Connolly frees up; Dex West, Dex East, R.H. Donnelley rise with earnings; Pantry flexes

By Sara Rosenberg

New York, July 25 - Connolly Inc.'s credit facility broke for trading on Wednesday, with the first- and second-lien term loans seen above their original issue discount prices, and Dex West, Dex East and R.H. Donnelley Inc. all saw their term loans strengthen as parent company Dex One Corp. released quarterly results that showed an improvement in net income from the prior year.

Over in the primary market, Pantry Inc. made some issuer-friendly changes to its term loan B on strong demand, with the coupon seeing a reduction and a leverage-based pricing step-down added, and Pilot Travel Centers LLC announced pricing guidance and Windstream Corp. revealed discount talk with their launches.

In addition, Peninsula Gaming LLC came out with timing on its credit facility, which will be launching with a slightly larger size than originally anticipated, and Presidio Inc. and CPM Holdings Inc. emerged with new deal plans.

Connolly hits secondary

Connolly's credit facility freed up for trading on Wednesday, with the $240 million first-lien term loan (Ba3) quoted at 99½ bid on the break and the $130 million second-lien term loan (Caa1) quoted at 99 bid on the break, according to a trader. By the afternoon, both loans had moved up to par bid, 101 offered, the trader added.

Pricing on the first-lien term loan is Libor plus 525 basis points, after flexing during the syndication process from Libor plus 550 bps. There is a 1.25% Libor floor as well as 101 soft call protection for one year, and the debt was sold at an original issue discount of 99.

Meanwhile, the second-lien term loan is priced at Libor plus 925 bps with a 1.25% Libor floor and was sold at a discount of 98. There is call protection of 103 in year one, 102 in year two and 101 in year three.

Connolly getting revolver

Connolly's $400 million credit facility, which is being led by RBC Capital Markets LLC and SunTrust Robinson Humphrey Inc., also includes a $30 million revolver (Ba3)

Proceeds will be used to help fund the buyout of the company by Advent International.

At close, first-lien leverage will be 3.97 times and second-lien leverage will be 6.13 times.

Completion of the transaction is expected this month.

Connolly is an Atlanta-based provider of technology-enabled recovery audit services.

Dex debt heads higher

Also in trading, Dex One's subsidiaries saw bank debt levels gain ground following the release of second-quarter numbers, according to a trader.

Dex West's term loan was quoted at 59 bid, 61 offered, up from 58 bid, 60 offered, Dex East's term loan was quoted at 51 bid, 53 offered, up from 50 bid, 52 offered, and R.H. Donnelley's term loan was quoted at 44 bid, 46 offered, up from 43 bid, 45 offered, the trader said.

For the quarter, Dex One reported net income of $52.9 million, or $1.05 per share, compared to a net loss of $602.1 million, or $12.01 per share, in the previous year.

Net revenue for the quarter was $334.5 million, versus $377.3 million in the second quarter of 2011.

And, adjusted EBITDA was $141.2 million, compared to $157.1 million last year.

Dex narrows guidance

Also on Wednesday, Dex One tightened its full-year 2012 guidance for net revenue, adjusted EBITDA and free cash flow.

Net revenue for the year is now expected to range from $1.25 billion to $1.3 billion, compared to previous estimates of $1.225 billion to $1.3 billion.

Adjusted EBITDA for the year is anticipated to range from $525 million to $575 million, instead of from $500 million to $575 million.

And free cash flow for the year is now guided at $310 million to $360 million, compared to prior estimates of $300 million to $375 million.

Dex One is a Cary, N.C.-based marketing services provider.

Pantry reworks pricing

Pantry announced revisions to its well-met $255 million term loan B, including cutting the spread to Libor plus 450 bps from Libor plus 475 bps and adding a step-down to Libor plus 425 bps at less than 4.0 times leverage, according to a market source.

As before, the loan has a 1.25% Libor floor, an original issue discount of 99 and 101 soft call protection for one year.

Recommitments were due by the end of the day on Wednesday, with the plan being to allocate on Thursday, the source said.

The company's $480 million senior secured credit facility (B1/BB) also provides for a $225 million revolver that is priced at Libor plus 425 bps. This trading is already syndicated, since it was launched a few weeks before the term loan.

Pantry refinancing debt

Proceeds from Pantry's credit facility will be used to help repay outstanding term loans and senior subordinated notes, the aggregate outstanding amount of which is about $598 million.

Other funds for the transaction will come from $250 million of senior notes and available cash.

Wells Fargo Securities LLC and Bank of America Merrill Lynch are the lead banks on the credit facility.

Pantry is a Cary, N.C.-based operator of a chain of convenience stores.

Pilot reveals talk

Pilot Travel Centers held a call on Wednesday to launch its new bank debt, and in connection with the event, talk on the $700 million term loan B-2 was released as Libor plus 325 bps to 350 bps with a 1% Libor floor, an original issue discount of 99 and 101 soft call protection for one year, a source said.

The company's $1.1 billion in new bank debt (Ba2) also includes a $100 million add-on revolver and a $300 million add-on term loan A.

Bank of America Merrill Lynch, Wells Fargo Securities LLC and SunTrust Robinson Humphrey Inc. are leading the deal that will fund a distribution to shareholders and be used for acquisitions and general corporate purposes.

Commitments are due at noon ET on Aug. 1, the source added.

Pilot is a Knoxville, Tenn.-based operator of travel centers.

Windstream OID emerges

Windstream also launched with a call in the afternoon, and its $600 million seven-year term loan B-3 was disclosed to be offered at an original issue discount of 99, according to market sources. Prior to launch, pricing guidance came out at Libor plus 325 bps to 350 bps with a 1% floor.

As previously reported, the company is also getting a $300 million five-year term loan A-4 talked at Libor plus 225 bps with no Libor floor.

J.P. Morgan Securities LLC, Bank of America Merrill Lynch, Barclays Capital Inc., Citigroup Global Markets Inc., CoBank, Goldman Sachs & Co., Morgan Stanley Senior Funding Inc., RBC Capital Markets LLC, RBS Securities Inc., SunTrust Robinson Humphrey Inc., Union Bank of California and Wells Fargo Securities LLC are leading the deal (Baa3) that will be used to repay existing revolver debt and for working capital needs.

Windstream is a Little Rock, Ark.-based provider of advanced communications and technology services, including managed services and cloud computing.

Peninsula sets launch

Peninsula Gaming nailed down timing on its credit facility, setting a bank meeting for Thursday morning to launch the $875 million five-year deal, according to sources.

The facility consists of a $50 million revolver and an $825 million term loan B, sources said. The B loan is larger than previously expected, as the company had said in an 8-K filed with the Securities and Exchange Commission in May that it would be $800 million.

In addition, the filing had disclosed that the term loan would have a 1.25% Libor floor and 101 soft call protection for one year, the revolver would have a 50 bps unused fee, and both tranches could be issued at an original issue discount of 99.

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

Peninsula being acquired

Proceeds from Peninsula Gaming's credit facility will be used to help fund its purchase by Boyd Gaming Corp. for $1.45 billion and refinance about $700 million of its existing debt.

Based on the earlier 8-K filing, other funds for the transaction are expected to come from $350 million of senior notes backed by a senior unsecured bridge loan that has a 1.5% Libor floor, $200 million in cash from Boyd and a roughly $144 million six-year PIK seller note that will have a coupon of 0% in year one, 6% in year two, 8% in year three and 10% thereafter.

Also, for the transaction, Boyd has received a commitment for a $150 million incremental revolver and or term loan due Dec. 17, 2015 that has pricing ranging from Libor plus 250 bps to 350 bps and an unused fee of 25 bps to 50 bps based on leverage.

Peninsula Gaming is Dubuque, Iowa-based owner and operator of casinos and off-track betting parlors. Boyd is a Las Vegas-based owner and operator of gaming entertainment properties.

Presidio readies deal

Also joining the calendar for Thursday was Presidio, with the company scheduled to hold a conference call to launch a new credit facility that will refinance its existing bank debt, according to a market source.

Barclays Capital Inc., J.P. Morgan Securities LLC and RBC Capital Markets LLC are the lead banks on the deal.

Presidio is a Greenbelt, Md.-based provider of advanced technology infrastructure services.

CPM coming soon

Meanwhile, CPM Holdings will be holding a bank meeting on Tuesday morning to launch a $500 million credit facility that is being led by Jefferies & Co., according to a market source.

The facility consists of a $40 million revolver, a $275 million first-lien term loan and a $185 million second-lien term loan, the source said.

CPM, a Waterloo, Iowa-based supplier of process equipment used for oilseed processing and animal feed production, will use the proceeds from the credit facility to refinance existing bonds and fund a distribution to shareholders.

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