Plastech firms spreads, call protection; Cellnet, Rexnord flex; Star sets talk; Lear moves on Icahn bid

By Sara Rosenberg

New York, Feb. 5 - Plastech Engineered Products Inc. finalized pricing and call premiums on its credit facility and is expecting to allocate the now oversubscribed deal later this week.

In other primary happenings, Cellnet lowered pricing on its first-lien term loan B and delayed-draw term loan, added a step down to the first-lien term loan B and finalized pricing on its second-lien loan, and Rexnord Corp. reduced the spread on its new term loan debt while adding a step down as well.

Also, The Star Tribune Co. started floating price talk around on its credit facility as the deal is getting ready to launch with a bank meeting Tuesday.

On the secondary side, Lear Corp.'s bank debt was active, with the revolver moving up and the term loan moving down, as news of an acquisition bid from Carl C. Icahn emerged.

Plastech Engineered Products finalized details on its $590 million credit facility, including setting pricing on the first-lien term loan B at the high end of talk, revealing the pricing grid on the second-lien term loan and settling on call protection provisions for both the first- and the second-lien term loans, according to a market source.

The $265 million six-year first-lien term B (B3/B+) ended up with pricing of Libor plus 550 basis points, the wide end of original guidance of Libor plus 500 to 550 bps, and call protection was established at 102 in year one and 101 in year two, the source said. At launch, the call protection on this tranche was labeled as to be determined.

The $100 million seven-year second-lien term loan (Caa2/B-) ended up with pricing of Libor plus 900 bps, in line with original guidance, and call protection was established at non-callable for two years, then at 103 in year three, 102 in year four and 101 in year five, the source continued. Like the first-lien term loan B, call premiums on the second-lien were to be determined when the deal launched.

In addition, details on the leverage-based pricing grid that the second-lien term loan was expected to carry since launch have been decided upon.

Under the second-lien grid, if total leverage is less than 3.0 times, pricing will be Libor plus 800 bps. If total leverage is 3.0 to 3.5 times, pricing will be Libor plus 900 bps. If total leverage is 3.5 to 4.0 times, pricing will be Libor plus 1050 bps. If total leverage is 4.0 to 4.5 times, pricing will be Libor plus 1050 bps plus 200 bps PIK. And, if total leverage is 4.5 to 5.0 times, pricing will be Libor plus 1050 bps plus 450 bps PIK.

The second-lien term loan was sold to investors at an original issue discount of 98. This discount has been present in the deal since the beginning of syndication.

Lastly, Plastech's $225 million five-year ABL revolver (B1/BB) firmed up at Libor plus 200 bps with a 50 bps undrawn fee, in line with original talk.

All three tranches are oversubscribed.

Allocations on the deal are expected to go out this coming Thursday, with closing and funding targeted for Friday, the source added.

Plastech originally came to market in November 2006 with a $600 million credit facility, consisting of a $200 million ABL revolver (B1/BB) talked at Libor plus 200 bps, a $250 million first-lien term loan B (B2/B+) talked at Libor plus 450 to 500 bps with 101 soft call protection for one year and a $150 million second-lien term loan (Caa2/B-) talked at Libor plus 750 to 800 bps with call protection of 102 in year one and 101 in year two.

As syndication progressed, pricing guidance on the first-lien term loan B narrowed to Libor plus 475 to 500 bps, and then expectations emerged that final pricing would end up at the high end of talk at Libor plus 500 bps, while the second-lien term loan was expected to come wider than the original guidance with additional call premiums layered in.

Then speculation started to float around that the deal might end up looking like something along the lines of a $225 million ABL revolver at Libor plus 200 bps, a $265 million first-lien term loan B at Libor plus 550 bps with call protection of 102 in year one and 101 in year two, and a $125 million second-lien term loan at Libor plus 900 bps with a grid.

By the end of 2006, the company and the syndicate simply decided to completely restructure the original deal and relaunch it with a conference call that took place in late January.

Goldman Sachs is the lead bank on the deal that will be used to refinance existing debt.

Plastech is a Dearborn, Mich., maker of blow-molded and injection-molded plastic products, primarily for the automotive industry.

Cellnet revises pricing

Cellnet came out with some modifications to its credit facility spreads that included reverse flexes to the first-lien term loan B and delayed-draw tranches and the addition of a pricing grid to the first-lien B loan, according to a market source.

Furthermore, pricing on the second-lien term loan was finally made public.

Under the changes, the $300 million 41/2-year first-lien term loan B is now priced at Libor plus 200 bps, down from original talk at launch in the Libor plus 225 bps area, the source said. In addition, a pricing step down to Libor plus 175 bps was added to the tranche effective upon a one-notch upgrade of the corporate rating from Moody's Investors Service.

The $60 million two-year delayed-draw with 41/2-year final maturity capital expenditures term loan is now priced at Libor plus 225 bps, down from original talk at launch of Libor plus 250 bps, the source continued.

And, as for the $110 million 43/4-year second-lien term loan, pricing firmed up at Libor plus 425 bps, the source added. At launch, price talk on this paper was to be determined.

Cellnet's $510 million credit facility also includes a $40 million 41/2-year revolver that is priced at Libor plus 250 bps, in line with original talk.

Under the credit agreement, the company can get a $50 million incremental term loan B subject to a number of conditions.

RBC is the lead bank on the deal that will be used to help fund Bayard Group's acquisition of the company.

Cellnet is an Alpharetta, Ga., provider of intelligent communication and automation solutions to energy and water businesses.

Rexnord lowers pricing

Rexnord reverse flexed pricing on its $200 million of new term loan debt (Ba2/B+) to Libor plus 225 bps from original talk at launch of Libor plus 250 bps, and added a step down to Libor plus 200 bps effective when leverage is at or below 5.5 times, according to a market source.

The term loan was going to be an add-on to the company's existing term loan B, but now it is being done as a separate tranche, the source said.

Pricing on the existing term loan B debt is going to stay at Libor plus 250 bps because there is call protection in place, the source added.

Proceeds from the new term loan, along with $460 million of high-yield bonds, will be used to fund the acquisition of Zurn Industries Inc., the plumbing products business of Jacuzzi Brands, Inc., for a cash purchase price of about $950 million.

Credit Suisse is the lead bank on the deal.

Closing is subject to, among other things, the receipt of financing and the completion of Apollo Management LP's proposed acquisition of Jacuzzi Brands.

RBS Global, Inc., the parent company of Rexnord and a portfolio company of Apollo Management, is a Milwaukee-based manufacturer of highly engineered power transmission, aerospace and other precision motion technology products.

Star Tribune floats talk

Star Tribune price talk started making its way around the marketplace as syndication on the $485 million deal is all ready to kick off with a bank meeting on Tuesday, according to a market source.

The $330 million first-lien term loan B and the $50 million revolver will both be presented to lenders with talk of Libor plus 275 bps, and the $105 million second-lien term loan will be presented to lenders with talk of Libor plus 650 bps, the source said.

The second-lien term loan carries call protection of 101 in year one, the source added.

Credit Suisse and RBS Securities are the lead banks on the deal that will be used to help fund Avista Capital Partners' buyout of Star Tribune from The McClatchy Co. for $530 million.

The transaction is expected to close in the first quarter.

Star Tribune is a Minneapolis-based information provider and includes the Star Tribune newspaper, StarTribune.com and other print and digital products and services.

Infor second-lien call protection

Infor announced call premiums of 102 in year one and 101 in year two on its $1.275 billion second-lien term loan (Caa2/CCC) as the deal was launched with a bank meeting during Monday's session, according to a market source.

As was previously reported, the second-lien loan will be denominated in both euros and dollars and is being talked at Libor/Euribor plus 650 bps.

Infor's $1.475 billion of new term loan debt also includes a $200 million euro-enominated add-on to its existing first-lien term loan B (B1) that is talked at Euribor plus 325 bps. The company's existing first-lien term loan B debt is priced at Libor plus 375 bps and is expected to remain at that pricing level.

JPMorgan, Credit Suisse and Merrill Lynch are the lead banks on the deal that will be used to refinance a $1.425 billion senior subordinated bridge loan.

Infor will be amending its existing senior secured credit facility to allow for this refinancing.

Closing is expected to occur in late February.

Infor is an Atlanta-based deliverer of fully integrated enterprise services as well as standalone products.

Covanta trims spreads

Covanta Energy Corp. reverse flexed pricing on its $680 million seven-year term loan B and $320 million seven-year synthetic letter-of-credit facility to Libor plus 150 bps from original talk at launch of Libor plus 200 bps, according to a market source.

The company's $1.3 billion credit facility (Ba2/BB-) also includes a $300 million six-year revolver with a 50 bps commitment fee.

There is a $400 million accordion feature under the credit facility.

Financial covenants include a maximum leverage ratio, maximum capital expenditures and a minimum interest coverage ratio.

JPMorgan, Lehman and Merrill Lynch are the lead banks on the deal that will be used to help refinance the company's existing credit facility and will be available for working capital and general corporate needs, including the repurchase of its indirect subsidiaries' outstanding notes.

The company plans to repurchase about $612 million in principal amount of notes, including the outstanding 8.5% senior secured notes due 2010 of MSW Energy Holdings LLC, the outstanding 7.375% senior secured notes due 2010 of MSW Energy Holdings II LLC and the outstanding 6.26% senior notes due 2015 of Covanta ARC LLC.

Covanta is a Fairfield, N.J., renewable energy and waste disposal company.

Krispy Kreme cuts pricing

Krispy Kreme Doughnuts, Inc. reverse flexed pricing on both tranches under its $160 million credit facility to Libor plus 300 bps from original talk at launch of Libor plus 325 bps, according to a market source.

Tranching on the deal is comprised of a $50 million revolver and a $110 million first-lien term loan.

There is a one time reset built into the pricing based on ratings that has also been revised.

Under the new grid, if the company receives corporate credit ratings, pricing will adjust at that time (and only once) as follows - Libor plus 225 bps at B1/B+, Libor plus 250 bps at B2/B and Libor plus 275 bps at B3/B-, the source added.

Originally, the ratings grid called for Libor plus 250 bps at B1/B+, Libor plus 275 bps at B2/B and Libor plus 300 bps at B3/B-.

Recommitments were due from lenders on Monday at 5 p.m. ET.

Credit Suisse is the lead bank on the deal that will be used to refinance existing debt.

Krispy Kreme is a Winston-Salem, N.C.-based branded specialty retailer of doughnuts.

Global Geophysical tweaks deal

Global Geophysical Services Inc. made some changes to its $130 million credit facility including moving some funds out of its second-lien term loan and into its first-lien term loan B and lowering pricing on the second-lien tranche according to a syndicate document.

The seven-year first-lien term loan B (B1/B) is now sized at $70 million, up from $60 million, while pricing was left unchanged at Libor plus 350 bps, the document said.

Meanwhile, the 71/2-year second-lien term loan (Caa2/CCC) is now sized at $30 million, down from $40 million, and pricing was reverse flexed to Libor plus 625 bps from original talk at launch of Libor plus 675 bps, the document added.

Global Geophysical's credit facility also includes a $25.5 million six-year revolver (B1/B) at Libor plus 350 bps and a $4.5 million six-year synthetic revolver (B1/B) at Libor plus 350 bps.

Credit Suisse is the lead bank on the deal that will be used, along with a $140 million investment from Kelso & Co., to fund capex plans for 2007, to refinance existing debt, to fund a tender of existing preferred stock and to fund the redemption of common stock.

Global Geophysical is a Houston-based provider of seismic data acquisition services to the oil and gas industry.

Harbor Freight upsizes

Harbor Freight Tools increased the size of its institutional term loan add-on to $210 million from $160 million, according to a market source.

Pricing on the add-on was left unchanged at Libor plus 225 bps with a step down to Libor plus 200 bps when leverage is less than 3.25 times.

And, pricing on the company's existing term loan debt will be changed to match the pricing on the incremental term debt

The current grid on the existing term loan calls for pricing of Libor plus 200 bps if leverage is above 3.25 times and Libor plus 175 bps if leverage is below 3.25 times. Excluding the add-on, leverage is below 3.25 times, meaning that the existing term loan is carrying pricing of Libor plus 175 bps.

Following completion of the add-on, the company's leverage will be more than 3.25 times.

Credit Suisse is the lead bank on the add-on that will be used to fund a dividend payment.

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

Brand Energy reworks deal

Brand Energy & Infrastructure Services Inc. revised its credit facility, moving some funds out of its second-lien term loan and into its first-lien term loan B, carving a synthetic letter-of-credit facility out of its revolver, and lowering pricing on everything, according to a market source.

The first-lien term loan B (B1/B) is now sized at $580 million, up from $530 million, while the second-lien term loan (Caa1/CCC+) is now sized at $300 million, down from $350 million, the source said.

Also, the revolver (B1/B) is now sized at $125 million, down from $150 million, as a new $25 million synthetic letter-of-credit facility (B1) was created, the source continued.

Pricing on the first-lien term loan B, the revolver and the synthetic letter-of-credit is set at Libor plus 225 bps with a step down to Libor plus 200 bps when first-lien leverage drops below 3 times. The term loan B and the revolver had originally been launched with talk of Libor plus 250 to 275 bps.

And, pricing on the second-lien term loan is set at Libor plus 600 bps, down from original talk at launch of Libor plus 625 to 650 bps, the source added.

Morgan Stanley and Credit Suisse are the lead banks on the $1.03 billion deal, with Morgan Stanley the left lead.

Proceeds will be used to help fund First Reserve Corp.'s leveraged buyout of the company from J.P. Morgan Partners, LLC.

Brand Energy & Infrastructure Services is a Kennesaw, Ga., provider of scaffolding services.

MACH Gen sets talk

MACH Gen came out with official price talk on its $740 million credit facility as ratings of B2/B emerged on the deal late last week, according to a market source.

The $100 million revolver, $60 million synthetic letter-of-credit facility and $580 million term loan B are all being talked at Libor plus 225 bps, the source said.

Morgan Stanley, Bear Stearns and Deutsche Bank are the lead banks on the deal that will be used to refinance existing debt.

MACH Gen is a portfolio of power-generation assets.

Town Sports spread guidance

Town Sports International LLC is talking both tranches under its in-market $260 million senior credit facility (Ba2) at Libor plus 225 bps, according to a market source.

Tranching on the deal that launched late last week is comprised of a $75 million revolver and a $185 million term loan B

Deutsche Bank is the lead bank on the facility that will be used to fund a tender offer for the company's $169.9 million of 9 5/8% senior notes due 2011.

The tender offer will expire on Feb. 26.

Town Sports is a New York-based owner and operator of fitness clubs.

Lear active on acquisition bid

Switching to the secondary market, Lear's bank debt was active on Monday on news that American Real Estate Partners LP, an affiliate of Carl C. Icahn, made an offer to acquire all of the company's stock for $36.00 per share in cash, according to a trader.

The company's revolver ended the session stronger by about half a point at 98 1/8 bid, 98 5/8 offered, after trading as high as 983/4, the trader said.

The term loan, on the other hand, ended the session softer by about three quarters of a point at par ¼ bid, 101 offered, the trader continued.

"If a change of control happens, this thing will be taken out," the trader said, explaining that the revolver and the term loan are both moving closer to par because of the possibility of a paydown.

Any transaction with Icahn would be subject to negotiation and execution of definitive documentation and other conditions.

Lear's board of directors is expected to formally consider the acquisition proposal following the conclusion of negotiations.

The acquisition proposal contemplates that Bob Rossiter, Lear's chairman and chief executive officer, and the rest of the senior management team will remain with the company.

Lear is a Southfield, Mich.-based supplier of automotive interior systems and components.

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