INC Research, Totes break; Dynegy up with refi; Texas Competitive softens; OWIC emerges

By Sara Rosenberg

New York, July 11 - INC Research LLC's credit facility made its way into the secondary market on Monday, with levels on the term loan B quoted above its original issue discount price, and Totes-Isotoner Corp. freed up as well.

Also in trading, Dynegy Inc.'s strip of institutional bank debt was stronger as the company launched a refinancing transaction, Texas Competitive Electric Holdings Co. LLC's debt was weaker on talk of new emission rules and a new offers-wanted-in-competition (OWIC) surfaced.

Over in the primary, Capsugel released price talk on its term loan B as the deal was presented to lenders during the session, YRC Worldwide Inc. began circulating some guidance on its second-out term loan ahead of its investor meeting and Immucor Inc. launched its bridge loan.

Furthermore, Chiquita Brands International Inc.'s credit facility is oversubscribed. Books, however, are being left open for an additional few days past the commitment deadline to allow for some stragglers.

INC Research tops OID

INC Research's credit facility broke for trading on Monday, with the $300 million term loan B quoted at 98 bid, 99 offered, according to a trader.

Pricing on the B loan is Libor plus 575 basis points with a 1.25% Libor floor, and it was sold at an original issue discount of 97. There is 101 soft call protection for one year.

During syndication, the term B was downsized from $350 million, pricing firmed at the wide end of revised talk of Libor plus 550 bps to 575 bps and was flexed up from initial talk of Libor plus 475 bps to 500 bps, the discount widened from revised talk of 98 and from original talk of 99, and call protection was added.

Morgan Stanley & Co. Inc., ING Financial Markets LLC and RBC Capital Markets LLC are the lead banks on the $375 million credit facility (Ba3/B+), which also includes a $75 million revolver.

INC Research buying Kendle

Proceeds from INC Research's credit facility, notes and equity will be used to fund the acquisition of Kendle International Inc. for $15.25 per share in cash. The total equity value is roughly $232 million.

The company priced $300 million of notes last week at par to yield 11½%. The offering was upsized from $250 million in connection with the term loan B downsizing.

Closing on the transaction is expected in the third quarter, subject to approval by Kendle's shareholders as well as satisfaction of customary conditions and regulatory approvals.

INC Research is a Raleigh, N.C.-based therapeutically focused contract research organization privately held by Avista Capital Partners and Ontario Teachers' Pension Plan. Kendle is a Cincinnati-based clinical research organization.

Totes starts trading

Also hitting the secondary market was Totes-Isotoner with its $160 million six-year first-lien term loan (B3/B) quoted at 98 bid, 98½ offered and its $80 million 61/2-year second-lien term loan (Caa2/CCC+) quoted at 97 bid, 98 offered, according to a trader.

Pricing on the first-lien term loan, which includes a $145 million funded tranche and a $15 million delayed-draw tranche, is Libor plus 575 bps with a 1.5% Libor floor, and it was sold at a discount of 98. There is 101 soft call protection for one year.

During syndication, pricing on the first-lien term loan was flexed up from Libor plus 525 bps, the discount widened from 99 and the call protection was added.

Meanwhile, pricing on the second-lien loan ended up in line with talk at Libor plus 925 bps with a 1.5% Libor floor, and it was sold at an original issue discount of 97. This tranche includes call protection of 103 in year one, 102 in year two and 101 in year three, with a carve-out for change of control at par.

Totes getting revolver

Totes-Isotoner's $325 million senior secured credit facility also includes an $85 million five-year ABL revolver.

Credit Suisse Securities (USA) LLC is the lead bank on the deal.

Proceeds are being used to refinance existing debt and pay a dividend to shareholders.

Totes-Isotoner is a Cincinnati-based marketer of umbrellas, gloves, rainwear, rubber overshoes and other weather-related accessories.

Dynegy strip rises

Dynegy's strip of institutional bank debt moved up to 98¾ bid, 99¾ offered from 98¼ bid, 98¾ offered as the company launched $1.7 billion in new term loans and disclosed plans for a refinancing/reorganization, a trader told Prospect News.

A second trader, who was quoting the paper at 98¾ bid, 99½ offered, said that the debt probably didn't move all the way up to par on the news since there is some risk of whether the deal will get done.

The new senior secured debt consists of a $1.3 billion six-year term loan at GasCo and a $400 million six-year term loan at CoalCo.

GasCo and CoalCo are being created through the reorganization that Dynegy said in a release will align its asset base and maximize flexibility to address additional potential debt restructuring activities.

GasCo will be a subsidiary that owns a portfolio of eight primarily natural gas-fired intermediate and peaking power generation facilities, and CoalCo will be a subsidiary that owns a portfolio of six primarily coal-fired baseload power generation facilities.

Dynegy lead banks

Credit Suisse Securities (USA) LLC and Goldman Sachs & Co. are the joint lead arrangers on Dynegy's new term loans and are expected to go out with price talk on the loans on Tuesday upon making a decision on whether to get the deal rated, a source remarked.

Proceeds from the GasCo loan will be used to repay Dynegy Holdings Inc.'s existing senior secured credit facility, repay existing debt relating to Sithe Energies Inc., make a $400 million restricted payment to a parent holding company of GasCo, and fund cash collateralized letters of credit and cash collateral for existing collateral requirements.

The CoalCo loan will be used to fund cash collateralized letters of credit and cash collateral for existing collateral requirements, and for general working capital and general corporate purposes.

Dynegy, a Houston-based producer and seller of electric energy, capacity and ancillary services, expects to close on the term loans at the end of July.

Texas Competitive slides

Texas Competitive's non-extended and extended term loans were lower in trading on chatter that the Environmental Protection Agency is requiring emission reductions for power plants, according to traders.

One trader had the non-extended loan quoted at 81 bid, 81½ offered, down from 82¾ bid, 83¾ offered and the extended loan quoted at 75 5/8 bid, 75 7/8 offered, down from 76¾ bid, 77¼ offered.

A second trader, meanwhile, had the non-extended loan quoted at 81½ bid, 82 offered, down from 82 3/8 bid, 82¾ offered and the extended loan quoted at 76 bid, 76½ offered, down from 76½ bid, 77 offered.

Texas Competitive is a Dallas-based energy company.

OWIC due Tuesday

A new $133 million OWIC was announced on Monday, with offers due by 1 p.m. ET on Tuesday, according to a market source.

Some names in the OWIC include Goodman Global Inc.'s term loan B, West Corp.'s term loan B-4, Laureate Education's extended term loan B, NBTY Inc.'s term loan B, Warner Chilcott Corp.'s term loan B-2, Caesars Entertainment Operating Co. Inc.'s term loan B-3, Emergency Medical Services Corp.'s term loan and Smile Brands Group Inc.'s new term loan B, the source said.

Capsugel talk emerges

Moving to the primary, Capsugel held a bank meeting on Monday afternoon to launch its credit facility, at which time talk on the $1.07 billion senior secured deal (B1) was announced as Libor plus 450 bps with a 1.25% Libor floor, according to a market source.

The facility includes a $150 million five-year revolver and a $920 million seven-year term loan B, with the B loan being offered at an original issue discount of 99 and having 101 soft call protection for one year, the source continued.

UBS Securities LLC, Barclays Capital Inc., Deutsche Bank Securities Inc., Mizuho Securities USA Inc. and KKR Capital Markets are leading the deal that will be used to help fund the buyout of the company by Kohlberg Kravis Roberts & Co LP from Pfizer Inc. for $2.375 billion in cash.

Capsugel plans notes

In addition to the credit facility, Capsugel plans on selling €325 million in notes as part of its buyout financing package.

The notes are backed by a commitment for a €325 million bridge loan.

Closing on the acquisition is expected in the third quarter, subject to customary conditions, including regulatory approval in certain jurisdictions, such as the United States and the European Union.

Capsugel is a Peapack, N.J.-based manufacturer of hard capsules and drug-delivery systems. The company generated about $750 million in revenue and manufactured more than 180 billion hard capsules in 2010.

YRC floats talk

YRC Worldwide started telling lender that its $225 million second-out term loan due Sept. 30, 2014 is being talked at Libor plus 975 bps with a 1.5% Libor floor and original issue discount that is still to be determined, according to a market source.

This talk is different than what was outlined in the commitment letter filed with the Securities and Exchange Commission on Friday. The letter had the second-out loan expected at Libor plus 850 bps with a 1.5% floor and an original issue discount of 981/2.

The letter also said that the second-out loan would have 101 call protection for one year.

J.P. Morgan Securities LLC is the lead bank on the deal that is set to launch with a lender meeting on Tuesday at 2 p.m. ET.

YRC plans first-out loan

In addition to the second-out term loan, YRC plans on getting a $175 million senior secured first-out term loan that, according to the commitment letter, is priced at Libor plus 700 bps with a 1.5% Libor floor and a 700 bps unused fee.

The first-out loan, also due Sept. 30, 2014, can only have $30 million drawn at closing and is non-callable for one year, then at 101 in year two.

J.P. Morgan Securities LLC, the Catalyst Capital Group Inc., Cyrus Capital Partners LP and Owl Creek Investments I LLC each committed to provide roughly $58.3 million of the first-out deal.

Proceeds from the term loans will be used to repay outstanding debt under an existing asset-backed securitization facility and for general corporate purposes.

YRC is an Overland Park, Kan.-based transportation service provider.

Immucor launches bridge

Immucor held a meeting on Monday to launch its $400 million senior unsecured bridge loan to investors, and the expectation is that the company's $700 million senior secured credit facility will come to market sometime this summer, according to a market source.

Based on an 8-K filed with the SEC, the credit facility consists of a $100 million five-year revolver, of which no more than $25 million can be drawn at closing, and a $600 million seven-year term loan.

J.P. Morgan Securities LLC and Citigroup Global Markets Inc. are the lead banks on the deal that will be used to help fund the buyout of the company by TPG Capital for $27 per share in cash. The transaction has a fully diluted equity value of $1.973 billion.

Immucor plans share tender

To complete the purchase of Immucor, a tender offer for the company's shares by IVD Acquisition Corp., an affiliate of TPG, is expected to commence no later than July 15.

Closing is expected in the second half of the year, subject to satisfaction of the minimum tender condition of 84% of the company's shares, approval under the Hart-Scott-Rodino Antitrust Improvements Act, the receipt of any applicable consents or approvals under German antitrust or merger control laws and other customary conditions.

If the minimum tender condition is not met, the parties have agreed to complete the transaction through a one-step merger after receipt of shareholder approval.

Immucor is a Norcross, Ga.-based provider of automated instrument-reagent systems to the blood transfusion industry.

Reynolds Group holds meeting

Also launching with a meeting on Monday was Reynolds Group's $2 billion senior secured term loan, but price talk has not yet come out as the company is waiting on ratings, according to a market source.

Commitments are due on July 25.

The term loan is being obtained pursuant to an amendment to the company's existing credit agreement.

Credit Suisse Securities (USA) LLC and HSBC Securities (USA) Inc. are the lead banks on the deal that will be used to fund the purchase of Graham Packaging Co. Inc. for $25.50 per share, or a total of about $4.5 billion, including assumed debt.

Reynolds additional debt

Other funds for Reynold's purchase of Grahama will come from $1.5 billion of senior secured debt, $500 million of senior unsecured debt and cash on hand.

Previously, the company had said that it was expecting to get $5 billion of new debt for the acquisition in the form of new term loans, the issuance of notes or other debt.

Pro forma for the anticipated financing, Reynolds Group estimates net senior secured leverage of under 3.5 times and net total leverage of 6.0 times.

Closing is expected in the second half of this year, subject to customary regulatory approvals and closing conditions, including the approval of Graham's stockholders.

Reynolds Group is an Auckland, New Zealand-based manufacturer and supplier of consumer food and beverage packaging and storage products. Graham is a York, Pa.-based supplier of plastic containers.

Chiquita extends deadline

In other news, Chiquita Brands decided to give investors till the end of the week to commit to its $400 million senior secured credit facility (Ba2/BB-) as a few banks needed more time, according to a market source. Originally, the commitment deadline had been set for Monday.

The source did say that the deal is already oversubscribed at initial terms and that no changes are expected to be made to the transaction. He explained that the extended syndication is simply because this is an all bank deal, and some banks take a little longer to place their orders. Institutional investors were not invited to participate.

The facility consists of a $150 million revolver talked at Libor plus 275 bps and a $250 million term loan talked at Libor plus 300 bps, with no Libor floor on either tranche.

Chiquita repaying debt

Proceeds from Chiquita's credit facility, along with cash, will be used to refinance about $155 million of existing bank debt and fund a tender offer for $100 million of the roughly $177 million outstanding under the company's 8 7/8% senior notes due 2015.

The tender offer expires on July 26 and is subject to completion of debt financing.

Rabobank is the lead arranger on the credit facility, Wells Fargo Securities LLC is the syndication agent and Bank of America Merrill Lynch is the documentation agent.

Chiquita is a Cincinnati-based marketer and distributor of fresh and value-added food products.

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