Sally tweaks deal; HCA cuts euro loan pricing; Emdeon firms first-lien spread; Psychiatric, Fidelity set talk

By Sara Rosenberg

New York, Nov. 8 - Sally Beauty Co. moved some funds from its term loan A into its term loan B and lowered pricing on the term loan B while adding a step down, HCA Inc. reverse flexed pricing on its Euro term loan, and Emdeon Business Services firmed up pricing on its first-lien term loan at the low end of original guidance.

In other primary news, Psychiatric Solutions, Inc. and Fidelity National Information Services, Inc. released price talk on their new bank deals as the transactions were launched to investors on Wednesday.

Sally Beauty made a round of changes to its $1.47 billion senior secured credit facility during market hours, including downsizing the term loan A tranche and upsizing, reverse flexing and adding a step down to the term loan B tranche, according to a market source.

The six-year term loan A (B2/B+) now carries a size of $150 million, down from $200 million, while pricing was left unchanged from original talk at Libor plus 250 basis points, the source said.

Meanwhile, the seven-year term loan B (B2/B+) now carries a size of $920 million, up from $870 million, pricing was reduced to Libor plus 250 bps from original talk of Libor plus 275 bps and a step was added under which pricing can drop to Libor plus 225 bps when net secured debt to EBITDA is equal to or lower than 3.0 times, the source continued.

Sally Beauty's $400 million five-year asset-based revolver (Ba2/BB-) was left unchanged in terms of size and pricing, which is currently set at Libor plus 150 bps.

Merrill Lynch, JPMorgan, Bank of America and Morgan Stanley are joint lead arrangers and joint bookrunners on the deal, with Merrill the administrative agent.

Proceeds from the credit facility, along with $430 million of senior unsecured notes and $280 million of senior subordinated notes, will be used to help fund the company's spinoff from Alberto-Culver Co.

Under the spinoff plan, Alberto-Culver's shareholders will receive a special $25.00 per share one-time cash dividend for each share and, upon completion of the transaction, Alberto-Culver shareholders will own one share of Alberto-Culver stock and one share of Sally Beauty stock for each share held.

Alberto-Culver shareholders will own 52.5% of the shares of Sally Beauty, which will become a new public company listed on the New York Stock Exchange.

The remaining 47.5% stake in Sally Beauty will be owned by Clayton, Dubilier & Rice, which will invest $575 million to acquire the equity stake.

Sally Beauty is a Melrose Park, Ill., beauty supplies distribution business.

HCA trims euro pricing

HCA reduced pricing on its $1.25 billion seven-year European term loan (Ba3/BB) to Euribor plus 250 bps from original talk at launch of Euribor plus 275 bps, according to a market source.

Pricing on the company's $2.75 billion six-year term loan A (Ba3/BB) and $2 billion six-year senior secured revolver (Ba3/BB) was left at Libor plus 250 bps, pricing on the $8.8 billion seven-year term loan B (Ba3/BB) was left at Libor plus 275 bps and pricing on the $2 billion six-year asset-based revolver (Ba2/BB) was left at Libor plus 175 bps, the source added.

Bank of America, Citigroup, JPMorgan, Merrill Lynch, Deutsche Bank and Wachovia are the bookrunners on the $16.8 billion deal, with Bank of America acting as the left lead.

Proceeds from the bank deal, along with $5.7 billion in high-yield notes, will be used to help fund the leveraged buyout of HCA by Bain Capital, Kohlberg Kravis Roberts & Co., Merrill Lynch Global Private Equity and company founder Thomas F. Frist Jr.

The financing structure contemplates a leverage multiple of 6.6 times based on latest 12 months EBITDA of $4.241 billion at June 30. EBITDA to cash interest expense would be 1.8 times, and total debt to total capitalization would be 84.1%.

Under the LBO agreement, the consortium will acquire HCA for $51.00 in cash for each share. The transaction is valued at about $33 billion, including the assumption or repayment of $11.7 billion of debt.

The consortium is anticipated to contribute around $5.3 billion in equity for LBO financing as well.

HCA is a Nashville, Tenn., health care services company.

Emdeon sets spread

Emdeon Business Services has decided to firm up pricing on its $755 million seven-year first-lien term loan B (B1/B+) at Libor plus 250 bps, the tight end of original talk of Libor plus 250 to 275 bps, as the deal was oversubscribed at that pricing point, according to a market source.

The company's $975 million credit facility also contains a $50 million six-year revolver (B1/B+) that is priced at Libor plus 250 bps and a $170 million 71/2-year second-lien term loan C (Caa1/B-) that is being talked in the Libor plus 550 bps area.

Citigroup, Deutsche Bank and Bear Stearns are the lead banks on the deal that will be used to help fund General Atlantic LLC's acquisition of a 52% interest in Emdeon Corp.'s Business Services business.

The transaction values the unit at $1.5 billion, according to Emdeon Corp., which is retaining a 48% interest.

General Atlantic will contribute $320 million in equity.

Closing is scheduled for the fourth quarter.

The business services segment provides revenue cycle management and clinical communication services for health care.

Emdeon is a health care business, technology and information services company based in Elmwood Park, N.J. General Atlantic is a Greenwich, Conn., private equity firm.

Psychiatric Solutions guidance

Psychiatric Solutions held a conference call around mid-morning on Wednesday to launch its proposed $300 million of add-on bank debt (Ba3/B+), and during that call, investors were told to expect pricing on the new debt to stay in line with existing spreads, according to a market source.

So, the $150 million term loan add-on was launched with price talk of Libor plus 175 bps and the up to $150 million revolver add-on was launched with price talk of Libor plus 125 bps, the source said.

Citigroup and Bank of America are joint bookrunners and joint lead arrangers on the term loan add-on, and Bank of America is the sole lead arranger and sole bookrunner on the revolver add-on.

The term loan add-on and a portion of the expanded revolver will be used to finance the $210 million cash purchase of Alternative Behavioral Services, Inc., which is expected to occur on Dec. 1.

Psychiatric Solutions is a Franklin, Tenn.-based provider of inpatient behavioral health care services.

Fidelity National sets talk

Fidelity National Information Services launched its $3.1 billion five-year unsecured credit facility with a bank meeting on Wednesday, and potential lenders were told that opening price talk on the deal is set at Libor plus 100 bps, according to a market source.

Tranching on the facility is comprised of a $1 billion revolver and a $2.1 billion term loan A.

JPMorgan, Bank of America and Wachovia are the lead arrangers and bookrunners on the deal.

Proceeds will be used to refinance the company's existing senior secured credit facility, under which there is $2.7 billion outstanding.

Fidelity National is a Jacksonville, Fla.-based provider of technology to the financial services and real estate industries.

Intergraph price talk emerges

Intergraph Corp. came out with price talk on its $740 million senior secured credit facility, which was actually already launched with a bank meeting this past Friday, according to a market source.

The $390 million first-lien term loan (Ba3/B) and $75 million revolver (Ba3/B) are both being talked at Libor plus 275 bps, while the $275 million second-lien term loan is being talked at Libor plus 675 bps, the source said.

Morgan Stanley and Wachovia are the lead banks on the deal, with Morgan Stanley the left lead on the first-lien debt and Wachovia the left lead on the second-lien loan.

Proceeds from the credit facility, along with a $60 million pay-in-kind loan, will be used to help fund the leveraged buyout of Intergraph by an investor group led by Hellman & Friedman LLC and Texas Pacific Group for $44.00 in cash for each share of common stock. The transaction is valued at $1.3 billion.

Originally, Intergraph was planning on getting a $464.5 million credit facility, consisting of a $389.5 million term loan and a $75 million revolver, and issuing $276.5 million of senior subordinated notes.

However, the company revised its credit facility commitment letter to add the second-lien term loan to the capital structure and eliminate the bond offering.

The second-lien term loan will be reduced on a dollar-for-dollar basis for the amount of any securitization transaction, sale leaseback transaction, non-recourse loan financing or other similar transaction involving specified real property of the company that is completed by the closing date.

Intergraph is a Huntsville, Ala., provider of spatial information management software.

Greenbrier closes

The Greenbrier Cos. closed on its new $300 million five-year revolving credit facility, according to a company news release.

Bank of America acted as the lead bank on the deal.

The revolver was obtained in connection with the company's acquisition of Meridian Rail Holdings Corp. from Olympus Partners for $227.5 million in cash, plus working capital adjustments.

Greenbrier is a Lake Oswego, Ore., supplier of transportation equipment and services to the railroad industry.

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