Harland Clarke to launch $500 million incremental term B-3 on Tuesday

By Sara Rosenberg

New York, Jan. 13 - Harland Clarke Holdings Corp. is scheduled to hold a bank meeting at 10 a.m. ET in New York on Tuesday to launch a fungible $500 million first-lien covenant-light incremental term loan B-3 due May 2018, according to a market source.

Credit Suisse Securities (USA) LLC, Bank of America Merrill Lynch, Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and Jefferies Finance LLC are the lead banks on the debt.

Price talk on the term loan is Libor plus 550 basis points with a 1.5% Libor floor, in line with the existing term loan B-3, and the debt is being offered at an original issue discount of 99, the source said.

Call protection is 102 through April 2014, then 101 for a year.

Commitments are due on Jan. 28, the source added.

Proceeds will be used to help fund the acquisition of Valassis for $34.04 per share in cash, representing a transaction value of about $1.84 billion, and to refinance existing debt.

Prior to the closing of the transaction, Harland Clarke may elect to conduct a tender offer for Valassis' 6 5/8% senior notes due 2021 and may solicit consents from the holders of those notes to waive the requirement of making a change-of-control offer.

Closing is expected in the first quarter of 2014 and after Valassis pays its previously announced Jan. 15, 2014 dividend.

The transaction will be effected through a tender offer for all of the shares of Valassis and is subject to the tender of the majority of Valassis' shares, expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act and customary conditions.

The combined company has about $3.3 billion of revenues.

Harland Clarke is a San Antonio-based provider of payment, marketing and security services. Valassis is a Livonia, Mich.-based provider of media solutions.

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