Reverse flexes and fund shifts galore on in-market deals; TRW breaks around par

By Sara Rosenberg

New York, Dec. 16 - The day was filled with changes to in-market deals including Goodman Global Holdings Inc. adding a step down in pricing to its term loan B, Vought Aircraft Industries Inc. reworking its deal, adding a synthetic letter-of-credit facility tranche, shifting funds and cutting term loan pricing, and Vertafore Inc. (formerly AMS Services Inc.) moving $10 million to its first-lien term loan B from its second-lien term loan and cutting pricing across the entire credit facility complex.

In the secondary, TRW Automotive Holdings Corp. broke for trading with the term loan B quoted right around the par area.

Goodman Global's $350 million seven-year term loan B now has a step down to Libor plus 200 basis points if total leverage falls below 43/4x, according to a market source. The tranche is currently priced with an interest rate of Libor plus 225 basis points.

According to the original term sheet that was presented to lenders at launch, the term loan B should have initially been priced at Libor plus 250 basis points based on the B2/B+ ratings it received. However, it had been talked at Libor plus 225 basis points from the start since the syndicate expected ratings to be one notch higher, the source explained.

The $500 million credit facility also contains a $150 million six-year revolver with an interest rate of Libor plus 225 basis points.

JPMorgan, UBS Securities and Credit Suisse First Boston are the lead banks on the deal, with JPMorgan the left lead.

Proceeds from the credit facility, along with a $650 million two-tranche bond offering, will be used to help fund Apollo Management LP's leveraged buyout of the company.

On Wednesday, the company priced $250 million of senior floating-rate notes due June 15, 2012 at par to yield six-month Libor plus 300 basis points. Price talk was Libor plus 300 to 325 basis points.

The company also priced $400 million of eight-year senior subordinated notes at par to yield 7 7/8%. Price talk was the 8% area.

Under the acquisition agreement, Apollo will acquire Goodman for about $1.43 billion. Members of the Goodman family will retain a significant investment in the company. Also acquiring an interest in the new company are members of Goodman's senior management team.

Closing of the acquisition, which is expected to occur in the first quarter of 2005, is subject to obtaining approvals under the Hart-Scott-Rodino Antitrust Improvements Act and other customary closing conditions.

Goodman is a Houston-based heating and air conditioning manufacturer.

Vought restructures

Vought Aircraft made a number of changes to its $650 million credit facility (Ba3/B+) structure, adding a $75 million six-year synthetic letter-of-credit tranche priced at Libor plus 250 basis points, upsizing the seven-year term loan B to $425 million from $400 million, and downsizing the six-year revolver to $150 million from $250 million, according to a market source.

Furthermore, pricing on the term loan B was reverse flexed to Libor plus 250 basis points from Libor plus 275 basis points, the source said.

Pricing on the Dallas aerostructure subcontractor's revolver remained at Libor plus 250 basis points, the source added.

Lehman, JPMorgan and Goldman Sachs are the lead banks on the refinancing deal, with Lehman the left lead.

Vertafore shifts funds, cuts pricing

Vertafore also made some changes to its credit facility, lowering pricing on all tranches and jiggling some funds.

The now $130 million six-year first-lien term loan B (upsized from $120 million) is priced with an interest rate of Libor plus 275 basis points, reverse flexed from Libor plus 300 basis points, according to a syndicate document.

The now $70 million seven-year second-lien term loan (downsized from $80 million) is priced with an interest rate of Libor plus 600 basis points, reverse flexed from Libor plus 650 basis points.

Lastly, the $20 million five-year revolver - size unchanged - is now priced with an interest rate of Libor plus 275 basis points, reverse flexed from Libor plus 300 basis points. The 50 basis point commitment fee was left unchanged.

Credit Suisse First Boston is the sole lead bank on the deal.

Proceeds will be used to help fund the purchase of Vertafore by Hellman & Friedman LLC and JMI Equity from MMC Capital Inc. and other minority investors.

The transaction is expected to close before year-end.

Vertafore is a Windsor, Conn., enterprise software and information services provider to the property and casualty insurance industry.

Basic Energy upsizes

Basic Energy Services Inc. increased the size of its term loan B to $170 million from $160 million as the deal was oversubscribed, according to a market source. Price talk was left unchanged at Libor plus 300 basis points.

The $50 million revolver, with grid-based pricing that can range from Libor plus 250 to 300 basis points, was also left unchanged.

UBS is sole lead on the $220 million credit facility (B1) that will be used to refinance existing debt.

Essentially, through this transaction, the company is increasing its revolver and term loan and lowering rates. The existing term loan is priced at Libor plus 350 basis points.

Both existing and new lenders are being approached for syndication of the deal.

Closing on the facility is scheduled for Tuesday.

Basic Energy Services is a Midland, Texas, provider of well site services with a fleet of well-servicing rigs, fluid service trucks and related equipment.

International Mill cuts pricing

International Mill Service Inc. reverse flexed its $140 million in add-on term loan B debt (B1/B+) to Libor plus 250 basis points from Libor plus 275 basis points, according to a market source. The $20 million in add-on second-lien term loan debt (B3/B-) was also reverse flexed, although pricing was unavailable prior to press time.

Bear Stearns and UBS are the lead banks on the deal, with Bear Stearns the left lead.

The company also is looking to get $20 million in add-on revolver debt (B1/B+) at Libor plus 275 basis points.

Proceeds from the additional bank debt will be used to help fund the acquisition of Glassport, Pa.-based Tube City Holdings LLC, a provider of specialty services to the global steel industry.

International Mill Service is a Horsham, Pa.-based provider of specialty services to the North American steel industry. The company closed on its credit facility about a month ago in connection with its acquisition by Wellspring Capital Management LLC.

Reliant upsizes B, cuts pricing

Reliant Energy Inc. upsized its term loan B to $1.3 billion from $1.1 billion and reduced pricing on the tranche to Libor plus 237.5 basis points from Libor plus 275 basis points, according to a market source.

The term loan B upsizing was a result of a $350 million downsizing to the company's recently priced 10-year $750 million 6¾% senior secured notes, through the removal of six-year floating-rate note tranche.

The other $150 million taken out of the originally sized $1.1 billion bond deal was added to the tax-exempt bond offering, which was increased to $500 million, the source explained.

Reliant's $3 billion credit facility (B1/B+) also contains a $1.7 billion revolver talked at Libor plus 300 basis points.

Deutsche Bank, Bank of America, Barclays, Goldman Sachs and Merrill Lynch are the lead banks on the deal, with Deutsche the left lead.

Proceeds from the credit facility, along with proceeds from the notes and tax-exempt bonds, will be used to refinance existing debt, including a $2.1 billion revolver and a $1.7 billion term loan at the parent company, $300 million of Orion Power Midwest bank debt and $400 million of floating-rate tax-exempt bonds.

Closing on the refinancing is expected to occur before year-end.

Reliant is a Houston provider of electricity and energy services to retail and wholesale customers.

Koch adds soft call

Koch Cellulose LLC added soft call protection of 101 for one year to its repricing proposal and modified the amount of excess cash flow that can be used for dividend payments, according to a market source.

Under the modified proposal, the company will be able to use 75% of excess cash flow, up until $50 million, to pay dividends with the remaining 25% used for debt repayment, the source said, explaining that originally the company wanted to be able to use 100% of excess cash flow for dividends.

Initial pricing on the $300 million term loan B and $74 million letter-of-credit facility would still be going down to Libor plus 200 basis points, with a step down to Libor plus 175 basis points if leverage falls below 21/2x.

Pricing on the tranches are currently grid based, and so the syndicate is looking to lower the grid by 25 basis points across the board.

Citigroup and Deutsche Bank are the lead banks on the deal, with Citigroup the left lead.

The company got the credit facility around May of this year when it acquired two pulp mills, a short line railroad and assets of two international sales offices from Georgia-Pacific Corp.

Koch Cellulose is a Brunswick, Ga., manufacturer and seller of wood pulp.

TRW breaks

TRW Automotive's $600 million term loan B hit the secondary on Thursday with the tranche quoted at par bid, par ¼ offered on the open, according to traders.

The term loan was recently downsized from $800 million and reverse flexed to Libor plus 150 basis points from Libor plus 175 basis points with 101 soft call protection for one year.

The $1.9 billion credit facility (Ba2/BB+) also contains a $400 million term loan A, increased from $250 million, and a $900 million revolver increased from $850 million. Pricing on the term loan A and the revolver is set at Libor plus 137.5 basis points.

JPMorgan is the left lead bank on the deal, with Bank of America and Goldman Sachs also acting as joint bookrunners.

Proceeds will be used to refinance $1.7 billion of the company's existing $2 billion credit facility. The new $300 million six-year term loan E, which just closed on Nov. 2 and carries an interest rate of Libor plus 175 basis points with the ability to step down to Libor plus 150 basis points based on ratings, will be left in place.

TRW is a Livonia, Mich.-based automotive supplier.

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