Octavius, Paetec break; Nortek adds step; Citco, Redflex lift spread, iPayment floats talk

By Sara Rosenberg

New York, April 21 - Octavius Tower's term loan B freed for trading early on in the day on Thursday, with levels quoted slightly above its original issue discount price, and Paetec Holding Corp. hit the secondary market as well.

In the primary market, Nortek Inc. added a pricing step-down to its covenant-light term loan, the Citco Group of Cos. and Redflex Holdings Ltd. raised pricing, and Town Sports International Holdings Inc. opted to leave books open on its deal for another few days.

Additionally, iPayment Holdings Inc. released price talk on its term loan B as the deal was presented to lenders during the session, Star Generation, Renfro Corp. and Aeroflex Inc. surfaced with plans to bring deals to market, and lead banks were revealed on Neiman Marcus Group Inc.'s upcoming amended and restated credit facility.

Octavius starts trading

Octavius Tower's $450 million six-year senior secured term loan B (B3/B) made its way into the secondary market on Thursday morning, with levels quoted at 99¼ bid, 99¾ offered on the open, and then it moved up to 99 3/8 bid, 99 7/8 offered, according to a trader.

Pricing on the loan, which had been upsized from $400 million, is Libor plus 800 basis points with a 1.25% Libor floor, and it was sold at an original issue discount of 99. It is non-callable for 18 months, then at 103 for six months, 102 for the following year and 101 in the year after that.

J.P. Morgan Securities LLC is the lead bank on the deal that will be used to fund the completion of the Octavius Tower at Caesars' Palace Las Vegas and the development of a retail, dining and entertainment corridor on the Las Vegas strip.

Octavius Tower is a subsidiary of Caesars Entertainment Corp., a Las Vegas-based casino entertainment company.

Paetec frees up

Paetec's credit facility also broke for trading, with the $100 million term loan B quoted at par ¼ bid, 101¼ offered, according to a trader.

Pricing on the term loan B is Libor plus 350 bps with a 1.5% Libor floor, and it was sold at a discount of 993/4, after tightening from 991/2. There is 101 soft call protection for one year.

The company's $225 million credit facility (Ba3/B) also includes a $125 million revolver.

Bank of America Merrill Lynch is the lead bank on the deal that will be used for acquisition financing and to pay down revolver borrowings.

Paetec is a Fairport, N.Y., provider of business communications.

Nortek inserts step

Nortek tweaked its $350 million six-year senior secured covenant-light term loan (B1/BB-) by including a pricing step-down to Libor plus 375 bps when corporate ratings are B2/B, according to a market source. Current corporate ratings are B3/B.

Initial pricing on the term loan was left unchanged at Libor plus 400 bps with a 1.25% Libor floor and an original issue discount of 991/2, the source continued.

Also, as before, the term loan includes 101 soft call protection for one year.

UBS Securities LLC is the lead bank on the deal and is expecting to give out allocations on Monday.

Nortek funding tender

Proceeds from Nortek's term loan, along with $500 million of senior notes that priced earlier this month at par to yield 8½%, will be used to fund a tender offer for the company's roughly $753 million of 11% senior secured notes due 2013.

The tender offer expires on May 10 and is conditioned on the completion of the term loan and the bond offering.

The company will continue to have access to its current $300 million asset-based revolver due in 2015. However, this revolver will need to be amended to allow for the refinancing.

Nortek is a Providence, R.I.-based manufacturer of residential and commercial ventilation, HVAC and home technology convenience and security products.

Citco ups talk

Citco widened price talk on its $490 million seven-year term loan to Libor plus 400 bps to 425 bps from Libor plus 350 bps to 375 bps but left the 1.25% Libor floor and original issue discount of 99½ unchanged, according to a market source.

UBS Securities and Deutsche Bank Securities Inc. are the lead banks on the deal that will be used to refinance existing debt.

Citco is a provider of financial services to hedge funds, private equity and real estate firms, institutional banks, companies and high net worth individuals.

Redflex flexes

Redflex raised pricing on its $215 million credit facility (Ba3/B) to Libor plus 550 bps from talk of Libor plus 475 bps to 500 bps, while leaving the 1.5% Libor floor and original issue discount of 98½ unchanged, according to a market source.

The facility consists of a $20 million revolver, a $175 million term loan B and a $20 million delayed-draw term loan.

The term loan B also saw the addition of 101 soft call protection for one year, the source remarked.

Macquarie Capital (USA) Inc. is the lead bank on the deal that is now fully subscribed.

Redflex being acquired

Proceeds from Redflex's credit facility will be used to help fund its buyout by the Carlyle Group and Macquarie Group Ltd. for $2.74 per share, or about $304 million. The delayed-draw loan will be available for capital expenditures.

The company is also getting a $75 million second-lien term loan that had been placed prior to syndication of the first-lien debt.

Closing on the acquisition is expected in June, subject to shareholder and regulatory approval.

Redflex is a South Melbourne, Australia-based manufacturer and operator of highway safety equipment, including digital speed and red-light cameras.

Town Sports stays open

Town Sports has moved the commitment deadline on its $350 million senior secured credit facility (B1/B) to the end of the day Wednesday from this past week, according to a market source.

The facility consists of a $50 million revolver and a $300 million seven-year term loan B talked at of Libor plus 425 bps to 450 bps with a 1.5% Libor floor and an original issue discount of 991/2.

Deutsche Bank Securities and KeyBanc Capital Markets LLC are the lead banks on the deal that will be used to repay an existing credit facility and to redeem the company's 11% senior discount notes due 2014.

Town Sports is a New York-based owner and operator of fitness clubs.

Engineering ups pricing

Engineering Solutions & Products Inc. raised the spread on its $120 million term loan to Libor plus 575 bps from Libor plus 550 bps and widened the original issue discount to 96½ from 99, while leaving the 1.5% Libor floor intact, according to a market source.

The company's $140 million credit facility also includes a $20 million revolver.

Bank of America Merrill Lynch is the lead bank on the deal that was used to help fund the buyout of the company by Berkshire Partners.

Engineering Solutions & Products is an Eatontown, N.J.-based provider of engineering, technical and consulting services in response to Department of Defense requirements.

iPayment sets talk

Also in the primary, iPayment held a bank meeting on Thursday to kick off syndication on its proposed $375 million six-year term loan B, and in connection with the event, price talk was announced, according to a market source.

The term loan B is being guided at Libor plus 450 bps to 475 bps with a 1.5% Libor floor and an original issue discount of 99, the source said, adding that there is 101 soft call protection for one year.

The company's $450 million senior secured credit facility also includes a $75 million revolver.

JPMorgan is the lead arranger on the deal that will be used to help refinance the company's existing senior secured credit facility, redeem existing senior subordinated notes and make a distribution to its indirect parent, iPayment Investors LP.

iPayment plans notes

In addition to the new bank debt, iPayment will be selling $375 million of senior notes due 2018 as well as $150 million of holdco PIK toggle senior notes due 2018 to help fund the refinancing and distribution.

Also, the company is offering 150,000 warrants to purchase common stock with the PIK toggle notes.

iPayment Investors plans to use the funds from the distribution to redeem PIK toggle notes and all of the equity interests held by the company's chairman and chief executive officer.

iPayment is a Nashville-based provider of credit and debit card-based payment processing services.

Star Generation coming soon

Star Generation has scheduled a bank meeting for Monday to launch a proposed $750 million credit facility that will include a revolver and a term loan B, according to sources.

Sizes and price talk on the tranches are still to be determined, with the details expected to be announced at the meeting, sources said.

However, it is contemplated that the breakdown will be somewhere along the lines of a $100 million revolver and a $650 million term loan B, sources added.

Barclays Capital Inc., RBC Capital Markets LLC and Citigroup Global Markets Inc. are the lead banks on the facility that will be used to help fund Highstar Capital's acquisition of 100% of the equity interests of the Arlington Valley and Griffith power generation plants located in Arizona from LS Power.

Closing on the transaction is subject to customary regulatory approvals.

Renfro readies call

Renfro has set a call for Monday to launch a repricing of its term loan to Libor plus 425 bps to 450 bps with a 1.5% Libor, from Libor plus 500 bps with a 1.75% Libor floor, according to a market source.

The repriced term loan is being offered at an original issue discount of 99 7/8, the source said.

JPMorgan is the lead bank on the deal.

Renfro is a Mount Airy, N.C.-based manufacturer of socks.

Aeroflex sets launch

Aeroflex scheduled a bank meeting for Tuesday to launch a new credit facility that will be used to refinance existing bank debt, according to a market source.

JPMorgan is the lead bank on the deal.

Aeroflex is a Plainview, N.Y.-based maker of radio frequency and microwave integrated circuits, components and systems used in wireless communication systems.

Neiman lead banks

Credit Suisse Securities (USA) LLC, JPMorgan, Bank of America Merrill Lynch and Barclays Capital are leading Neiman Marcus' proposed $2.76 billion amended and restated senior secured credit facility, a market source told Prospect News on Thursday.

As was previously reported, the facility is set to launch with a bank meeting in New York on Monday and will consist of a $2.06 billion term loan and a $700 million revolver.

Price talk on the transaction is expected to come out with the launch, the source said.

Through the amendment and restatement, the company is increasing its term loan from $1.51 billion and increasing its revolver from $600 million, and proceeds from the incremental term loan debt, along with cash on hand, will be used to repurchase its $752.4 million 9%/9¾% senior notes due 2015.

The Dallas-based high-end specialty retailer said in a news release that the purpose of the planned refinancing is to lower interest expense going forward by taking advantage of current market conditions.

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