Dresser, Kinder, Graceway, Local TV tweak deals; Omnova, Hamilton, Hayes set talk; USI breaks

By Sara Rosenberg

New York, May 1 - Dresser Inc. revised its credit facility structure by moving some funds between is first- and second-lien term loans, adding a step down in pricing to the first-lien term loan and firming up pricing on the second-lien term loan at the low end of talk.

Kinder Morgan Inc. also announced a change to its credit facility as it added a step down in pricing to its term loan B, Graceway Pharmaceuticals LLC shifted some funds around and set pricing terms and Local TV LLC reduced spreads on its credit facility.

In other primary news, Omnova Solutions Inc. and Hamilton Beach Inc. came out with price talk on their term loans as bank meetings to launch the two deals were held during Tuesday's market hours, and Hayes Lemmerz International Inc. price talk began circulating as it gears up for its Wednesday and Thursday launches.

Over in the secondary market, USI Holdings Corp.'s credit facility freed up for trading with the term loan B wrapping around 101.

Dresser announced some modifications to its $2.05 billion senior secured credit facility that included upsizing and adding a step down to the first-lien term loan and downsizing and firming up pricing on the second-lien term loan, according to a market source.

With the changes, the seven-year first-lien term loan (B2/B) is now sized at $1.3 billion, up from $1.15 billion, and while pricing remained in line with initial talk at Libor plus 250 basis points, the spread can now step down to Libor plus 225 bps upon delivery of outstanding financials, the source said.

Meanwhile, the eight-year PIK toggle second-lien term loan (B3/CCC+) is now sized at $600 million, down from $750 million, and pricing firmed up at Libor plus 575 bps, the tight end of original guidance of Libor plus 575 bps to 600 bps, the source continued.

Call protection on the second-lien loan remained unchanged at 102 in year one and 101 in year two.

The first-lien term loan is "multiple times oversubscribed" and the second-lien term loan is "well oversubscribed," the source added.

Dresser's credit facility also includes a $150 million six-year revolver (B2/B) priced at Libor plus 250 bps, in line with original talk.

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

Lehman, Morgan Stanley, Credit Suisse and UBS are the lead banks on the deal, with Lehman the left lead.

Proceeds will be used to help fund the acquisition of Dresser by Riverstone Holdings LLC, First Reserve and Lehman Brothers Co-Investment Partners.

Dresser is a Dallas-based provider of highly engineered infrastructure products for the energy industry.

Kinder term B gets step down

Kinder Morgan added a step down to its $2.3 billion seven-year term loan B so that now pricing can drop to Libor plus 137.5 bps based on the company meeting a leverage test, according to a market source.

Currently, the term loan B is priced at Libor plus 150 bps. Pricing on the paper firmed up at the tight end of original guidance of Libor plus 150 bps to 175 bps late last week.

Kinder Morgan's $7.3 billion credit facility (Ba2/NA/BB) also includes a $2 billion 61/2-year term loan A and a $1 billion six-year revolver that are priced at Libor plus 162.5 bps and a $2 billion three-year asset-sale bridge term loan C that is priced at Libor plus 137.5 bps.

Citigroup, Goldman Sachs, Deutsche Bank, Wachovia and Merrill Lynch are the lead banks on the deal.

Proceeds will be used to help fund the company's public-to-private buyout by management and equity investors.

Under the acquisition, chairman and chief executive officer Richard D. Kinder and other members of management, including co-founder Bill Morgan, current board members Fayez Sarofim and Mike Morgan, and investment partners Goldman Sachs Capital Partners, American International Group, Inc., the Carlyle Group and Riverstone Holdings LLC will acquire all of the outstanding common stock of Kinder Morgan for $107.50 per share in cash.

All in all, the transaction is valued at about $22 billion, including the assumption of about $7 billion of debt.

Kinder Morgan is a Houston-based energy infrastructure provider.

Graceway shifts funds, sets spreads

Graceway Pharmaceuticals moved some funds out of its mezzanine financing and into its first-lien term loan B, announced pricing on all tranches for the first time since the deal launched on March 28, set original issue discounts and revised covenants, according to a market source.

The five-year amortizing first-lien term loan B (Ba3/BB-) is now sized at $650 million, up from $600 million, pricing has been set at Libor plus 275 bps and the paper is being sold to investors with an original issue discount of 991/2, the source said.

Meanwhile, the 61/2-year mezzanine loan is now sized at $70 million, down from $120 million, pricing has been set at Libor plus 825 bps and the debt is being sold at an original issue discount that is still to be determined, the source continued.

In addition, pricing on Graceway's $30 million five-year revolver (Ba3/BB-) has been set at Libor plus 275 bps.

And, pricing on its $330 million six-year second-lien term loan (Caa1/B-) has been set at Libor plus 650 bps with an original issue discount of 981/2, the source remarked.

Lastly, covenants on the deal now include total leverage and interest coverage on the first-lien debt and total leverage on the second-lien debt, the source added.

Goldman Sachs, Bank of America and Deutsche Bank are the lead banks on the now $1.01 billion (up from $960 million) senior secured credit facility, as well as on the mezzanine loan, with Goldman the left lead.

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

Graceway is a Bristol, Tenn., pharmaceutical company focused on acquiring, in-licensing and developing branded prescription pharmaceutical products.

Local TV trims pricing

Local TV reverse flexed pricing on both tranches under its $305 million senior secured credit facility (Ba3/B) on Tuesday as the deal was massively oversubscribed, according to a market source.

The $30 million six-year revolver and the $275 million six-year term loan are now both priced at Libor plus 200 bps, down from original talk at launch of Libor plus 225 bps, the source said.

UBS and Deutsche Bank are the joint lead arrangers on the deal.

Proceeds will be used to help fund Oak Hill Capital Partners' acquisition of the New York Times Co.'s Broadcast Media Group for $575 million.

The Broadcast Media Group comprises the following stations: WHO-TV in Des Moines, Iowa, KFSM-TV in Fort Smith, Ark., WHNT-TV in Huntsville, Ala., WREG-TV in Memphis, Tenn., WQAD-TV in Moline, Ill., WTKR-TV in Norfolk, Va., KFOR-TV in Oklahoma City, KAUT-TV in Oklahoma City and WNEP-TV in Scranton, Pa.

Omnova price talk

In more primary happenings, Omnova Solutions held a bank meeting on Tuesday to kick off syndication on its new credit facility, and in connection with the launch, price talk on the company's term loan surfaced, according to a market source.

The $150 million term loan B (B2/B+) was presented to lenders with opening talk of Libor plus 275 bps, the source said.

Omnova's $230 million credit facility also includes an $80 million ABL revolver.

Deutsche Bank is the bookrunner on the term loan B and JPMorgan is the bookrunner on the ABL revolver.

Proceeds will be used to help fund a cash tender offer for the company's $165 million of 11¼% secured notes due 2010.

The tender offer is scheduled to expire on May 18 and is conditioned on the company getting the new term loan.

Omnova is a Fairlawn, Ohio, provider of emulsion polymers and specialty chemicals and decorative and functional surfaces for various commercial, industrial and residential end uses.

Hamilton Beach sets guidance

Hamilton Beach announced price talk of Libor plus 250 bps on its proposed $125 million senior secured term loan due 2013 (B1/B) as it too held a bank meeting on Tuesday to launch the deal into syndication, according to a market source.

UBS Securities LLC and Wachovia Securities LLC are the lead banks on the deal, with UBS the left lead.

The loan will require quarterly principal payments in an amount equal to 1% per year for the term of the loan, with the remaining balance to be paid in 2013.

Financial covenants include, among other things, limitations on additional debt, investments and dividends, a maximum total leverage ratio and a minimum fixed-charge coverage ratio.

Security will be a first lien on all of the company's existing and after-acquired assets and a second lien on all of the collateral securing its obligations under an existing asset-based revolving credit facility.

The existing $115 million asset-based revolver will be amended linked to this transaction to allow for the new term loan.

Proceeds from the term loan will be used to fund a $110 million special cash dividend to Nacco Industries Inc. in connection with Hamilton's spinoff from Nacco.

Under the transaction, which is expected to be completed by the end of June, Nacco is spinning off its Hamilton Beach/Proctor-Silex business to Nacco stockholders.

The spinoff will establish this Glen Allen, Va.-based company, which will be known as Hamilton Beach, Inc., as an independent public company in the small electric household and commercial appliance industries.

Hamilton Beach's capital structure will have two classes of stock. Nacco class A and class B stockholders will receive one half of one share of Hamilton Beach class A common stock and one half of one share of Hamilton Beach class B common stock for each share of Nacco class A and class B common stock they own.

Hayes floats talk

Also on the price talk front, Hayes Lemmerz guidance started making its way around the market as the company is getting ready to launch its proposed $495 million senior secured credit facility with a bank meeting in London on Wednesday and a bank meeting in New York on Thursday, according to a market source.

All three tranches under the facility will be launched to investors with opening price talk of Libor plus 300 bps, the source said.

Tranching on the deal is comprised of a $350 million term loan, which will be denominated in euros and placed with a subsidiary in Europe, a $125 million revolver and a $20 million synthetic letter-of-credit facility.

Citigroup and Deutsche Bank are the joint lead arrangers and joint bookrunners on the deal.

Proceeds will be used to refinance the company's existing credit facility and for working capital and other general corporate purposes.

Hayes Lemmerz is a Northville, Mich., supplier of automotive and commercial highway wheels, brakes and powertrain components.

Culligan retranches, ups second-lien spread

Culligan Holding Sarl made some changes to its credit facility, including downsizing its euro second-lien term loan, increasing second-lien pricing and adding a new euro first-lien term loan tranche to the transaction, according to a market source.

The second-lien term loan (Caa1/CCC+) is now sized at €175 million, down from €200 million, and pricing was flexed up to Libor plus 475 bps from original talk at launch of Libor plus 425 bps, the source said.

On the flip side, a new €25 million first-lien term loan (B1) was added to the capital structure with pricing of Libor plus 225 bps, the source continued.

Culligan's senior secured credit facility also includes a $110 million revolver (B1/B) and $530 million term loan B (B1/B), with both of these tranches priced at Libor plus 225 bps - in line with original talk.

BNP Paribas and Citigroup are the lead banks on the deal.

Proceeds will be used for a recapitalization that will include an about $360 million distribution to equity holders, refinancing the company's existing credit facility and the repayment of its 8% senior subordinated notes due 2014.

Culligan is a Northbrook, Ill., provider of water treatment products and services for household and commercial applications.

USI frees to trade

Switching to the secondary market, USI Holdings' credit facility broke for trading on Tuesday, with the $550 million seven-year term loan B quoted at par ¾ bid, 101 1/8 offered, according to a trader.

The term loan B is priced at Libor plus 275 bps.

During syndication, the term loan B was upsized from $525 million after the company downsized its bond offering to $400 million from $425 million.

USI Holdings' $650 million senior secured credit facility (B2/B-) also includes a $100 million six-year revolver that is priced at Libor plus 250 bps, with a 50 bps commitment fee.

Goldman Sachs and JPMorgan are the joint lead arrangers and joint bookrunners on the deal, with JPMorgan the administrative agent.

Proceeds will be used to help fund GS Capital Partners' acquisition of the company for $17 in cash per share. The transaction is valued at about $1.4 billion, including repayment of about $365 million of USI's existing debt.

USI is a Briarcliff Manor, N.Y., distributor of insurance and financial products and services to businesses.

Carestream closes

Carestream Health, Inc., an affiliate of Onex Corp., completed its acquisition of Eastman Kodak Co.'s health group business, which consists of Kodak's medical, dental and molecular imaging systems businesses, for up to $2.55 billion.

To help fund the transaction, Carestream got a new $2.09 billion credit facility consisting of a $1.5 billion six-year first-lien term loan B (Ba2/B+) priced at Libor plus 200 bps, a $150 million five-year revolver (Ba2/B+) priced at Libor plus 200 bps with a 50 bps commitment fee and a $440 million 61/2-year second-lien term loan (B3/B) priced at Libor plus 525 bps with call protection of 101 in year one.

During syndication, pricing on the term loan B and the revolver was reverse flexed from original talk of Libor plus 225 bps, pricing on the second-lien term loan was reduced from original talk of Libor plus 550 bps to 600 bps and second-lien call protection was revised from the originally proposed 102 in year one and 101 in year two.

Credit Suisse and Goldman Sachs acted as the joint lead arrangers on the Rochester, N.Y.-based health care business' deal.

RGIS closes

The Blackstone Group has completed its purchase of a controlling interest in RGIS Holdings LLC, according to a news release.

To help fund the buyout, RGIS got a new $600 million credit facility (Ba3/B-) consisting of a $75 million revolver priced at Libor plus 250 bps, a $500 million funded term loan priced at Libor plus 250 bps with a step down to Libor plus 225 bps at less than 4.0 times leverage and a $25 million delayed-draw term loan priced at Libor plus 250 bps with a step down to Libor plus 225 bps at less than 4.0 times leverage.

During syndication, the step downs were added to the two term loan tranches.

The revolver carries a 50 bps undrawn fee and the delayed-draw term loan carries a 75 bps undrawn fee.

Goldman Sachs acted as the lead bank on the deal, with Wachovia the administrative agent and General Electric Corp. the documentation agent.

RGIS is an Auburn Hills, Mich., inventory and retail services company.

LS Power closes

LS Power Group completed its acquisition of six U.S. natural gas-fired power plants from Mirant Corp., according to a news release.

To help fund the transaction, LS Power got a new $1.365 billion credit facility consisting of a $150 million revolver (B1/BB-) priced at Libor plus 200 bps, an $800 million first-lien term loan (B1/BB-) priced at Libor plus 200 bps, a $165 million synthetic letter-of-credit facility (B1/BB-) priced at Libor plus 200 bps and a $250 million second-lien term loan (B3/B) is priced at Libor plus 375 bps.

During syndication, the first-lien term loan was upsized from $700 million and the second-lien term loan was downsized from $300 million with pricing reduced from original talk at launch of Libor plus 425 bps.

JPMorgan, Barclays and Lehman Brothers acted as the lead banks on the deal.

LS Power is a fully integrated investor, developer and management team focused on the power sector.

Clarke American closes

Clarke American Corp. closed on its new $1.9 billion credit facility (B1/B+) consisting of a $1.8 billion seven-year term loan B priced at Libor plus 250 bps and a $100 million six-year revolver priced at Libor plus 250 bps, with a 50 bps commitment fee.

Credit Suisse, Bear Stearns, Citigroup and JPMorgan acted as the lead banks on the deal.

Proceeds were used to fund the acquisition of John H. Harland Co. and refinance Clarke's existing debt.

Under the agreement, parent company M&F Worldwide Corp. bought Harland for $52.75 per share in cash, representing an approximate transaction value of $1.7 billion.

Clarke American is being renamed Harland Clarke Holdings Corp.

M&F is based in New York and offers marketing services and products to customers of financial institutions and produces licorice products through its subsidiaries.

Harland is a Decatur, Ga.-based provider of printed products and software and related services sold to the financial institution market.

© 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.