Rita Aid moves around; Skilled Healthcare, Boston Generating rise; Chemtura, AMN set launches

By Sara Rosenberg

New York, Aug. 9 - Rite Aid Corp. saw some of its term loans head higher during Monday's trading session as the company announced plans for a paydown, but the actual debt that is being taken out was softer.

Also in trading, Skilled Healthcare Group Inc.'s term loan strengthened with the company's filing of a mistrial/new trial motion regarding a recent litigation ruling as it claimed to discover misconduct by a juror.

In addition, Boston Generating LLC's first-lien term loan was better on a potential buyout, and Graham Packaging Co. Inc.'s term loan C was lower following an acquisition announcement.

Moving to the primary, Chemtura Corp. and AMN Healthcare Services Inc. have nailed down timing on the launches of their new loan deals, and Medical Card Systems began floating some price talk on its term loan ahead of its bank meeting.

Rite Aid shifts with repayment

Rite Aid's tranche 2 and 3 term loans gained some ground as the company is planning on prepaying some of its bank debt. The actual debt that is being repaid, however, was lower on the news as it moved closer to its 103 paydown level, according to traders.

Specifically, the company said that it will repay all of its $648 million tranche 4 term loan due in 2015 using cash on hand and proceeds from a $650 million senior secured notes offering.

Following the announcement, one trader had the tranche 2 term loan quoted at 89¾ bid, 90¾ offered, up from 88¾ bid, 89¼ offered, and the tranche 3 term loan quoted at 96¼ bid, 97¼ offered, up from 95½ bid, 96 offered. But, the tranche 4 term loan was quoted by the trader lower on the day at 102¼ bid, 103 offered, compared to 102 7/8 bid, 103 1/8 offered.

A second trader had the tranche 2 term loan quoted at 89½ bid, 90¼ offered, up from 88¾ bid, 89½ offered, the tranche 3 term loan quoted at 96¼ bid, 97 offered, up from 95¼ bid, 96 offered, and the tranche 4 term loan quoted at 102¾ bid, 103 offered, down from 102 7/8 bid, 103 1/8 offered.

Rite Aid syndicating revolver

Rite Aid also revealed on Monday that it is in the process of syndicating a new $1.175 billion revolving credit facility due in 2015 and, as of Friday, there was already $1.115 billion in commitments towards the deal.

Proceeds will be used to amend or replace the company's existing $1.175 billion revolver due in 2012, with the new deal expected to be priced lower than the existing one.

Additionally, the company is seeking amendments to its senior credit facility to provide more flexibility under covenants.

The new revolver and amendment are contingent on completion of the company's proposed notes offering, but the notes are not subject to the entry into the revolver or the amendment.

Rite Aid is a Camp Hill, Pa.-based drugstore chain.

Boston Generating rallies

Boston Generating's first-lien term loan was noticeably stronger in the secondary market after Constellation Energy disclosed that it has signed an asset purchase agreement to acquire the company's 2,950-megawatt fleet, according to traders.

The first-lien term loan was quoted by traders at 94½ bid, 96 offered, up from 88 bid, 89 offered.

Constellation Energy is looking to acquire Boston Generating's five power plants located in the Boston area for roughly $1.1 billion, with financing coming from cash on hand and debt.

The proposed transaction is expected to be consummated through a court-approved bankruptcy proceeding to be initiated by Boston Generating. If approved, Constellation Energy's bid would then be considered the price to beat in an asset auction to be held later this year.

Skilled Healthcare up on motion

Skilled Healthcare's term loan saw an improvement as news emerged that the company filed a motion for mistrial and new trial in the case over a complaint that was filed in 2006, according to traders.

The plaintiffs in the case alleged that certain of the company's California-based facilities were understaffed and misrepresented the quality of care provided in their facilities.

In July, a jury ruled that the company should pay $613 million in statutory damages and $58 million in restitutionary damages to the plaintiffs, and before the punitive damages phase of the trial went on, the parties reached an agreement to enter into mediation to settle the lawsuit.

However, the company is now claiming that there was "serious and blatant juror misconduct" during the trial and is seeking a mistrial/new trial.

On the back of this development, the company's term loan was quoted by one trader at 94½ bid, 95¼ offered, up from 91½ bid, 93½ offered, and by a second trader at 93½ bid, 95½ offered, up from 91½ bid, 93½ offered.

Skilled Healthcare: juror biased

In defense of its motion, Skilled Healthcare said that through an investigation into the case, it has discovered that there was bias, false statements and non-disclosure of critical information by a juror.

The investigation specifically revealed that the juror had pretrial familiarity with a defendant facility and a member of the plaintiff class who was listed in the jury questionnaire as a potential witness.

The company went on to say that it disagreed with the verdict from the start and that its facilities are appropriately staffed and thoroughly regulated.

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

Graham Packaging edges higher

Graham Packaging's term loan C was weaker on Monday after the company said that it is acquiring Liquid Container LP and taking on more debt to do so, according to traders.

The term loan C was quoted by one trader at par 7/8 bid, 101 3/8 offered, down from 101 1/8 bid, 101½ offered.

Meanwhile, the company's term loan B was quoted by one trader at 99 5/8 bid, par 1/8 offered versus 99 5/8 bid, par offered on Friday, and by another trader at 99 5/8 bid, par offered, up from 99½ bid, 99 7/8 offered.

Funding for the $568 million acquisition will be coming from new bank debt under the company's $300 million accordion feature contained in its existing credit agreement and high-yield bonds, which are backed by a bridge loan commitment.

Citigroup and Deutsche Bank are the lead banks on the new debt financing.

Graham Packaging leverage

At close, Graham Packaging's leverage will be 4.7 times, up from 4.4 times currently, but company officials said in a conference call that the plan is to pay down debt with cash flow.

The transaction is expected to be accretive on an EBITDA, earnings per share and free cash flow basis in its first full year of operation.

Also, officials remarked that the existing credit facility accordion feature allows for the refinancing of its term loan B, and that ability would not be lost.

Closing on the acquisition is expected to take place this year, subject to normal regulatory approvals and customary conditions.

Graham Packaging is a York, Pa.-based designer, manufacturer and seller of technology-based, customized blow-molded plastic containers. Liquid Container is a West Chicago, Ill.-based operator of blow molded plastic container plants.

Chemtura launching exit deal

Switching to the primary market, Chemtura has scheduled a bank meeting for Tuesday to launch its proposed $300 million six-year term loan B that will be used for exit financing, according to a market source.

Bank of America, Barclays and Citigroup are the lead banks on the deal, with Bank of America the left lead.

Other funds for the company's exit are expected to come from a $275 million five-year senior secured asset-based revolver and $450 million of unsecured notes due in 2018.

Previously, the company said that it would get $750 million of term loan and/or notes, with the sizes to be decided based on, among other things, market conditions.

The plan is to pre-fund the notes and term loan, but proceeds would not be available until after the company's plan of reorganization takes effect.

Chemtura revolver pricing

Chemtura previously disclosed that pricing on its asset-based revolver is anticipated to range from Libor plus 275 basis points to 325 bps based on availability.

If availability is less than $100 million, pricing will be Libor plus 325 bps. If it is $100 million to $200 million, pricing will be Libor plus 300 bps, and if it is greater than $200 million, pricing will be Libor plus 275 bps.

Bank of America is the administrative agent the revolver.

Chemtura is a Middlebury, Conn.-based manufacturer and seller of specialty chemicals and polymer products.

AMN readies call

Another deal set to launch this week is AMN Healthcare Services, with the company scheduled to hold a conference call on Wednesday to present lenders with its proposed $118 million of incremental loans, according to a market source.

The debt is comprised of a $68 million term loan B add-on (Ba2) and a new $50 million second-lien term loan (B1).

In addition, the company expects to amend and extend its existing $107 million term loan B and revolver.

Bank of America, GE Capital and SunTrust are the lead banks on the deal, with Bank of America the left lead.

AMN buying Nursefinders

AMN's new debt is in connection with its acquisition of Nursefinders Inc. for roughly 6.3 million shares of common stock and about 5.7 million shares of series A conditional convertible preferred stock.

Proceeds from the incremental loans will be used to refinance Nursefinders' $132 million of bank debt.

The transaction is expected to close in the third quarter, subject to customary conditions, regulatory approvals and receipt of debt financing.

AMN is a San Diego-based health care staffing and workforce services company. Nursefinders is an Arlington, Texas-based provider of clinical workforce managed services programs.

Medical Card floats talk

Medical Card Systems is talking its proposed $175 million five-year term loan in the Libor plus 950 bps area, with Libor floor and original issue discount still to be determined, according to a market source.

Jefferies and Deutsche Bank are the lead banks on the deal that is set to launch with a bank meeting on Wednesday.

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

Senior leverage is 1.6 times.

Medical Card Systems is a managed care provider in Puerto Rico.

Alliance Data closes

In other news, Alliance Data Systems Corp. closed on its $200 million unsecured term loan A-2 due March 30, 2012 that is priced at Libor plus 250 bps, according to a 10-Q filed with the Securities and Exchange Commission on Monday.

The deal has a $100 million accordion feature that can be exercised within the next 60 days, and as such, at close on Aug. 6, the company actually drew down $221 million under the term loan. The remaining $79 million is expected to be borrowed shortly.

"Demand for the new term loan was strong [...] we expect to upsize the facility within the next 60 days. After closing, our leverage at the corporate level remains prudent with a core debt to operating cash flow ratio below 2.7 to 1, which is well within our covenant requirements," Charles Horn, chief financial officer, said in a news release.

BMO and SunTrust acted as the lead banks on the deal that was used by the Dallas-based provider of loyalty and marketing services to repay existing revolver borrowings.

Blount wraps amendment

Blount International Inc. closed on its $425 million amended and restated facility (Ba3/BB-) on Monday, according to a 10-Q filed with the SEC.

The facility consists of a $75 million term loan A due in August 2015, a $75 million revolver due in August 2015 and a $275 million term loan B due in August 2016.

Pricing on the revolver and term loan A is Libor plus 350 bps with no Libor floor, and pricing on the term loan B is Libor plus 400 bps with a 1.5% Libor floor.

The B loan carries 101 soft call protection for one year and was sold at an original issue discount of 99.

Blount led by GE Capital

GE Capital Markets acted as the lead bank on Blount's deal that is being used to refinance existing bank debt and fund the redemption of its $175 million of senior subordinated notes.

The facility went through a couple of changes during syndication, including increasing pricing on the term loan B from Libor plus 350 bps and adding soft call protection, as well as adding the term loan A when a $75 million delayed-draw term loan B was eliminated from the capital structure.

Blount is a Portland, Ore.-based manufacturer of equipment, accessories and replacement parts for the forestry, garden and construction industries.

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