Investors await pickup in primary activity with acquisition/LBO deals post-Labor Day

By Sara Rosenberg

New York, Aug. 31 - The next few weeks are starting to shape up as quite busy on the primary side as a number of deals are expected to launch, including AOT Bedding Super Holdings, Payless ShoeSource/Collective Licensing International, Advanced Disposal Services, Deltek Inc., Par Pharmaceutical Cos. Inc., Tallgrass Energy Partners LP, Getty Images Inc. and Hertz Global Holdings Inc.

AOT coming soon

AOT Bedding set a bank meeting for 9:30 a.m. ET on Thursday to launch a proposed $1,458,000,000 credit facility that is being led by Morgan Stanley Senior Funding Inc., Goldman Sachs & Co., UBS Securities LLC, Deutsche Bank Securities Inc., Barclays, Jefferies & Co. and RBC Capital Markets LLC, sources previously told Prospect News.

The facility consists of a $225 million ABL revolver and a $1,233,000,000 seven-year senior secured term loan.

Proceeds, along with $725 million of high-yield bonds, will fund the buyout of the company by Advent International and refinance existing debt. Sellers Ares Management LLC and the Ontario Teachers' Pension Plan will retain a significant equity stake in the company at close, which is expected to occur in the fourth quarter.

AOT Bedding, a mattress manufacturer, is the parent company of Hoffman Estates, Ill.-based National Bedding Co. and Atlanta-based Simmons Bedding Co.

Payless/Collective on deck

Another deal set to launch right after Labor Day is Payless ShoeSource/Collective Licensing's $275 million seven-year senior secured term loan for which a bank meeting will be held at 10 a.m. ET on Sept. 7.

Morgan Stanley Senior Funding Inc., Jefferies & Co. and KKR Capital Markets are leading the term loan, which is being done in addition to the company's previously announced commitment for a $250 million senior secured asset-based revolving credit facility that is being led by Wells Fargo Capital Finance.

Proceeds will be used to refinance existing debt and help fund the buyout of the company by Blum Capital Partners and Golden Gate Capital from Collective Brands Inc., which is expected to close late in the third quarter or early in the fourth quarter.

Payless is a Topeka, Kan.-based specialty family footwear retailer, and Collective Licensing is an Englewood, Colo.-based development and licensing company.

Advanced Disposal readies deal

Continuing on the topic of the forward calendar, Advanced Disposal Services is planning a bank meeting in September for its proposed $1.95 billion credit facility that consists of a $300 million revolver and a $1.65 billion term loan, a market source said.

Deutsche Bank Securities, Inc., Macquarie Capital, UBS Investment Bank, Barclays Capital Inc. and Credit Suisse Securities (USA) LLC are leading the deal that will be used, along with $830 million of senior unsecured notes, to fund the purchase of Veolia ES Solid Waste Inc. from Veolia Environmental Services North America Corp. in a transaction valued at about $1.9 billion.

At close, Star Atlantic Waste Holdings LP, a Highstar Capital portfolio company, will combine its existing investments in Advanced Disposal Services Inc. and Interstate Waste Services Inc. with the acquired Veolia operations. The combined business will operate as Advanced Disposal Services.

Advanced Disposal leverage

Advanced Disposal's senior secured leverage will be around four times, and unsecured leverage will be around six times.

Closing on the transaction is expected this fall, subject to customary regulatory approvals.

Advanced Disposal is a Jacksonville, Fla.-based provider of integrated, non-hazardous solid waste collection, transfer, recycling and disposal services.

Deltek expected in September

Another deal that will likely launch with a bank meeting in September is Deltek's $680 million senior secured credit facility that is being led by Jefferies Finance LLC and RBC Capital Markets.

The credit facility consists of a $30 million revolver, a $425 million first-lien term loan and a $225 million second-lien term loan, the company disclosed in an 8-K recently filed with the Securities and Exchange Commission.

Proceeds will be used to help fund the buyout of the company by Thoma Bravo LLC for $13 per share for a transaction value of about $1.1 billion.

Closing is expected in the fourth quarter, subject to customary conditions and regulatory approvals.

Deltek is a Herndon, Va.-based provider of enterprise software and information for professional services firms and government contractors.

Par Pharma loan plans

Par Pharmaceutical, a Woodcliff Lake, N.J.-based specialty pharmaceutical company, will likely also come to market in September with its $1.13 billion senior secured credit facility that will be used to fund its buyout by TPG for $50 per share in cash, or about $1.9 billion.

Based on filings with the SEC, the facility is expected to consist of a $150 million revolver and a $980 million term loan.

Bank of America Merrill Lynch, Deutsche Bank Securities Inc., Goldman Sachs & Co., RBC Capital Markets LLC and Citigroup Global Markets Inc. are the lead banks on the deal.

In addition to the credit facility, the company has received a commitment for a $490 million senior unsecured bridge loan to help fund the transaction.

Closing is subject to shareholder approval, clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and other customary conditions. It is not subject to a financing condition.

Tallgrass timing

Meanwhile, Tallgrass Energy Partners' $1,025,000,000 credit facility is anticipated to launch with a bank meeting in late September as well via lead bank Barclays, a source previously said.

The facility consists of a $150 million revolver and an $875 million term loan and will be used with $1 billion of equity to fund the acquisition of assets from Kinder Morgan Energy Partners LP and for working capital purposes.

Under the agreement, Tallgrass is buying Kinder Morgan Interstate Gas Transmission, Trailblazer Pipeline Co., the Casper-Douglas natural gas processing and West Frenchie Draw treating facilities in Wyoming and Kinder Morgan's 50% interest in the Rockies Express Pipeline for a total cash consideration of about $1.8 billion.

Closing is expected in the fourth quarter, subject to Federal Trade Commission approval.

Tallgrass is owned by the management team of Tallgrass, Kelso & Co. and a limited group of investors led by the Energy & Minerals Group, including Magnetar Capital.

Getty in next few weeks

Getty Images' proposed credit facility will likely come to market in late September or early October, according to a market source. Details on the deal have not yet emerged.

J.P. Morgan Securities LLC, Barclays, Credit Suisse Securities (USA) LLC, Goldman Sachs & Co. and RBC Capital Markets LLC are leading the debt that will be used to help fund the buyout of the company by the Carlyle Group and management from Hellman & Friedman for $3.3 billion.

Other funds for the transaction will come from equity and high-yield bonds.

Closing is targeted to take place this year.

Getty Images is a Seattle-based creator and distributor of still imagery, video and multimedia products.

Hertz incremental loan

Hertz's incremental term loan, for which a size is not yet out, is another deal that is looking at the late September/early October timeframe for launch, a market source had remarked.

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

Proceeds will be used to help fund the acquisition of Dollar Thrifty Automotive Group Inc. for $87.50 per share. The transaction has an equity value of $2.6 billion and a corporate enterprise value of $2.3 billion.

Closing is expected in mid-to-late October, subject to the tender of a majority of the shares of Dollar Thrifty common stock, regulatory clearance by the Federal Trade Commission and other customary conditions.

Hertz bridge commitment

Currently, Hertz has a commitment for a $1.95 billion 365-day unsecured bridge loan that is priced at Libor plus 537.5 basis points with a 1% Libor floor. The spread will increase by 50 bps every three months until it hits a cap.

The incremental term loan will be used to replace some of that bridge loan, and the rest of the bridge debt will be taken out with bonds.

Total debt to EBITDA will be 3.7 times, or 3.4 times with cost synergies, and total debt to gross EBITDA will be 4 times, or 3.8 times with cost synergies.

Hertz is a Park Ridge, N.J.-based auto and equipment rental company. Dollar Thrifty is a Tulsa, Okla.-based renter and leaser of vehicles.

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