Inverness sets second-lien talk; Varietal, Hercules talk emerges; NRG Energy, Conseco break

By Sara Rosenberg

New York, June 8 - Inverness Medical Innovations Inc. released price talk on its second-lien term loan as the deal was launched with a bank meeting on Friday.

Also on the price talk front, Varietal Distribution Holdings, LLC and Hercules Offshore Inc. set official guidance on their in-market deals on the heels of the ratings coming out.

Meanwhile, in the secondary market, NRG Energy Inc.'s new holdco term loan and strip of repriced opco bank debt freed up for trading, with the holdco quoted in the low par's and the opco quoted in the mid par's.

And, Conseco Inc.'s incremental term loan debt broke for trading as well, with levels seen atop par.

Inverness held a bank meeting on Friday to kick off syndication on its proposed credit facility, and in conjunction with the launch, price talk on the second-lien term loan was announced, according to a market source.

The $200 million eight-year second-lien term loan is being talked at Libor plus 500 basis points, with call protection of 102 in year one and 101 in year two, the source said.

As was previously reported, Inverness' $1.25 billion senior secured credit facility also includes a $150 million six-year revolver and a $900 seven-year first-lien term loan B, with both of these tranches talked at Libor plus 225 bps.

Earlier this week, the credit facility was revised to increase the term loan B size from $850 million and to add the second-lien term loan to the capital structure as the company opted to do away with its proposed $300 million unsecured senior subordinated notes offering.

In addition, once the structure changed, the company moved the bank meeting to Friday from Thursday.

General Electric Capital Corp. and UBS are the joint lead arrangers on the deal, with General Electric Capital the left lead on the first-lien debt and UBS the left lead on the second-lien debt.

Proceeds from the credit facility will be used to help fund the acquisition of Biosite Inc. in a cash tender offer for $92.50 per share. The tender offer expires on June 25.

Inverness is a Waltham, Mass.-based developer of advanced diagnostic devices. Biosite is a San Diego-based biomedical company.

Varietal price talk

Varietal Distribution revealed price talk of Libor plus 250 bps on all tranches under its in-market $1.665 billion senior secured credit facility now that B1/B+ ratings emerged late in the day Thursday, according to a market source.

Tranching on the facility, which launched with a bank meeting in New York this past Wednesday and in London on Thursday, is comprised of a $250 million six-year revolver, a $715 million seven-year term loan B and a $700 million euro equivalent seven-year term loan B.

Bank of America, Goldman Sachs and JPMorgan are the lead banks on the deal.

Proceeds will be used to help Varietal Distribution, a newly formed company controlled by Madison Dearborn Partners LLC, fund its acquisition of VWR International Inc. from Clayton, Dubilier & Rice, Inc. for a cash merger consideration of $2.196 billion, less certain transaction expenses and subject to certain other adjustments.

In connection with the buyout, the company is tendering for VWR parent company CDRV Investors Inc.'s $350 million of senior floating-rate notes due 2011, $481 million of 9 5/8% senior discount notes due 2015, $200 million of 6 7/8% senior notes due 2012 and $320 million of 8% senior subordinated notes due 2014. The tender offer will expire on June 26.

VWR is a West Chester, Pa., distributor of laboratory products.

Hercules official guidance

Hercules Offshore came out with official price talk of Libor plus 200 bps on both tranches under its up to $1.05 billion credit facility as a BB rating was announced on the deal, joining the Ba3 rating that came out a few days ago, according to a market source.

Tranching on the deal, which launched with a bank meeting this past Tuesday, is comprised of an up to $900 million six-year term loan B and a $150 million five-year revolver.

Prior to launch, the term loan B was expected to carry a size of $1.1 billion, but it was reduced because the company is generating a lot of cash. In fact, the final size of the term loan B won't be determined until around closing at the end of June.

UBS is the lead bank on the deal. Other banks involved include Amegy Bank, Comerica Bank, Credit Suisse, Deutsche Bank, Jefferies Finance LLC and JPMorgan.

Financial covenants include maximum leverage and fixed-charge coverage.

Proceeds will be used to help fund the acquisition of Todco for an average total consideration equal to 0.979 of a share of Hercules Offshore and $16.00 in cash for each share of Todco common stock outstanding, or an estimated 56.9 million shares of Hercules Offshore and cash of $930.7 million. The transaction is valued at $2.3 billion.

In addition to financing the acquisition, proceeds from the facility will be used to repay in full and terminate Hercules' existing senior secured term loan facility and to refinance Todco's revolver.

Hercules Offshore is a Houston-based operator of jack-up drilling rigs and liftboats. Todco is a Houston-based provider of contract oil and gas drilling services.

Intertape sets second-lien call premiums

Intertape Polymer Group Inc. revealed on Friday that its $120 million 71/2-year second-lien term loan (Caa2) will carry call protection of 102 in year one and 101 in year two, according to a market source.

The company's $460 million credit facility, which is scheduled to launch with a bank meeting on Monday afternoon in New York, also includes a $60 million six-year revolver (B2) and a $280 million seven-year first-lien term loan B (B2).

Price talk on the tranches will be announced at the bank meeting, the source continued.

The credit facility will have a maximum leverage covenant, the source added.

Citigroup is the lead bank on the deal.

Proceeds will be used to help fund Littlejohn & Co., LLC's acquisition of the company for $4.76 per share in cash. Including net debt outstanding, the total transaction value is about $500 million.

Other acquisition financing will come from an up to $141 million equity commitment, according to filings with the Securities and Exchange Commission.

The transaction will be implemented by way of a court-approved plan of arrangement under Canadian law and, accordingly, will be subject to the approval of two-thirds of the votes cast by the company's shareholders at a special meeting set to take place on June 26.

In addition, the transaction will require approval by the Superior Court of Quebec in the District of Montreal.

Intertape is a Saint Laurent, Quebec, developer, manufacturer and seller of polyolefin films, paper and film pressure-sensitive tapes and complementary packaging systems.

Educate tweaks deal

Educate Inc. made some changes to its credit facility, including moving funds between its first- and second-lien term loans and lowering pricing on the two tranches, according to a market source.

The six-year first-lien term loan (Ba2/B) is now sized at $200 million, up from $170 million, and pricing was reverse flexed to Libor plus 225 bps from original talk at launch of Libor plus 300 bps, the source said.

On the flip side, the seven-year second-lien term loan (B3/CCC+) is now sized at $75 million, down from $105 million, and pricing was reverse flexed to Libor plus 525 bps from original talk at launch of Libor plus 600 bps, the source added.

The second-lien term loan carries call protection of 102 in year one and 101 in year two.

Educate's $290 million credit facility also includes a $15 million five-year revolver (Ba2/B) that has a 50 bps commitment fee.

JPMorgan is the lead bank on the deal.

Proceeds will be used to help fund the buyout of the company by chairman and chief executive officer Christopher Hoehn-Saric, president and chief operating officer Peter Cohen and certain other members of management and affiliates of Sterling Capital Partners and Citigroup Private Equity for $8.00 per share in cash.

The total value of the transaction, including assumed debt, is about $535 million.

Educate is a Baltimore-based pre-K through 12 education company.

NRG frees to trade

Moving to the secondary, NRG Energy's senior secured holdco term loan B and repriced strip of opco debt broke for trading on Friday, with the holdco term loan quoted at par bid, par ¼ offered and the opco debt quoted at par 3/8 bid, par 5/8 offered, according to a trader.

The $1 billion delayed-draw senior secured holdco term loan B (B2/B-) is priced at Libor plus 250 bps, with a 50 bps undrawn fee for six months and a 75 bps fee after that.

During syndication, pricing on the holdco loan was increased from original talk at launch of Libor plus 225 bps and the undrawn fee was revised from just 75 bps after six months.

The holdco term loan B is part of a plan under which NRG will become a wholly owned operating subsidiary of a newly created holding company.

Proceeds will be used to fund an equity contribution to opco, which opco would then use to repay some of its existing term loan B debt.

The holdco delayed-draw term loan B will not be funded until regulatory approvals are received, which is expected in the fourth quarter.

The strip of opco debt is comprised of an existing $3.148 billion term loan B and an existing $1.3 billion synthetic letter-of-credit facility that were both repriced to Libor plus 175 bps from Libor plus 200 bps.

In connection with this transaction, the company reduced the size of its synthetic letter-of-credit facility from $1.5 billion.

Credit Suisse and Citigroup are the lead banks on the deal.

NRG is a Princeton, N.J.-based wholesale power generation company.

Conseco breaks

Also hitting the secondary on Friday was Conseco's $200 million term loan add-on, with levels quoted at par ¼ bid, par ½ offered on the open and then moving up to par 3/8 bid, par 5/8 offered, where it closed out the session, according to a trader.

The term loan add-on is priced at Libor plus 200 bps, in line with existing term loan pricing.

Bank of America and JPMorgan are the joint lead arrangers and bookrunners on the deal.

Proceeds from the add-on will be used for general corporate purposes, including the repurchase of common stock, and the strengthening of the capital of its insurance subsidiaries.

Conseco is a Carmel, Ind., insurance company.

LCDX higher

LCDX went out stronger on Friday as the equity markets ended the day higher, according to a trader.

The index went out at 100.49 bid, 100.51 offered, up from 100.43 bid, 100.45 offered at the close of business Thursday, the trader said.

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