Skilled Healthcare plummets; LNR pulls loan; AL Gulf tweaks deal; Gentiva, Vertafore set talk

By Sara Rosenberg

New York, July 7 - Skilled Healthcare Group Inc.'s term loan nosedived during Wednesday's trading session after the company announced that a jury has ordered it to pay hundreds of millions of dollars in damages, and Intergraph Corp.'s first-lien term loan headed higher on news that the company is being acquired by Hexagon AB.

Over in the primary market, LNR Property Corp. pulled its term loan from market, and AL Gulf Coast Terminals LLC made a second round of changes to its senior secured holdco loan, including widening the original issue discount and sweetening the call protection.

Also, in more new deal happenings, Gentiva Health Services Inc. released price talk on its term loan B as the tranche was launched to lenders in the afternoon, Vertafore Inc. guidance began circulating ahead of its launch, and Allscripts revealed the sizes of its term loan A and term loan B tranches.

Skilled Healthcare falls on verdict

Skilled Healthcare's term loan saw a significant drop in levels on Wednesday as a jury ruled that the company should pay $613 million in statutory damages and $58 million in restitutionary damages, according to a trader.

The verdict relates to a complaint filed in 2006 that claimed certain of the company's California-based facilities were understaffed and misrepresented the quality of care provided in their facilities.

The verdict is a result of the first phase of deliberations. The jury has yet to hear the punitive damages phase of the trial.

Following the news, Skilled Healthcare's term loan was quoted by one trader at 82 bid, 85 offered, down from 98½ bid, 99 offered, and by a second trader at 82 bid, 85 offered, down from 98½ bid, 99½ offered.

The first trader said that he saw the paper quoted in the 70s at one point during the day, but he didn't think that it actually traded that low.

Skilled Healthcare plans motions

Upon announcing the verdict, Skilled Healthcare said that it intends to vigorously pursue various post-trial motions as well as an appeal, if necessary, after the final judgment is made in the next few weeks.

In order to satisfy the typical bonding requirement to defer enforcement of a judgment during the pendancy of an appeal, the company would be required to post a bond for 150% of the final judgment amount.

The company currently has $94 million of borrowing capacity under its $100 million revolving credit facility. However, its ability to draw the funds is limited by the revolver covenants.

And, the company's primary professional liability insurance coverage has been exhausted for the policy year applicable to this case.

Skilled Healthcare is a Foothill Ranch, Calif.-based healthcare services company.

Intergraph up with acquisition

Intergraph's first-lien term loan moved up to 99 bid, 99½ offered from 98 bid, 98¾ offered as the company revealed that it is being purchased by Hexagon in a transaction valued at $2.125 billion, according to a trader.

However, the company's second-lien term loan was quoted at par bid, par ½ offered, down from par ¼ bid, 101 offered, the trader continued.

Intergraph is being acquired from Hellman & Friedman LLC, TPG Capital and JMI Equity.

The transaction is expected to be completed in the third or fourth quarter, subject to regulatory approvals and other customary conditions.

Intergraph is a Huntsville, Ala.-based provider of engineering, geospatial and security software.

LNR cancels term loan

Moving to the primary, LNR Property decided to remove from market its $445 million five-year term loan (B1/B) that was going to be used to refinance existing debt, according to a market source.

The term loan was being talked at Libor plus 750 bps, after flexing up from Libor plus 550 bps, with a 2% Libor floor and 101 soft call protection for one year.

There was never any official word on an original issue discount other than it was being guided in the high-90s area.

Goldman Sachs and Bank of America were acting as the lead banks on the deal.

LNR is a Miami-based real estate, investment, finance and management company.

AL Gulf revises OID, call protection

AL Gulf came out with some new modifications to its $305 million six-year senior secured holdco term loan (Ba2/BBB-), this time increasing the original issue discount and reworking the call protection, according to a market source.

The original issue discount is now set at 97, up from most recent talk of 98, and initial talk at launch that was in the 98 to 98½ context, the source said.

And, the loan is now non-callable for one year, then at 101 in the second year, whereas before it only carried 101 soft call protection for one year, the source continued. The one year of soft call protection had been added earlier in the syndication process.

Pricing on the term loan remained at Libor plus 500 basis points with a 1.75% Libor floor. At launch, the loan was talked in the Libor plus 375 bps to 400 bps area with a 1.5% Libor floor, but those terms were revised to the current pricing around mid-June.

AL Gulf led by Barclays

Barclays is the lead bank on AL Gulf's credit facility that will be used to refinance existing holdco debt, fund a debt service reserve account and pay a dividend to the company's sponsor, ArcLight Capital Holdings LLC.

The credit agreement includes an excess cash flow recapture of 75% in the first two years and 100% in all other years. This provision was changed last month from 50% in the first three years, 75% in year four and 100% in years five and six.

There is no recommitment deadline as a result of the latest changes since the deal is done at the revised terms, the source added.

Channelview, Texas-based AL Gulf Coast owns a 100% interest in the Houston Fuel Oil Terminal Co. LLC, a provider of crude and residual fuel oil storage in the Gulf of Mexico.

Gentiva talk emerges

Gentiva Health Services held a bank meeting at 1:30 p.m. ET on Wednesday at the New York Palace to kick off syndication on its proposed $600 million term loan B, and in connection with the launch, price talk was announced, according to a market source.

The term loan B is being talked at Libor plus 450 bps to 475 bps with a 1.75% Libor floor and an original issue discount of 98, the source said.

Furthermore, the term loan B includes 101 soft call protection for one year, the source added.

Bank of America, GE Capital, Barclays Bank and SunTrust are the joint lead arrangers and bookrunners on the deal, with Bank of America the administrative agent.

Covenants under the credit facility include a minimum interest coverage ratio and a maximum total leverage ratio.

Gentiva getting pro rata, too

In addition to the term loan B, Gentiva's $925 million senior credit facility (Ba2/BB-) also contains a $125 million revolver and a $200 million term loan A.

Price talk on the revolver and term loan A, which were already launched to banks on June 16, is Libor plus 400 bps with a 1.5% Libor floor and an original issue discount of 981/2.

Sizes of the term loans can shift based on demand, with the term loan A able to go up to $300 million, which would result in the term loan B dropping to $500 million.

By comparison, filings with the Securities and Exchange Commission had the term loan B sized at $800 million, with no mention of a term loan A, and outlined expected pricing on the revolver and term loan B at Libor plus 325 bps, with the B loan having a 1.5% Libor floor.

Gentiva buying Odyssey

Proceeds from Gentiva's credit facility will be used to help fund the acquisition of Odyssey HealthCare Inc. for $27 per share, for an aggregate purchase price of about $1 billion, and refinance existing debt.

Other funding for the transaction is expected to come from $305 million of eight-year senior unsecured notes, which are backed by a commitment for a $305 million 12-month senior bridge loan.

Pricing on the bridge loan is Libor plus 700 bps, increasing by 50 bps at the end of each subsequent three-month period, subject to a cap, according to SEC filings.

The cap is 12% if unsecured debt ratings are B2/B- and 12.75% if ratings are lower. In addition, the cap will increase by 50 bps if the closing date is more than 90 days after the date of the commitment letter, which is dated May 23.

Gentiva leverage multiple

Following completion of the transaction, Gentiva's net leverage is expected to be around the 4.0 times area.

Closing on the credit facility and the acquisition is expected in the third quarter, subject to standard conditions, including regulatory approvals and clearance under the Hart-Scott-Rodino Act as well as approval by Odyssey's stockholders.

On Wednesday, the company announced that the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act for the acquisition has expired.

Gentiva is an Atlanta-based home health care provider. Odyssey is a Dallas-based provider of hospice care.

Vertafore sets guidance

Vertafore came out with price talk on its proposed $625 million senior credit facility ahead of the Thursday morning bank meeting that will launch the deal into syndication, according to a market source.

Both the $75 million revolver and the $550 million term loan are being talked at Libor plus 525 bps with a 1.75% Libor floor, the source said.

And, the term loan is being offered at an original issue discount in the 97 to 98 area, the source added.

Credit Suisse, Bank of America and Barclays are the lead banks on the deal, with Credit Suisse the left lead. RBC is a documentation agent.

Vertafore getting junior debt

In addition to the credit facility, Vertafore plans on obtaining $240 million of junior debt.

Proceeds from the financings, along with equity, will be used to help fund the buyout of the company by TPG Capital from Hellman & Friedman and JMI Equity for a total consideration of $1.4 billion.

The acquisition is expected to close in the third quarter, subject to customary regulatory approvals.

Leverage will be 4.5 times through the first-lien and 6.5 times total, and the equity contribution is 47%.

Vertafore is a Bothell, Wash.-based provider of software and information to the insurance distribution channel.

Allscripts details tranching

Allscripts came out with a breakdown on its $570 million of term loan debt, with the plan being that there will be a $320 million term loan A and a $250 million term loan B, according to a market source.

The term loan A and a $150 million five-year revolver will be launched to banks with a meeting on Thursday, and the term loan B will be launched at a later date.

JPMorgan, Barclays Capital and UBS are the lead banks on the $720 million credit facility (Ba2/BBB-).

Pro forma leverage is 2.1 times LTM EBITDA.

Allscripts expected pricing

Allscripts previously said that it expects its new revolver to be priced at Libor plus 300 bps and its six-year term loan to be priced at Libor plus 350 bps. There was no mention of a term loan A until earlier this week.

According to the commitment letter, pricing on the debt is based on corporate ratings - if rated Ba1/BB+, pricing on the term loan will be in the Libor plus 300 bps to 325 bps range and pricing on the revolver will be in the Libor plus 250 bps to 275 bps range.

If rated Ba2/BB, pricing on the term loan will be in the Libor plus 325 bps to 350 bps range and pricing on the revolver will be in the Libor plus 275 bps to 300 bps range, and if rated Ba3/BB- or lower, pricing on the term loan will be in the Libor plus 350 bps to 375 bps range and pricing on the revolver will be in the Libor plus 300 bps to 325 bps range.

Also, the letter said that the term loan is anticipated to have a 1.5% Libor floor and the revolver has a 50 bps unused fee.

Allscripts buying back shares

Proceeds from Allscripts' credit facility will be used to fund the buyback of shares from Misys plc, which is selling the majority of its 54.6% interest in its Allscripts subsidiary in a transaction that is expected to raise roughly $1.3 billion. The amount of shares being sold is about 68 million, and Misys will retain about 12 million shares.

Allscripts will then merge with Eclipsys, an Atlanta-based provider of health care IT services, and following this merger, Misys will have an option to sell to Allscripts an additional 5.3 million of shares for $102 million.

The new credit facility will fund the initial buyback of shares, and any additional buyback will be funded with cash on hand.

Subject to the conditions being met, the buyback of shares and the merger with Eclipsys are expected to be completed in September or October.

Allscripts is a Chicago-based provider of software, services, information and connectivity services to physicians and other health care providers.

DynCorp closes

In other news, Cerberus Capital Management LP completed its buyout of DynCorp International Inc. for $17.55 in cash per share, according to a news release.

To help fund the transaction, DynCorp got a new $715 million credit facility (Ba1/BB) comprised of a $150 million revolver and a $565 million term loan.

Pricing on the term loan is Libor plus 450 bps with a 1.75% Libor floor, and it was sold at an original issue discount of 98. There is 101 soft call protection for one year.

During syndication, pricing on the term loan was reduced from Libor plus 475 bps, the discount firmed at the tight end of the 97 to 98 talk and the call protection was added.

Bank of America, Citigroup, Barclays Bank and Deutsche Bank acted as the lead banks on the deal.

DynCorp is a Falls Church, Va.-based government services provider in support of U.S. national security and foreign policy objectives.

Silgan wraps deal

Silgan Holdings Inc. closed on its $1.4 billion senior secured credit facility (Ba1/BBB), consisting of a $400 million six-year term loan A, a €125 million six-year term loan A, a C$81 million six-year term loan A and an $800 million five-year revolver, according to a news release.

During syndication, the U.S. term loan A was upsized from $300 million and the revolver was upsized from $550 million.

All tranches are priced in line with initial talk at Libor plus 225 bps.

There is a $450 million accordion feature.

Deutsche Bank and Bank of America acted as the lead banks on the deal that was used to refinance existing debt and is available for general corporate purposes.

Silgan is a Stamford, Conn.-based manufacturer of consumer goods packaging products.

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