Harbor Freight Tools' term loan hits the secondary in the plus 101 context

By Sara Rosenberg

New York, July 14 - Harbor Freight Tools allocated and broke for trading on Wednesday with the institutional paper immediately moving to levels above 101 and trading steadily in that area.

The $440 million six-year term loan B was quoted at 101¼ bid, 101¾ offered, according to a trader.

"It hasn't moved much. It traded but just in the same context," the trader said.

Pricing on the tranche is Libor plus 275 basis points. Originally the term loan was launched with pricing of Libor plus 300 basis points, but the rate came down at the end of last week, which was somewhat anticipated since the deal generated great enthusiasm among potential investors upon launching into the bank loan market and was prophesized to end up as a blowout.

Harbor Freight's $490 million credit facility also contains a $50 million five-year revolver with an interest rate of Libor plus 275 basis points.

UBS and Credit Suisse First Boston are joint lead arrangers and joint bookrunners on the deal, with UBS listed on the left.

Proceeds will be used for to pay a dividend recap.

Harbor Freight Tools is a Camarillo, Calif. tool and equipment catalog retailer.

Kranson well attended

Kranson Industries Inc.'s Wednesday bank meeting saw "strong attendance", according to a market source, as the deal continues to be progressing smoothly.

The $170 million senior secured credit facility consists of a $30 million six-year revolver talked at Libor plus 275 basis points and a $140 million seven-year term loan talked at Libor plus 300 basis points.

The term loan is being offered to investors at par while those opting to participate in the revolver portion of the deal will receive 50 basis points upfront for any size commitment.

UBS Securities LLC is the lead bank on the deal. Scotia just recently signed on as syndication agent, and GE and Antares signed on as co-documentation agents.

Senior debt is 3x and total debt is 5.5x, the market source added.

Proceeds will be used to help fund AEA Investors LLC's leveraged buyout of Kranson, a St. Louis provider of rigid packaging containers and related components.

Loews sold well

Loews Cineplex Entertainment Corp.'s $729.2 million credit facility (B1) "has sold very well" since launching to investors last Thursday, according to a market source. Credit Suisse First Boston and Citigroup are joint lead arrangers and joint bookrunners on the deal, with Lehman Brothers, Bank of America and Deutsche Bank acting as co-documentation agents.

The facility consists of a $100 million six-year revolver with an interest rate of Libor plus 275 basis points and a 50 basis points commitment fee, a $100 million delayed draw term loan and a $529.2 million seven-year term loan B with an interest rate of Libor plus 275 basis points.

Proceeds from the facility will be used to help fund the acquisition of Loews by a corporation formed by Bain Capital, The Carlyle Group and Spectrum Equity Investors for C$2.0 billion from Onex Corp. and Oaktree Capital Management LLC.

Under the acquisition agreement, Onex and Oaktree will retain Loews' interest in Cineplex Galaxy, which operates the Loews theatre business in Canada as well as Galaxy Entertainment.

The assets being acquired include Loews' operations in the United States, Grupo Cinemex and its 50% interests in Megabox Cineplex of Korea and Yelmo Cineplex of Spain.

It is expected that the sale, which is subject to customary regulatory approvals, will close during the third quarter.

Loews is a New York-based movie theater chain.

Acosta book building

The book is building "quickly" on Acosta Sales Co. Inc.'s $200 million six-year term loan B that just launched via a well attended bank meeting on Tuesday, according to a market source.

"It's a very unique business. People wanted to hear the story. It's tracking real well," the source added.

The term loan, which is being offered to investors at par, is currently talked at Libor plus 275 to 300 basis points. Before the meeting, market sources had the deal talked at Libor plus 300 basis points.

GE Capital and Wachovia are the lead banks on the deal, with GE listed on the left.

Acosta's facility also contains an $80 million five-year revolver with an interest rate of Libor plus 300 basis points that is being led by GE.

"It's a clubbed up revolver. Not a real big syndication. Basically existing lenders with possibly some new lenders added," the source said.

Proceeds from the credit facility will be used to pay a $200 million dividend and refinance the existing revolver.

Acosta is a Jacksonville, Fla. sales and marketing agency to the consumer packaged goods industry.

Rent-A-Center closes

Rent-A-Center Inc. closed on its new $600 million senior credit facility (Ba2/BB+) consisting of a $350 million term loan with an interest rate of Libor plus 175 basis points and a stepdown to Libor plus 150 basis points if leverage falls below 1.5x, and a $250 million revolver with an interest rate of Libor plus 175 basis points.

Initially, the deal was launched as a $200 million revolver and a $400 million term but sizes were shifted during syndication. Furthermore, when the size modifications took place the syndicate opted to add the stepdown in term loan pricing.

Lehman Brothers and JPMorgan are co-lead arrangers and joint bookrunners on the deal, with Lehman listed on the left.

The Plano, Texas operator of rental purchase stores drew down the $350 million term loan and $50 million of the revolving facility on Wednesday to repay its existing senior term debt.

"We are pleased with the strong demand for participation in our senior credit facilities, which allowed us to reduce our term loan by $50 million and increase the revolving credit facility by $50 million from what we anticipated when we announced this refinancing," said Robert D. Davis, chief financial officer, in a company news release.

"We believe this enhanced revolving structure will allow us to scale our secured debt more closely to our business needs over time and result in a more efficient cost of capital. Based upon our present leverage ratio, we expect at least a 50 basis point interest expense savings under the new credit facility."

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