche B or at least get same or better pricing on the extended debt. It's seeing some pushback," the source said.

On Tuesday, the company launched the proposal to extend $1 billion of its tranche A and B term loans to May 2017.

As of March 31, the company had $2.983 billion and €321 million of tranche A term loans due in 2013 and $1.013 billion and €179 million of tranche B term loans due in 2016.

The extended term loan debt would be priced at Libor plus 325 basis points, compared to current pricing on the tranche A debt of Libor plus 200 bps and on the tranche B debt of Libor plus 375 bps.

Nielsen levels holds steady

Despite the worries over the extension, Nielsen's existing tranche A and B term loans held firm in trading on Wednesday, the source continued.

The tranche A was quoted at 94½ bid, 95½ offered, and the tranche B was quoted at 96 3/8 bid, 96 7/8 offered, with both tranches unchanged on the day, the source added.

Citigroup and JPMorgan are the lead banks on the company's extension proposal and are looking for responses by Monday.

Nielsen is a New York-based information and media company.

Gentiva gives more time

On the new deal front, Gentiva Health Services decided to extend the commitment deadline on its $600 million term loan from Wednesday until an undetermined date as the company wants to give more time to digest news of an investigation by the Securities and Exchange Commission.

Last Thursday, the company held a call with lenders to discuss the situation, which involves an investigation into its participation in the Medicare Home Health Prospective Payment System.

The company said that it plans to comply with any requests and that the investigation is a result of the industry as a whole coming under scrutiny.

There have been no changes made to the term loan B. The tranche was launched on July 7 with talk of Libor plus 450 bps to 475 bps with a 1.75% Libor floor and an original issue discount of 98. There is 101 soft call protection for one year.

Gentiva pro rata debt

Gentiva's $925 million senior credit facility (Ba2/BB-) also includes a $125 million revolver and a $200 million term loan A.

Price talk on the revolver and term loan A, which were launched to banks on June 16, is Libor plus 400 bps with a 1.5% Libor floor and an original issue discount of 981/2.

Bank of America, GE Capital, Barclays Bank and SunTrust are the joint lead arrangers and bookrunners on the deal, with Bank of America the administrative agent.

Covenants under the credit facility include a minimum interest coverage ratio and a maximum total leverage ratio.

Gentiva buying Odyssey

Proceeds from Gentiva's credit facility will be used to help fund the acquisition of Odyssey HealthCare Inc. for $27 per share, for an aggregate purchase price of about $1 billion, and to refinance existing debt.

Other funding for the transaction is expected to come from $305 million of eight-year senior unsecured notes, which is backed by a commitment for a $305 million 12-month senior bridge loan.

Following completion of the transaction, net leverage is expected to be around the 4.0 times area.

Closing on the credit facility and the acquisition is expected in the third quarter, subject to approval by Odyssey's stockholders.

Gentiva is an Atlanta-based home health care provider. Odyssey is a Dallas-based provider of hospice care.

Express Scripts details

Tranching and price talk on Express Scripts' proposed credit facility became available now that the deal is in market, according to a market source, who said that the transaction is being done through a pro rata execution.

The facility consists of a $500 million term loan A and a $100 million revolver, with both tranches talked at Libor plus 275 bps with no Libor floor, the source said.

Credit Suisse, Morgan Stanley, JPMorgan, Citigroup and Wells Fargo are the joint lead arrangers on the deal that launched with a bank meeting on Tuesday, with Credit Suisse the left lead.

Proceeds will be used to refinance the company's existing credit facility, which, as of March 31, was comprised of $360 million of term A loans, $800 million of term-1 loans and a $600 million revolver that was undrawn.

Express Scripts is a St. Louis-based provider of pharmacy benefit management services.

Vertafore overfills

Vertafore's $625 million senior credit facility (B1/B+) has been well met by investors, resulting in oversubscription of the deal ahead of Thursday's commitment deadline, according to a market source.

The facility consists of a $75 million revolver and a $550 million term loan, with both tranches talked at Libor plus 525 bps with a 1.75% Libor floor.

The term loan is being offered at an original issue discount in the 97 to 98 area.

Credit Suisse, Bank of America and Barclays are the lead banks on the deal, with Credit Suisse the left lead. RBC is a documentation agent.

Vertafore being acquired

Proceeds from Vertafore's credit facility will be used to help fund its buyout by TPG Capital from Hellman & Friedman and JMI Equity for a total consideration of $1.4 billion.

Other financing will come from $240 million of junior debt and equity.

The acquisition is expected to close in the third quarter, subject to customary regulatory approvals.

Leverage will be 4.5 times through the first lien and 6.5 times total, and the equity contribution is 47%.

Vertafore is a Bothell, Wash.-based provider of software and information to the insurance distribution channel.

Airvana sets timing

Airvana nailed down timing on the launch of its proposed $330 million senior secured term loan, with the scheduling of a bank meeting for July 29, according to a market source.

Previously, it was known that the deal would come next week, but a specific date had been unavailable, and the loan has already been presented to some investors through one-on-one conversations.

Rumor is that the term loan is being whispered at Libor plus 700 bps with a 2% Libor floor and an original issue discount of 97 to 98, the source said.

Jefferies, Societe Generale and Macquarie are the lead banks on the deal, with Jefferies the left lead.

Airvana size could move

The size of Airvana's term loan is still flexible, with the ability for it to be increased based on demand, a market source previously told Prospect News.

Proceeds will be used to refinance existing debt and pay a dividend.

In April, the company was acquired by 72 Mobile Holdings LLC, an entity that was formed by S.A.C. Private Capital Group LLC, GSO Capital Partners, Sankaty Advisors LLC and ZelnickMedia.

Corporate ratings are expected at B2/B+.

Airvana is a Chelmsford, Mass.-based provider of mobile broadband network infrastructure products.

Concho expected in next few weeks

Concho Resources, a Midland, Texas-based oil and natural gas company, is anticipated to hold a bank meeting sometime before Labor Day to launch its proposed $800 million revolving credit facility add-on, according to a market source.

JPMorgan and Bank of America are the lead banks on the deal that will be used to help fund the acquisition of all the oil and gas assets of Marbob Energy Corp. for $1.65 billion in cash and Concho securities.

The $1.45 billion cash portion of the transaction, plus $35 million for fees and expenses, will come from $1.185 billion of borrowings under the expanded revolver and from the sale of 6.6 million shares of common stock for $300 million in a private placement transaction.

Completion of the acquisition is expected to occur on Nov. 1, subject to certain preferential rights to purchase, due diligence, customary purchase price adjustments and other customary conditions.

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