Revlon sees some early interest with large commitments heard to be hitting the books

By Sara Rosenberg

New York, June 22 - The primary was hopping on Tuesday with the launch of a couple of new deals, and the largest one of the day - Revlon Consumers Products Corp. - generated some positive attention as some large commitments, primarily from hedge funds, were said to be heading into the books.

"I think that's going to go really well," a market source said. "It sounds like guys are putting in big commitments already right after the bank meeting. I heard one guy say he's committing $30 million and another guy say he's committing $50 million."

Revlon Inc. hosted a public conference call on Tuesday as well as a private call later on in the day outlining terms of its proposed refinancing to potential lenders and benefits to the company that would result from completing such a transaction.

As was previously reported, the $910 million senior secured credit facility that is being obtained at the Revlon Consumers Products Corp. level consists of a $750 million six-year term loan with price talk of Libor plus 600 to 625 basis points and a $160 million five-year asset-based revolving credit facility priced at Libor plus 250 basis points with an undrawn commitment fee of 50 basis points.

The term loan has call protection of 105 in year one, 103 in year two, 102 in year three and 101 in year four, officials said during the call.

There is only one financial covenant under the term loan and that is a maximum senior secured leverage test which is set at 51/2x at December 2004 and gradually reduces to 41/2x at the beginning of the first quarter of 2007.

There will also be a prohibition on additional senior secured and unsecured debt with baskets to be determined on final documentation.

On a March 2004 last-12-months basis, total debt to EBIDTA is about 7.8x.

Ratings on the term loan are B3/B-, and the rating on the revolver is B2 (S&P has opted not to rate the tranche), officials said in the call.

Although the company is still "committed" to completing a $110 million equity offering by the end of the first quarter of 2006, proceeds from that offering may not necessarily go toward the repayment of term loan debt, company officials said in the conference call. Proceeds from the contemplated equity offering can be used to repay debt that matures inside the term loan so, for example, it can be used to repay the senior notes that come due in 2006. However, proceeds from the equity offering would go toward term debt repayment following the refinancing of debt that comes due prior to the term loan, officials explained.

Proceeds will be used to refinance the existing credit facility that currently has about $290 million outstanding, to refinance the approximately $363 million 12% senior secured notes and to pay about $95 million in transactional fees and expenses, tender costs and accrued interest.

"The key benefits of this refinancing are that it does address our short-term maturities, it improves our liquidity to help fund our growth plan and it further reduces our interest expense," company officials explained in the call.

The company expects to complete the tender offer for the bonds and close on the credit facility sometime in mid-to-late July.

Second attempt for Revlon

This is Revlon's second attempt at a refinancing this year. In April, the company announced plans to get a new $680 million credit facility, sell $400 million of senior notes and complete a tender offer for the outstanding 8 1/8% senior notes due 2006, the 9% senior notes due 2006 and the 12% senior secured notes due 2005. However, the refinancing attempt was pulled in May.

The $680 million credit facility (B2/B) that was previously in-market came via JPMorgan and Citigroup. The facility included a $530 million six-year term B at Libor plus 425 basis points and a $150 million five-year revolver at Libor plus 325 basis points with a 50 basis points undrawn fee.

Syndication of the term loan B met with some resistance, even though the company increased pricing on the tranche by 100 basis points to Libor plus 425 basis points from Libor plus 325 basis points and added 101 soft-call protection after price talk on the proposed bond offering headed higher.

The company explained during the call that it felt like there was a lot of momentum in the first quarter on the heels of the exchange offer that was completed in March but unfortunately the previous deals were met with unfavorable market conditions. "We came back soon after and worked with Citi on this deal, which we feel on balance is a very good one for us and for all of our stakeholders, and it's just the right time to execute it," officials added.

In the March exchange offer, Revlon tendered about $631.2 million principal amount of notes in exchange for equity.

Citigroup is the lead bank on the proposed credit facility.

Revlon is a New York manufacturer and seller of cosmetics and skin care, fragrance and personal care products.

Yonkers well attended

Yonkers Raceway's bank meeting on Tuesday saw good attendance both in person and on the phone, according to a market source, with the $185 million term loan going out at Libor plus 375 basis points, slightly higher then the originally anticipated price talk of Libor plus 325 to 350 basis points, according to a market source.

However, the pricing on the term loan does drop back down to Libor plus 325 basis points upon opening of the renovated facility.

Technically, the entire tranche is considered a delayed-draw term loan, but some of the loan will be drawn immediately at closing. There is a 100 basis point undrawn fee on the portion of the loan that is not borrowed.

The term loan is being offered at par.

"There were a lot of detailed questions, which is usually a good sign," the source said. "There are a lot of commercial banks looking at this. There are a bunch that do all the gaming deals. They're good lenders to have because they understand the business. There should be a good combination of commercial banks and funds investing in this."

Merrill Lynch is the left lead bank on the deal. On Friday, Bear Stearns signed up as co-arranger and syndication agent on the loan.

More specifically, proceeds from the term loan will be used by the Yonkers, N.Y., horse racing track to fund renovations and additions to the facility that will enable it to have a 5,500-slot "racino," or race track-casino, the source said. It is expected that construction will take about nine months.

Resolution Specialty commitments

Resolution Specialty Materials' $145 million credit facility has gotten some early commitments already even before the Tuesday bank meeting, according to a market source.

"There were just a couple [of commitments] before the meeting. Good attendance [at the meeting]. Wasn't overflowing but the room looked full and there were a bunch of people on the phone," the source added.

The facility consists of a $30 million revolver with an interest rate of Libor plus 300 basis points and a $115 million term loan B with an interest rate of Libor plus 300 basis points. The term loan is being offered at par. Revolver commitments are being offered 100 basis points.

JPMorgan and Bear Stearns are the lead arrangers on the facility, with JPMorgan listed on the left.

Proceeds will be used to help finance the Apollo Management LP's acquisition of some businesses and product lines in Eastman Chemical Co.'s coatings, adhesives, specialty polymers and inks segment.

Rent-A-Center launch

Also launching Tuesday was Rent-A-Center Inc.'s proposed $600 million senior credit facility consisting of a $400 million term loan and a $200 million revolver.

Lehman Brothers and JPMorgan are co-lead arrangers and joint bookrunners on the deal, with Lehman listed on the left.

The company is looking to refinance its existing credit to get lower interest rates and to renegotiate covenants, including the basket to repurchase stock and the capital expenditures requirement, a company spokesman previously told Prospect News. The decision to seek the refinancing at the present time was based on the strength of the credit market and the company's enhanced credit standing since being upgraded by Standard & Poor's.

Rent-A-Center's existing credit facility contains a $400 million term loan with an interest rate of Libor plus 225 basis points, a $120 million revolver with an interest rate of Libor plus 200 basis points and an $80 million letter-of-credit facility with an interest rate of Libor plus 225 basis points, the spokesman added. At March 31, the company had a total of $397 million outstanding under its term loan and $90.3 million of availability under its revolver.

In addition to repaying the existing facility, Rent-A-Center will use proceeds for general corporate purposes.

The Plano, Texas, operator of rental purchase stores expects to complete the transaction in the third quarter.

Harbor Freight pricing

Pricing of Libor plus 300 basis points surfaced on Harbor Freight Tools' $440 million six-year term loan B. However, pricing on the $60 million five-year revolver is still to be determined, according to a market source.

UBS and Credit Suisse First Boston are joint lead arrangers and joint bookrunners on the deal that is scheduled to launch via a bank meeting on Thursday, with UBS listed on the left.

Proceeds will be used for to pay a dividend recap, the source added.

Harbor Freight Tools is a Camarillo, Calif., tool and equipment catalog retailer.

Coinstar reverse flexed

Notification went out to accounts on Tuesday that Coinstar Inc.'s $250 million term loan B was reverse flexed to Libor plus 225 basis points from original price talk of Libor plus 250 to 275 basis points, according to a fund manager.

"It was pretty well oversubscribed," the fund manager explained. "The $250 million term loan I think had a billion in the book."

The $300 million credit facility (Ba3/BB-) also contains a $50 million revolver.

"Today is the last day for people to commit to the deal so it should allocate end of this week, beginning of next week," the fund manager added.

JPMorgan and Lehman Brothers are the lead banks on the deal, with JPMorgan listed on the left.

Proceeds will be used to finance the $235 million cash purchase of American Coin Merchandising Inc. (ACMI).

As part of the acquisition, Coinstar will not be assuming any of ACMI's existing debt. The transaction is expected to close in the third quarter of this year. Closing is contingent upon customary conditions including obtaining Hart-Scott-Rodino and other governmental approvals, securing contractual consents and financing.

Coinstar is a Bellevue, Wash., owner and operator of automated self-service coin-counting machines. ACMI is a Louisville, Colo., owner and operator of coin-operated amusement vending equipment.

BWAY lowers pricing

BWAY Corp. lowered pricing on its $225 million term loan to Libor plus 225 basis points from Libor plus 275 basis points, according to a market source.

Deutsche Bank and JPMorgan are joint lead arrangers on the deal, with Deutsche listed on the left.

The $255 million credit facility (B1/B+) also contains a $30 million revolver that was left unchanged with pricing of Libor plus 275 basis points.

The revolver is expected to be undrawn at closing.

Proceeds from the term loan, along with a $30 million equity contribution, will be used to help fund the acquisition of North America Packaging Corp. (Nampac) and to repay borrowings under the company's existing $90 million credit agreement.

BWAY is paying $210 million for Nampac, subject to adjustments for the redemption of preferred stock, repayment of debt and working capital.

On a pro forma basis for the Nampac acquisition, leverage as of the second fiscal quarter ended April 4 would be 4.7x.

Considering management estimates of initial synergies resulting from the Nampac acquisition, pro forma leverage as of the second fiscal quarter ended April 4, 2004 would be 4.5x, according to a company news release that announced the transaction.

BWAY is an Atlanta manufacturer of steel and plastic containers. NAMPAC is a Raleigh, N.C., producer of general line rigid plastic containers.

AMO breaks

In the secondary, Advanced Medical Optics' $360 million credit facility broke for trading with the $250 million term loan hitting the market in the 101s, according to one trader. A second trader was a bit more specific on levels putting the term loan at 101 bid, 101½ offered.

The term loan is priced with an interest rate of Libor plus 225 basis points.

Originally, the term loan was launched with a size of $275 million but was recently reduced to $250 million.

Mid last week the company priced an upsized convertible offering, selling $300 million of notes as opposed to the planned $275 million.

The facility also contains a $110 million revolver that is really just being amended so the company basically worked with existing lenders on syndication of the tranche.

Bank of America and Lehman Brothers are the lead banks on the deal, with Bank of America listed on the left.

Proceeds from the credit facility and the convertibles will be used to help fund the purchase of Pfizer's surgical ophthalmology business for $450 million in cash.

Advanced Medical Optics is a Santa Ana, Calif., developer, manufacturer and marketer of ophthalmic surgical and contact lens care products.

Reliant higher

Reliant Energy Inc.'s bank debt was higher by about a quarter of a point on Tuesday trading in the 99¾ bid, par ½ offered context, according to a trader.

"There was no reason. All utilities have been better," the trader said.

Reliant is a Houston energy company.

Conseco closes

Conseco Inc. closed on its $800 million senior secured term loan (BB-). Banc of America Securities LLC and J.P. Morgan Securities Inc. were the lead arrangers for the deal.

The term loan carries an initial interest rate of Libor plus 400 basis points. The pricing will decrease to Libor plus 350 basis points when the company receives a senior credit rating of B2 from Moody's Investors Service, according to a company news release.

Proceeds from the term loan, combined with proceeds from previously completed common and mandatorily convertible preferred stock offerings, were used to redeem all of the issued and outstanding class A cumulative convertible exchangeable preferred stock, repay all of the $1.3 billion existing senior bank debt and redeem some inter-company preferred stock investments held by Conseco's insurance subsidiaries.

"We are very pleased to complete our recapitalization. As a result of the recapitalization, our annual cost of debt and preferred stock has been reduced by approximately $90 million, after-tax. We can now focus even more on providing superior insurance products to senior and middle-income Americans. We appreciate the confidence which the investment community and capital markets have placed in us, and we intend to prove that their confidence is deserved," said Bill Shea, chief executive officer, in the release.

Conseco is a Carmel, Ind., provider of supplemental health insurance, life insurance and annuities.

Iasis closes

Iasis Healthcare Corp. closed on its $675 million credit facility (B1/B+) consisting of a $425 million term loan B with an interest rate of Libor plus 225 basis points (after being reverse flexed during syndication from initial pricing of Libor plus 250 basis points) and a $250 million revolver with an interest rate of Libor plus 250 basis points that was undrawn at closing.

Bank of America, Citigroup, Goldman Sachs, Lehman Brothers and Merrill Lynch are the lead banks on the deal, with Bank of America listed on the left.

Proceeds, combined with proceeds from a bond deal, were used to help fund the acquisition of Iasis by an investor group led by Texas Pacific Group from JLL Partners in a transaction valued at about $1.4 billion.

Iasis is a Franklin, Tenn., owner and operator of medium-sized acute care hospitals.

© 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.