Health Management slides as counsel leaves; Genesys, ThermaSys, Morton's talk surfaces

By Sara Rosenberg

New York, Jan. 10 - Health Management Associates Inc.'s term loan B headed lower in trading on Tuesday as the company announced that its general counsel has resigned during a time at which it is facing a whistleblower lawsuit and allegations of overbilling.

Over in the primary market, Genesys disclosed price talk on term loan B and ThermaSys Corp. released guidance on its credit facility as both deals were presented to lenders during the session, and Post Holdings Inc. launched as planned.

Also, Morton's Restaurant Group Inc. started circulating official spread and floor talk on its upcoming deal that is in line with was outlined in regulatory filings, and original issue discount guidance emerged as well.

Furthermore, Crown Castle Operating Co. came out with details on structure and timing on its proposed credit facility for the acquisition of NextG Networks Inc., and American Dental Partners Inc. set a bank meeting date for its deal, and Summit Materials LLC emerged with new loan plans.

Health Management retreats

Health Management's term loan B weakened during Tuesday's trading hours after the company said in an 8-K filed with the Securities and Exchange Commission that Timothy R. Parry, Esq., senior vice president, general counsel and secretary resigned, according to traders.

The term loan B was quoted by one trader at 98½ bid, 99½ offered, down from 99¾ bid, par ¾ offered, and by a second trader at 98 bid, 99 offered, down from 99½ bid, 99¾ offered. The second trader said the loan got as low as 97½ bid, 98½ offered but rebounded a bit before the close.

Reports have surfaced recently that the company is facing a lawsuit in which a former employee claims that he was fired for blowing the whistle on Medicare overbilling.

And with the resignation of counsel and the firing of the employee, some market participants are beginning to believe that there may be validity to the overbilling allegations, one trader explained.

Health Management is a Naples, Fla.-based operator of acute care hospitals.

Genesys releases guidance

Switching to the primary, Genesys held a bank meeting on Tuesday to kick off syndication on its credit facility, and with the launch, talk on the $550 million seven-year term loan B was announced, according to a market source.

The term loan B is guided at Libor plus 525 basis points to 550 bps with a 1.5% Libor floor and an original issue discount of 98 and includes 101 soft call protection for one year, the source said.

Goldman Sachs & Co., Citigroup Global Markets Inc., RBC Capital Markets LLC and Macquarie Capital are leading the $600 million facility (Ba3) that also provides for a $50 million five-year revolver.

Commitments are due on Jan. 20.

Genesys funding buyout

Proceeds from Genesys' credit facility, along with about $225 million of mezzanine debt and over 50% equity, will fund its acquisition by Permira from Alcatel-Lucent for around $1.5 billion.

Senior leverage is in the mid 3.0 times area and total leverage is in the low 5.0 times area.

Closing is expected early this year, subject to review by the Committee of Foreign Investment in the United States and other customary regulatory approvals and consultations in various countries.

Genesys is a Daly City, Calif.-based supplier of contact center technology software.

ThermaSys pricing

ThermaSys was another company to hold a bank meeting, launching its $142 million five-year credit facility with talk of Libor plus 500 bps with a 1.25% Libor floor and an original issue discount of 99, according to a market source.

The GE Capital Markets-led facility consists of a $30 million revolver and a $112 million term loan.

Proceeds will be used to help finance the purchase of the company by Wellspring Capital from Sun Capital Partners Inc.

ThermaSys is a Montgomery, Ala.-based supplier of highly engineered copper/brass and aluminum heat exchanger components and assemblies.

Post launches

Post Holdings, a St. Louis-based ready-to-eat cereal manufacturer, launched its $350 million five-year senior secured credit facility (Baa3/BB) in the afternoon as planned, with price talk of Libor plus 200 bps, according to a market source.

The facility consists of a $175 million undrawn revolver and a $175 million term loan A.

Barclays Capital Inc., PNC Capital Markets LLC, SunTrust Robinson Humphrey Inc. and Wells Fargo Securities LLC are the bookrunners on the deal, with Barclays the lead arranger.

The deal, along with $775 million of 10-year senior notes, is being done in connection with the company's spin-off from Ralcorp Holdings Inc. that will be completed by a pro rata distribution of at least 80% of the outstanding shares of Post common stock to holders of Ralcorp common stock.

The debt will fund a distribution to Ralcorp, which Ralcorp will then use to reduce debt, to pursue private brand acquisitions and for additional share repurchases.

Morton's floats talk

Also on the new deal front, Morton's Restaurant Group released official talk on its proposed $205 million senior secured credit facility at Libor plus 725 bps with a 1.5% Libor floor, which matches the expected pricing level that the company had previously disclosed in filings with the Securities and Exchange Commission, according to a market source.

The facility, which is set to launch with a bank meeting at 12:30 p.m. ET on Thursday, consists of a $15 million 41/2-year revolver and a $190 million five-year term loan.

Original issue discount talk on the term loan is 97, the source continued. The regulatory filings did not disclose the offer price that the company was expecting for the debt.

The term loan is coming to market with a slightly smaller size than the $200 million amount that was outlined in the SEC filings.

Morton's lead bank

Jefferies & Co. is the lead bank on Morton's credit facility and will be asking lenders to get their commitments in by Jan. 26.

Leverage through the credit facility will be in the low 3.0 times context.

Proceeds from the credit facility and cash on hand will fund the company's buyout by Tilman J. Fertitta's wholly owned company Fertitta Morton's Restaurants Inc. for $6.90 per share through a tender offer that expires on Jan. 31.

Closing is expected in early February, subject to the tender of a majority of shares, the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and other customary conditions.

Morton's is a Chicago-based operator of company-owned upscale steakhouses.

Crown Castle readies deal

Crown Castle revealed that it will be launching the financing for its NextG acquisition with a bank meeting on Thursday morning and that the proposed $3.1 billion senior secured credit facility (B+/BB+) will also be used to refinance existing revolver and term loan debt, according to a market source.

The facility consists of a $1 billion five-year revolver, a $500 million five-year delayed-draw term loan A and a $1.6 billion seven-year term loan B, with price talk not yet available, the source said.

Bank of America Merrill Lynch, RBS Securities Inc. and Morgan Stanley & Co. LLC are leading the deal that is expected to close this quarter, with Bank of America left lead on the B loan and RBS left lead on the pro rata.

NextG, a Milpitas, Calif.-based provider of outdoor distributed antenna systems, is being bought from a group of investors led by Madison Dearborn Partners. Crown Castle is a Houston-based owner, operator and leaser of towers and other infrastructure for wireless communications.

American Dental firms timing

American Dental has nailed down the launch date for its January-business senior secured credit facility, setting a bank meeting in New York for Jan. 17, according to a market source.

The $241 million deal consists of a $36 million five-year revolver and a $205 million six-year term loan B, the source said, adding that price talk is not yet available. The term loan B is coming a bit smaller than the $220 million amount that the company had outlined in filings with the SEC.

KeyBanc Capital Markets LLC, CIT Capital Securities and NXT Capital LLC are leading the deal that be used, along with about $220 million of equity, to fund the purchase of the company by JLL Partners Inc. for $19 per share. The transaction is valued at about $427.2 million on a fully diluted basis.

American Dental, a Wakefield, Mass.-based business partner to dental group practices, expects the buyout to close this quarter, subject to receipt of shareholder and regulatory approvals.

Summit sets launch

Summit Materials announced plans for a new credit facility, scheduling a bank meeting for Thursday to launch the $550 million deal that is comprised of a $150 million five-year revolver and a $400 million seven-year term loan B, according to a market source.

Bank of America Merrill Lynch, Citigroup Global Markets Inc., UBS Securities LLC, Barclays Capital Inc., Credit Suisse Securities (USA) LLC and Deutsche Bank Securities Inc. are the lead banks on the deal that will be used to refinance existing debt.

Summit Materials is a Washington, D.C.-based company that acquires and grows heavy-side building materials companies in the aggregates, ready-mix concrete, cement, asphalt paving and construction industries.

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