EPCO, Acco Brands, Natural Products Group break for trading; HIT sets second-lien price talk, nets orders

By Sara Rosenberg

New York, Aug. 15 - The secondary loan market saw an influx of new paper during Monday's market hours, with EPCO Inc., Acco Brands Corp. and Natural Products Group LLC all freeing up for trading in the 101 arena.

In primary doings, HIT Entertainment plc set price talk on its recently added second-lien term loan during a lender call Monday, and early commitments had already found their way into the book by evening.

EPCO's $1 billion five-year term loan B closed out the session with levels of 101 5/8 bid, 101 7/8 offered, according to a trader, who said that the paper had moved up by about an eighth to a quarter of a point from the open.

The term loan B, which was originally issued to investors at par, is priced with an interest rate of Libor plus 225 basis points and contains a step down to Libor pus 200 basis points based on leverage. Initially, the tranche was launched with price talk of Libor plus 250 basis points but was reverse flexed with the addition of the step down during syndication.

EPCO's $1.9 billion credit facility (Ba3/B+) also contains a $300 million three-year revolver and a $600 million three-year term loan A, with both pro rata tranches priced at Libor plus 225 basis points. Pricing on the revolver and term loan A were left unchanged throughout syndication.

The revolver and term loan A were sold as a strip with commitments of $35 million getting an upfront fee of 30 basis points and commitments of $20 million getting an upfront fee of 25 basis points.

Lehman Brothers and Citigroup are the lead banks on the deal, with Lehman the left lead on the term loan B and Citigroup the left lead on the revolver and term loan A.

Proceeds will be used to refinance an existing bridge loan.

EPCO, a privately owned company controlled by Dan L. Duncan, owns the general partner of Houston-based midstream energy company Enterprise Products Partners LP and Houston-based pipeline company Texas Eastern Products Pipeline Co. LLC.

Acco tops 101

Acco Brands' $400 million seven-year term loan B broke for trading on Monday at 101 bid, 101½ offered, moved up to 101 5/8 bid, 101¾ offered during market hours and then settled down to 101 3/8 bid, 101 5/8 offered by close, according to market sources.

The term loan B is priced with an interest rate of Libor plus 175 basis points. Originally, the tranche was launched with price talk of Libor plus 200 basis points but was reverse flexed during syndication.

As for allocations on the term loan B, one buyside source said that he got about 50% of his original order amount.

Acco's $750 million credit facility (BB-) also contains a $150 million five-year revolver and a $200 million five-year term loan A, with both tranches priced at Libor plus 200 basis points. Pricing on the revolver and term loan A were left unchanged throughout syndication.

Citigroup and ABN Amro are the lead banks on the deal, with Citigroup the left lead.

Proceeds from the term loans will be used to help fund Fortune Brands Inc.'s spinoff of Acco World Corp. and merger of Acco with General Binding Corp. to form a new entity called Acco Brands. Revolver borrowings will be available for general corporate purposes.

Immediately following the merger, Fortune Brands stockholders and Acco World's current minority stockholder will together own 66%, and General Binding's stockholders will own 34%, of the shares of common stock of the new company on a fully diluted basis.

Acco is an Illinois-based supplier of branded office products.

Natural Products bid, no offer

Natural Products Group's opened for trading on Monday as well, but unlike the others, it only saw a bid in the secondary with no offers to follow, according to a fund manager.

The $186.5 million first-lien term loan was quoted at 101 bid, the fund manager said.

The first-lien term loan, which was upsized from $175 million during syndication, is priced with an interest rate of Libor plus 325 basis points.

As for allocations on the first lien, "I think most lenders got their existing positions rolled into this new deal," the fund manager added.

Natural Products' $265 million credit facility also contains a $15 million revolver with an interest rate of Libor plus 325 basis points and a $63.5 million second-lien term loan with an interest rate of Libor plus 700 basis points. Both of these tranches were left unchanged throughout syndication.

CIBC is the lead bank on the deal that will be used to make a dividend payment and to refinance existing debt.

The upsizing of the first-lien term loan resulted in an increase in the size of the planned dividend payment to $136.5 million from $125 million.

Furthermore, the credit agreement was revised during syndication to allow the company to issue up to $75 million of incremental term loans at any time for up to 18 months after closing.

The incremental term loans can be used to finance permitted expenditures, including additional dividends, subject to no event of default, maximum leverage ratio of 4.25x and customary mark to market provisions.

Natural Products Group is a California-based natural personal care products company owned by Harvest Partners.

HIT sets price talk

HIT Entertainment revealed price talk on its second-lien term loan during a lender call that was held to re-present the deal, and the tranche is said to be moving along nicely in terms of syndication, with orders from investors already being placed, according to a market source.

The $172 million 71/2-year second-lien term loan is talked at Libor plus 575 to 600 basis points, is being offered at par and is non-callable for one year. The tranche is callable in year two at 102 and callable in year three at 101.

"Management was on the phone doing a redo of lender slides for anyone who may have missed it the first time," the source said.

"The book is building very nicely," the source added.

HIT added the second-lien tranche late last week after the decision was made to pull its previously planned $172 million eight-year senior subordinated note offering.

The company's $625 million credit facility also contains a $77 million six-year revolver (B1/B) talked at Libor plus 225 basis points and a $376 million seven-year term loan B (B1/B) talked at Libor plus 250 basis points.

Merrill Lynch and Deutsche Bank are the lead banks on the deal, with Merrill the left lead on the revolver and term loan B and Deutsche the left lead on the second-lien term loan.

Proceeds from the credit facility will be used to help fund Apax Partners' leveraged buyout of the company.

HIT Entertainment is a London-based producer of children's television programming, including "Barney and Friends" and "Bob the Builder."

Conseco closes

Conseco Inc. completed the amendment of its credit facility that reduced the term loan (B2/NA/BB+) to $447 million from $767 million and repriced the tranche at Libor plus 200 basis points from Libor plus 350 basis points, according to a company news release.

Furthermore, pricing on the term loan can step down to Libor plus 175 basis points when the facility is rated Ba3 by Moody's Investors Service.

Originally, the term loan was launched with price talk of Libor plus 225 basis points with a step down to Libor plus 200 basis points, but the deal was reverse flexed during syndication.

Lastly, the Carmel, Ind.-based insurance company's amendment relaxed financial covenants and increased flexibility for the company to enter into capital markets transactions.

Banc of America Securities LLC and J.P. Morgan Securities Inc. acted as lead arrangers and joint bookrunners on the deal, which went out to existing lenders only, with Banc of America the left lead.

Conseco also completed its offering of 3.5% convertible debentures due Sept. 30, 2035. Net proceeds of about $320 million from the offering were applied to repay term loan debt, which is how the size of the term loan went down to $447 million from $767 million.

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