First Data, Freescale up in strong market; Avis Budget, Garden Ridge, Sealed Air rework deals

By Sara Rosenberg

New York, Sept. 20 - The secondary market on Tuesday saw some buyers stepping off the sidelines and getting involved in trading, resulting in an improvement in levels in general and strong gains in names like First Data Corp. and Freescale Semiconductor Inc.

Over in the primary, Avis Budget Group Inc. came out with issuer-friendly changes to its term loan B, including lowering coupon, tightening the Libor floor and setting the original issue discount price at the low end of guidance, while Garden Ridge needed to make investor-friendly revisions, sweetening pricing, the discount, call premiums and amortization.

Continuing on the topic of reworked deals, Sealed Air Corp. moved some funds out of its U.S. term loan B and into its euro term loan B, and then trimmed pricing and original issue discount on the U.S. tranche.

Also on the new deal front, Valeant Pharmaceuticals International Inc. surfaced with new deal plans, Kinetic Concepts Inc. updated expected timing on its proposed credit facility, re-labeling the transaction as October business, and Emdeon Inc.'s credit facility has been put on the forward calendar for next month as well.

First Data, Freescale rise

First Data and Freescale both saw improvements in their term loan levels as there was a strong amount of buying interest in the names since guys have cash to put to use, according to traders.

While one trader described the secondary as a whole as being stronger by about a quarter of a point, the gains seen in First Data and Freescale surpassed that number.

First Data, a Greenwood Village, Colo., provider of electronic commerce and payment services, saw its extended term loan quoted at 84¾ bid, 85¾ offered, up from 83¼ bid, 84¼ offered, traders said.

And, Freescale, an Austin, Texas-based designer and manufacturer of embedded semiconductors for the automotive, consumer, industrial and networking markets, saw its term loan quoted at 92¾ bid, 93¾ offered, up from 91¾ bid, 92¾ offered, traders added.

BWIC surfaces

In more secondary happenings, a $45 million loan Bid Wanted In Competition (BWIC) was announced on Tuesday morning, and guys are being asked to place their bids by 2 p.m. ET on Wednesday, according to a trader.

Each loan in the BWIC is being offered in a $500,000 chunk.

Some of the debt includes Ashland Inc.'s term loan B, Avaya Inc.'s term loan B-3, Calpine Corp.'s term loan, Chrysler Group LLC's tranche B term loan, Delta Air Lines Inc.'s new term loan, HCA Inc.'s term loan B-3, inVentiv Health Inc.'s term loan B-3, Laureate Education Inc.'s extended term loan, Neiman Marcus Group Inc.'s term loan, Penn National Gaming Inc.'s term loan B, Reynolds Group Holdings Inc.'s term loan B and term loan C, and Univision Communications Inc.'s extended first-lien term loan.

Avis trims pricing

Switching to the primary, Avis announced on Tuesday that it revised pricing on its $420 million seven-year term loan B (Ba1) to Libor plus 500 basis points with a 1.25% Libor floor and an original issue discount of 98, versus most recent talk of Libor plus 525 bps with a 1.5% Libor floor and a discount of 97 to 98, according to a market source.

When the deal was first launched in early August, before the large market sell-off, the term loan B was sized at $400 million and talked at Libor plus 350 bps with a 1.25% Libor floor and an original issue discount of 99.

The B loan has 101 soft call protection for one year, and has since its initial launch last month.

Commitments were due end of day Tuesday. The deadline was accelerated earlier this week from Thursday.

Allocations are targeted to go out on Wednesday, the source added.

Avis lead banks

Morgan Stanley & Co., Citigroup Global Markets Inc., Credit Agricole Securities (USA) Inc., Scotia Capital (USA) Inc. and RBS Securities Inc. are the lead banks on Avis' term loan B.

The newly announced changes were a result of the deal being met with strong demand since relaunching on Sept. 13, and some factors that may have helped the deal following its relaunch include Avis' dropped bid for Dollar Thrifty Automotive Group Inc. and the release of detailed information on the company's proposed capital structure.

Proceeds will be used to help fund the acquisition of Avis Europe plc for £3.15 in cash per share. The transaction is valued at £635 million, or about $1 billion.

Closing is expected to take place in October, subject to Avis Europe shareholder approval, court approval and regulatory clearances.

Avis capital structure

In an 8-K filed last week with the Securities and Exchange Commission, Avis said that other funding for its acquisition of Avis Europe will come from a $20 million tranche A term loan and a $200 million revolver add-on, both priced at Libor plus 275 bps to 325 bps based on ratings, and $250 million of senior notes.

This is different from original plans, which called for a $200 million term loan A and a $300 million revolver add-on, both of which were guided at Libor plus 300 bps, subject to a ratings-based grid, with no Libor floor.

Furthermore for the acquisition, Avis plans to use cash of $955 million, borrow an additional $140 million under certain of its existing fleet debt financing arrangements, assume Avis Europe's existing vehicle finance leases of roughly $440 million, assume about $50 million of existing Avis Europe corporate debt and enter into a financing arrangement secured by certain of Avis Europe's vehicle assets.

Parsippany, N.J.-based Avis and Bracknell, England-based Avis Europe are vehicle rental companies.

Garden Ridge flexes up

Another company to release revisions on Tuesday was Garden Ridge, as it raised pricing on its $250 million six-year term loan B (B2/B+) to Libor plus 725 bps from talk of Libor plus 625 bps to 650 bps and moved the original issue discount to 93 from 97, according to a market source.

Furthermore, soft call protection was changed to 102 in year one and 101 in year two, from just 101 in year one, and amortization is now 5% per annum, compared to 1% previously, the source said.

The 1.5% Libor floor was left unchanged, as was the Wednesday commitment deadline.

The company's $330 million credit facility also provides for an $80 million ABL revolver.

Bank of America Merrill Lynch and UBS Securities LLC are the lead banks on the deal that will be used to fund the buyout of the company by AEA Investors LP.

Garden Ridge is a Houston-based seller of mattresses, ready-to-assemble furniture, discount apparel and handbags and books.

Sealed Air tweaks deal

Sealed Air also made a number of changes to its credit facility, including shifting some funds between the U.S. and euro term loan B's and revising pricing on the U.S. debt, according to a market source.

The U.S. term loan B is now sized at $790 million, down from $925 million, pricing is Libor plus 375 bps, down from Libor plus 400 bps, and the original issue discount is 98, versus 97 previously, the source said. There is still a 1% Libor floor and 101 soft call protection for one year.

On the flip side, the U.S. dollar equivalent euro term loan B is now $410 million, up from $275 million, while pricing was left unchanged at Euribor plus 450 bps with a 1% Euribor floor and an original issue discount of 97, the source said. This tranche also includes 101 soft call protection for one year.

By comparison, earlier filings with the SEC said the debt would be priced at Libor plus 275 bps on the U.S. piece and Euribor plus 300 bps on the euro piece, with the entire tranche having a 1% floor.

Sealed Air moves deadline

With the changes, Sealed Air accelerated the commitment deadline on the entire $1.2 billion seven-year term loan B to 5 p.m. ET on Wednesday from Friday, the source continued.

The company's $3 billion senior secured credit facility (Ba1/BB+) also includes a $700 million five-year revolver - split between a $500 million U.S. tranche and a $200 million multi-currency tranche - and a $1.1 billion five-year term loan A, which is split into a $900 million U.S. piece, a $140 million U.S. dollar equivalent JPY piece and a $60 million U.S. dollar equivalent Canadian piece.

Syndication of the revolver and term loan A was launched in late July and was such a success that the total amount of term A debt was upsized from $1 billion, resulting in the downsizing of the B loan from $1.3 billion. And originally, based on regulatory filings, it was expected that the term A would total $750 million and the term B would total $1.55 billion, but a revised structure emerged at the pro rata launch.

Pricing on the A loan and revolver is Libor plus 250 bps. The revolver has a 50 bps unused fee that can step down to 37.5 bps based on net total leverage.

Sealed Air buying Diversey

Proceeds from Sealed Air's credit facility, along with $1.5 billion of senior unsecured notes, will be used to fund the purchase of Diversey Holdings Inc. from the Johnson family and Clayton, Dubilier & Rice LLC for $2.1 billion in cash and an aggregate of 31.7 million shares of Sealed Air common stock.

Pro forma leverage will be 4.3 times, with closing expected in the fourth quarter, subject to customary regulatory approvals.

Citigroup Global Markets Inc., Bank of America Merrill Lynch, BNP Paribas Securities Corp. and RBS Securities Inc. are the lead banks on the credit facility.

Sealed Air is an Elmwood Park, N.J.-based manufacturer of packaging and performance-based materials and equipment systems for food, industrial, medical and consumer applications. Diversey is a Sturtevant, Wis.-based provider of cleaning, sanitization and hygiene products.

Valeant readies deal

Also in the primary, Valeant Pharmaceuticals set a bank meeting for Thursday afternoon for private lenders only to launch a proposed $1.7 billion 41/2-year senior secured credit facility, according to a market source.

The facility consists of a $200 million revolver and a $1.5 billion term loan A, including a $500 million delayed-draw tranche, the source said, adding that price talk is not yet out.

Goldman Sachs & Co. and J.P. Morgan Securities LLC are the lead banks on the deal that will be used to refinance existing senior secured bank debt.

Closing is expected in October, subject to market and other customary conditions.

Valeant Pharmaceuticals is a Mississauga, Ont.-based specialty pharmaceutical company that primarily focuses on the areas of neurology, dermatology and branded generics.

Kinetic slides to October

The bank meeting for Kinetic Concepts' $2.8 billion buyout financing senior secured credit facility (Ba3/BB-) is now being talked as an October event, as opposed to this month's business, a market source told Prospect News on Tuesday.

Another source explained that the loan launch may be waiting on the company to set a shareholder meeting date to vote on its buyout.

Kinetic Concepts is being acquired by Apax Partners, Canada Pension Plan Investment Board and the Public Sector Pension Investment Board for $68.50 per share in cash in a transaction valued at $6.3 billion, including outstanding debt.

In addition to the credit facility, funds for the acquisition are expected to come from $2.15 billion of notes - backed by a commitment for a $900 million senior unsecured bridge loan and a $1.25 billion senior secured second-lien bridge loan, with a portion of the second-lien bridge loan possibly available in euros - and about $1.75 billion of equity.

Kinetic facility details

Kinetic Concept's credit facility consists of a $2.6 billion term loan and a $200 million revolver. Price talk on the transaction is still to be determined.

Bank of America Merrill Lynch, Morgan Stanley & Co. Inc. and Credit Suisse Securities (USA) LLC are the lead arrangers on the deal and have already launched the facility to senior managing agents back in August.

Closing on the buyout is expected in the second half of this year, subject to certain conditions, including obtaining shareholder and regulatory approvals. It is not subject to financing.

Kinetic Concepts is a San Antonio-based medical technology company.

Emdeon next month, too

Joining Kinetic Concepts on the calendar for October is Emdeon's proposed $1.325 billion senior secured credit facility, for which a Ba3 rating was announced on Monday, according to a market source. Firm timing is not yet available.

The facility consists of a $125 million five-year revolver and a $1.2 billion seven-year covenant-light term loan B.

Official talk is still to be determined, but filings with the SEC have outlined pricing on the revolver at Libor plus 450 bps with a 50 bps unused fee and the term B at Libor plus 475 bps with a 1.25% Libor floor. Both tranches are anticipated to have at least one 25 bps step-down based on consolidated first-lien net leverage.

Bank of America, Citigroup and Barclays are the joint lead arrangers and bookrunners on the deal, and Goldman Sachs & Co. signed on as a bookrunner as well.

Emdeon being acquired

Proceeds from Emdeon's credit facility, $750 million of senior unsecured notes, $870 million of equity and rollover of about $330 million of equity will be used to fund the buyout of the company by Blackstone Capital Partners VI LP for $19 per share in cash. The transaction is valued at about $3 billion.

The notes are backed by a commitment for a $750 million one-year senior unsecured bridge loan, priced at Libor plus 850 bps for the first 60 days. Thereafter, interest will be payable at a rate equal to the senior cap. There is a 1.25% Libor floor.

Closing is expected this year, subject to customary conditions, including approval by stockholders and clearance under the Hart-Scott-Rodino Act.

Following completion of the acquisition, Hellman & Friedman will maintain a significant minority equity interest in the company.

Emdeon is a Nashville-based provider of revenue and payment cycle management services, connecting payers, providers and patients in the U.S. health care system.

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