Navistar steady with numbers; Genesee retranches; AOT Bedding, CPG, Six3 Systems set talk

By Sara Rosenberg

New York, Sept. 6 - Navistar International Corp.'s term loan B held firm in trading on Thursday despite the release of quarterly results that showed a year-over-year decline in earnings and revenues.

Meanwhile, over in the primary market, Genesee & Wyoming Inc. revised its credit facility, opting to lift the size of the term loan A and cancel plans for a term loan B due to strong support for the pro rata debt.

Also, AOT Bedding Super Holdings LLC, CPG International Inc. and Six3 Systems Inc. revealed price talk as their transactions were presented to investors during the session, and BJ's Wholesale Club Inc. announced a new deal.

Navistar stays firm

Navistar's term loan B held steady in trading on Thursday as the company came out with third quarter earnings, according to a trader.

The B loan was quoted at par 3/8 bid, par 7/8 offered, unchanged on the day, the trader said.

For the third quarter, Navistar reported net income of $84 million, or $1.22 per diluted share, compared net income of $1.4 billion, or $18.24 per diluted share, in the previous year.

Revenues for the quarter were $3.3 billion, down 6% from $3.5 billion in the third quarter of 2011. The company attributed the decline to lower net sales in its U.S. and Canada truck and engine segments, primarily due to lower military sales and reduced engine volumes in South America.

Navistar evaluating assets

In connection with the earnings announcement, the company said in a news release that it has launched a review of all of its non-core businesses with the goal of improving its return on invested capital and driving long-term profitability.

Also, the company disclosed that it will complete a voluntary separation program and a reduction in force of its salaried workforce. These actions are expected to generate $70 million to $80 million of annual savings.

Navistar is a Lisle, Ill.-based manufacturer of commercial and military trucks, buses, RVs and diesel engines.

OWIC announced

A $111.5 million Offers-Wanted-In-Competition (OWIC) emerged late in the day, with investors asked to get their offers in by 1 p.m. ET on Tuesday, according to a trader.

Some debt included in the portfolio is Colfax's term loan A1/A2, DaVita's term loan A, iStar Financial's term loan A, Lawson Software's term loan B-1, Penn Gaming's term loan A, Petroleum Geo-Services' term loan, Pilot Travel Centers LLC's term loan A, Pinnacle Foods' initial term loan, Walter Energy Inc.'s term loan A and Windstream's term loan B-2, the trader added.

Genesee ups A loan

Moving to the primary, Genesee & Wyoming raised its five-year term loan A to $1.875 billion from $875 million and, as a result, eliminated plans for a $1 billion seven-year term loan B, according to a market source.

Pricing on the term loan A is Libor plus 250 basis points.

The company's $2.3 billion senior secured credit facility (Ba3/BB+) also includes a $425 million five-year revolver, of which about $125 million is expected to be drawn at close. The revolver is priced at Libor plus 250 bps as well.

The pro rata debt was launched to banks in August, but a bank meeting for the term loan B had not yet taken place.

Based on filings with the Securities and Exchange Commission, it was expected that the term loan B would be priced at Libor plus 375 bps with a 1% Libor floor and include 101 soft call protection for one year.

Genesee lead banks

Bank of America Merrill Lynch, J.P. Morgan Securities LLC and Citigroup Global Markets Inc. are the lead banks Genesee & Wyoming's credit facility that will be used, along with $800 million of equity or equity-linked securities, to fund the purchase of RailAmerica Inc. for $27.50 per share and refinance existing debt.

Pro forma total debt to EBITDA is expected to be 4 times at the end of 2012.

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

Genesee & Wyoming is a Greenwich, Conn.-based operator of short line and regional freight railroads and provider of railcar switching services. RailAmerica is a Jacksonville, Fla.-based owner and operator of short line and regional freight railroads.

AOT talk emerges

In more primary happenings, AOT Bedding released price talk of Libor plus 425 bps to 450 bps with a 1.25% Libor floor and an original issue discount of 99 on its $1,233,000,000 seven-year senior secured term loan (B1) as the debt was launched with a bank meeting on Thursday morning, according to a market source.

The company's $1,458,000,000 credit facility also provides for a $225 million ABL revolver.

Commitments are due on Sept. 19, the source added.

Morgan Stanley Senior Funding Inc., Goldman Sachs & Co., UBS Securities LLC, Deutsche Bank Securities Inc. and Barclays are the bookrunners on the deal and joint lead arrangers with Jefferies & Co. and RBC Capital Markets LLC.

AOT being acquired

Proceeds from AOT Bedding's credit facility, along with $725 million of high-yield bonds, will be used to help fund its buyout by Advent International from Ares Management LLC and the Ontario Teachers' Pension Plan and to refinance existing debt.

As part of the transaction, Ares and Ontario Teachers' will retain a significant equity stake in the company.

Closing is expected in the fourth quarter, subject to conditions.

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

CPG discloses guidance

CPG International also held a bank meeting, and price talk on its $355 million seven-year covenant-light first-lien term loan (B1) was announced at Libor plus 500 bps with a 1.25% Libor floor and an original issue discount of 99, according to a market source. There is 101 repricing protection for one year.

In addition, lenders were told that the company's proposed $110 million five-year ABL revolver will have pricing that can range from Libor plus 150 bps to 200 bps, the source remarked.

Credit Suisse Securities (USA) LLC and Barclays are leading the term loan, and Wells Fargo Securities LLC, Credit Suisse and Barclays are leading the revolver.

CPG buying TimberTech

Proceeds from CPG's $465 million credit facility will be used to help fund the purchase of TimberTech and to refinance existing debt.

Commitments for the loan are due on Sept. 18, the source added, and closing on the acquisition is expected to occur late this month.

CPG is a Scranton, Pa.-based manufacturer of synthetic building products. TimberTech is a Wilmington, Ohio-based subsidiary of the Crane Group that manufactures low maintenance decking, railing and accessory products.

Six3 pricing

Another deal to launch and release guidance was Six3 Systems, with its $260 million seven-year term loan B talked in the Libor plus 500 bps area with a 1.25% Libor floor, an original issue discount of 99 and 101 soft call protection for one year, according to sources.

Goldman Sachs & Co., J.P. Morgan Securities LLC, Bank of America Merrill Lynch and RBS Citizens are leading the $310 million credit facility (B+), which also includes a $50 million five-year revolver.

Proceeds will be used to repay existing debt and preferred equity.

Leverage is around 4.5 times.

Six3 is a McLean, Va.-based provider of strategic and differentiated services to support the missions of customers in the U.S. national security and defense intelligence communities.

Ikaria sets deadline

Ikaria Acquisition Inc. launched its $125 million five-year first-lien term loan (B1/BB) with a bank meeting in the afternoon and asked lenders to get their commitments in by Sept. 20, according to a market source.

As previously reported, the loan is talked at Libor plus 650 bps with a 1.5% Libor floor, an original issue discount of 98 and 101 soft call protection for one year.

Credit Suisse Securities (USA) LLC, SunTrust Robinson Humphrey Inc. and Fifth Third Securities Inc. are the joint lead arrangers on the deal that will be used for a dividend recapitalization.

Leverage is 2.2 times, the source added.

Ikaria is a Hampton, N.J.-based biotherapeutics company in the critical care market.

FoxCo launches

Another deal to come to market on Thursday was FoxCo Acquisition Sub LLC's $715 million covenant-light term loan (B2/B+), according to sources.

Talk on the loan came out earlier this week at Libor plus 450 bps to 475 bps with a 1% Libor floor, an original issue discount of 99 and 101 soft call protection for one year.

Deutsche Bank Securities Inc. and UBS Securities LLC are the leading the deal that will be used to refinance existing term loan debt and bonds and to fund a dividend payment.

FoxCo is a Fort Wright, Ky.-based owner and operator of television stations

BJ's readies deal

In other news, BJ's Wholesale Club emerged with new loan plans, setting a bank meeting for Monday to launch a $1.225 billion first-lien term loan and a $400 million second-lien term loan, a market source said.

Deutsche Bank Securities Inc. is the left lead on the $1.625 billion deal.

Proceeds will be used to fund a dividend recapitalization.

BJ's is a Westborough, Mass.-based operator of warehouse clubs.

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