Blue Coat second-lien up on buyout news; Ineos, Headwaters, Surgical Care changes surface

By Sara Rosenberg

New York, March 10 – Blue Coat Systems Inc. saw the bid on its second-lien term loan rise in trading on Tuesday following news that the company is being acquired by Bain Capital.

Meanwhile, in the primary, Ineos Finance plc tightened pricing and original issue discount on its term debt and firmed up U.S. and euro tranche sizes, and Headwaters Inc. trimmed the spread, modified the offer price and moved up the commitment deadline on its term loan B.

Also, Surgical Care Affiliates Inc. lowered pricing on its term loan while also revising original issue discount guidance, Coyote Logistics LLC and Ferrara Candy Co. disclosed price talk with launch, and Walgreens Infusion Services joined this week’s calendar.

Blue Coat bid up

Blue Coat Systems’ second-lien term loan was bid at 102 in the secondary market on Tuesday, up from a 101 bid on Monday, according to a trader.

The bid rose after the company announced that it is being bought by Bain Capital from Thoma Bravo LLC in an all-cash transaction valued at about $2.4 billion.

The trader explained that the second-lien term loan will be taken out a premium of 102 due to call protection, which is why the bid moved up to that level.

The Sunnyvale, Calif.-based web security company’s first-lien term loan was quoted tightly wrapped around par, pretty much unchanged from prior levels of 99 7/8 bid, par 1/8 offered, the trader added.

To help fund the buyout, Blue Coat has obtained financing commitments from Jefferies Finance LLC.

Closing is expected in the first half of this year, subject to customary conditions, including regulatory approvals.

Ineos updates deal

Switching to the primary, Ineos Finance cut pricing on its roughly €1.4 billion-equivalent seven-year senior secured covenant-light term loan B to Libor/Euribor plus 325 bps from Libor/Euribor plus 350 bps and tightened the original issue discount to 99½ from 99, according to a market source.

As before, the term debt includes a 1% floor and 101 soft call protection for six months.

Additionally, the breakdown of U.S. and euro tranche sizes within the term loan was announced, with the U.S. tranche sized at $625 million and the euro tranche sized at €850 million, the source said, versus talk at launch of a minimum size of $250 million and a minimum size of €250 million.

Recommitments were due on Tuesday at 5 p.m. ET for the U.S. debt and at 5 p.m. GMT for the euro debt, the source added.

Ineos refinancing notes

Proceeds from Ineos’ term debt will be used to redeem existing €500 million floating-rate notes due 2019 and all of the existing $1 billion senior secured notes due 2019 on April 1.

At first, the company was only going to buy back $300 million of the senior secured notes, but last week the total amount of term loan debt was upsized from €750 million equivalent due to strong demand, allowing Ineos to redeem all of the senior secured notes.

Barclays and J.P. Morgan Securities LLC are the lead bookrunners and joint global coordinators on the term debt, and other bookrunners include Bank of America Merrill Lynch, Citigroup Global Markets Inc. and Morgan Stanley Senior Funding Inc.

Ineos is a London-based manufacturer of petrochemicals, specialty chemicals and oil products.

Headwaters revises loan

Headwaters lowered pricing on its $425 million seven-year covenant-light term loan B (B1/BB-) to Libor plus 350 bps from the Libor plus 400 bps area, moved the original issue discount to 99½ from 99 and accelerated the commitment deadline to 5 p.m. ET on Wednesday from Thursday, a market source remarked.

The loan still has a 1% Libor floor and 101 soft call protection for six months.

Deutsche Bank Securities Inc. is leading the deal that will be used to refinance 7 5/8% senior secured notes.

Closing is expected this month.

Headwaters is a South Jordan, Utah-based manufacturer of light building products and heavy construction materials.

Surgical Care cuts pricing

Surgical Care Affiliates reverse flexed pricing on its $450 million term loan to Libor plus 325 bps from Libor plus 375 bps and changed original issue discount talk to 99½ to 99¾ from 99, while keeping the 1% Libor floor and 101 soft call protection for six months intact, according to a market source.

Earlier in syndication, the term loan was upsized from $350 million as the company’s senior unsecured notes offering was downsized to $250 million from $350 million.

The company’s $700 million senior secured credit facility (B1/B+) also includes a $250 million revolver.

Recommitments due at noon ET on Wednesday, the source added.

J.P. Morgan Securities LLC, Goldman Sachs Bank USA, Citigroup Global Markets Inc., Barclays, Morgan Stanley Senior Funding Inc., Bank of America Merrill Lynch and SunTrust Robinson Humphrey Inc. are leading the deal that will be used with the bonds to refinance an existing credit facility and for general corporate purposes.

Surgical Care, a Deerfield, Ill.-based operator of surgical facilities, expects to close on the debt by the end of this quarter.

Coyote reveals guidance

Also in the primary, Coyote Logistics held its bank meeting on Tuesday, launching its $360 million seven-year term loan (B2/B-) with talk of Libor plus 550 bps with a 1% Libor floor, an original issue discount of 98½ to 99 and 101 soft call protection for six months, a market source said.

Commitments are due on March 20, the source added.

Goldman Sachs Bank USA and Wells Fargo Securities LLC are leading the deal that will be used to refinance existing debt and fund a dividend.

Coyote Logistics is a Chicago-based freight broker.

Ferrara Candy sets talk

Ferrara Candy came out with original issue discount talk of 98 on its fungible $40 million add-on first-lien covenant-light term loan (B) due June 2018 that launched with a call in the afternoon, according to a market source.

The add-on term loan is priced at Libor plus 625 bps with a 1.25% Libor floor, the source said.

Commitments are due on Friday.

Morgan Stanley Senior Funding Inc. is leading the deal that will be used to pay down ABL credit facility borrowings.

Ferrara Candy is a confectionery and candy manufacturer.

Walgreens Infusion on deck

Walgreens Infusion Services surfaced with plans to hold a bank meeting at 10:30 a.m. ET on Thursday to launch a $415 million seven-year term loan, according to a market source.

Bank of America Merrill Lynch, Barclays, Deutsche Bank Securities Inc. and Goldman Sachs Bank USA are leading the deal that will be used with $150 million of second-lien debt placed with Goldman Sachs Mezzanine and equity to fund the buyout of the company by Madison Dearborn Partners from Walgreen Co.

Closing is expected in the second quarter, subject to satisfaction of regulatory requirements and other conditions.

Walgreens Infusion Services is a provider of home and alternate treatment site infusion services.

Lattice Semiconductor closes

In other news, Lattice Semiconductor Corp. completed its acquisition of Silicon Image Inc. in an all-cash tender offer of $7.30 per share, representing an equity value of about $606.6 million, a news release said.

To help fund the transaction, Lattice got a new $350 million six-year senior secured covenant-light term loan (Ba3/BB-) priced at Libor plus 425 bps with a 1% Libor floor and sold at an original issue discount of 99. The debt has 101 soft call protection for one year, extended from six months during syndication.

Jefferies Finance LLC and HSBC Securities USA Inc. led the loan.

Other funds for the transaction came from about $250 million of cash on the balance sheet.

Pro forma net leverage is about 1.4 times.

Lattice Semiconductor is a Portland, Ore.-based provider of programmable connectivity services. Silicon Image is a Sunnyvale, Calif.-based provider of wired and wireless connectivity services.

Impax completed

Impax Laboratories Inc. closed on Monday on its $485 million credit facility (B1/BBB-), consisting of a $50 million five-year revolver and a $435 million six-year senior secured term loan, according to an 8-K filed with the Securities and Exchange Commission on Tuesday.

Pricing on the term loan is Libor plus 450 bps with a 1% Libor floor and it was sold at an original issue discount of 99. There is 101 soft call protection for one year that was extended from six months during syndication.

Barclays, RBC Capital Markets and Wells Fargo Securities LLC are led the deal that was used with cash on hand to fund the acquisition of Tower Holdings Inc., including operating subsidiaries CorePharma LLC and Amedra Pharmaceuticals LLC, and Lineage Therapeutics Inc. for $700 million in cash.

Senior secured and total leverage is 2 times, net total leverage is 1.3 times.

Impax is a Hayward, Calif., technology-based specialty pharmaceutical company. Tower Holdings and Lineage develop, manufacture and commercialize complex generic and branded pharmaceutical products.

Kindred wraps add-on

Kindred Healthcare Inc. completed its fungible $200 million incremental term loan, according to a news release.

Pricing on the loan is Libor plus 325 bps with a 1% Libor floor and it was issued at 99½.

During syndication, the loan was upsized from $150 million and the discount was tightened from talk of 98¾ to 99.

J.P. Morgan Securities LLC led the deal that was used to pay down borrowings under the company’s $900 million senior secured asset-based revolver.

Kindred is a Louisville, Ky.-based health care services company.

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