Neustar, RegionalCare free up; Level 3 B II dips as add-on launches, breaks; Gentiva falls

By Sara Rosenberg

New York, Nov. 3 - Neustar Inc. and RegionalCare Hospital Partners Inc. saw their credit facilities free up for trading on Thursday, and both companies' term loans were quoted above their original issue discount prices.

Also in trading, Level 3 Communications Inc.'s term loan B II headed lower as the company launched and broke for trading a term loan add-on that carries the same coupon and maturity as the existing B II, but was offered in the mid-90s, and Gentiva Health Services Inc. weakened with covenant issues and poor earnings.

Moving to the primary, Health Management Associates Inc.'s term loan B has such strong momentum already that lenders are being told that price talk is being focused on the low end of guidance.

Additionally, as a result of good demand, CBRE Group Inc. upsized its sterling term loan A-1, and AGCO Corp. increased its revolver size.

Furthermore, Diversified Machine Inc., Unifrax I LLC and National Healing Corp. released price talk on their loans as the deals were presented to investors during the session.

Neustar starts trading

Neustar's credit facility hit the secondary on Thursday afternoon, with the $600 million seven-year term loan B quoted at par bid, par ½ offered on the open, according to a market source. A second source said that the loan ran up as high at par ¼ bid, par 5/8 offered, after the break, but then came back in to par bid, par ½ offered.

Pricing on the B loan is Libor plus 375 basis points with a 1.25% Libor floor, and it was sold at an original issue discount of 981/2. There is 101 soft call protection for one year.

The loan was so well received by the market that the coupon was reduced from talk of Libor plus 425 bps to 450 bps and the discount tightened from 98. With those changes, call protection was added.

The company's $700 million senior secured credit facility (Ba2/BB+) also includes a $100 million five-year revolver priced at Libor plus 350 bps, after flexing down from talk of Libor plus 400 bps to 425 bps, with no Libor floor and an original issue discount of 99.

Neustar funding acquisition

Proceeds from Neustar's credit facility will be used to help fund the acquisition of Targus Information Corp. for about $650 million in cash, including repayment of outstanding debt.

Morgan Stanley Senior Funding Inc. is leading the deal.

For the combined company, total debt to last-12-months adjusted EBITDA is 1.9 times, and net debt to last-12-months adjusted EBITDA is 0.9 times.

Closing is expected in the fourth quarter, subject to Hart-Scott-Rodino approval.

Neustar is based in Sterling, Va. The company provides solutions and directory services that enable communication across networks, applications and enterprises. Targus is a Vienna, Va.-based provider of real-time, on-demand information and analytics services.

RegionalCare breaks

RegionalCare Hospital Partners' credit facility also freed up for trading, with the $295 million seven-year first-lien term loan B (B2/B) quoted at 96½ bid, 97½ offered, according to a trader.

Pricing on the first-lien term loan is Libor plus 650 bps with a 1.5% Libor floor, and it was sold at an original issue discount of 96. There is 101 soft call protection for one year.

During syndication, pricing on the loan firmed at the wide end of talk of Libor plus 625 to 650 bps with a discount of 96 to 97.

The company's $460 million senior secured credit facility also includes a $100 million five-year revolver (B2/B) and a $65 million 71/2-year second-lien term loan (CCC+). The second-lien tranche was spoken for by a third party.

RegionalCare lead banks

Citigroup Global Markets Inc., Morgan Stanley & Co. LLC and Deutsche Bank Securities Inc. are leading RegionalCare's deal that will be used to help fund the purchase of Essent Healthcare from Vestar Capital Partners and Cressey & Co.

First-lien leverage is 4.1 times and net first-lien leverage is 3.38 times. Total leverage is 5.0 times and net total leverage is 4.3 times.

Closing is expected by the fourth quarter, subject to customary regulatory reviews and approvals.

RegionalCare is a Brentwood, Tenn.-based owner and operator of four non-urban hospitals. Essent is a Nashville-based owner and operator of three non-urban acute care hospitals.

Level 3 B-2 retreats

Level 3 Communications' term loan B II dropped in trading in reaction to the company's selling of a term loan add-on at an original discount price of 95, according to traders.

The existing B II debt was quoted by one trader at 95½ bid, 96 offered early on in the day, and then it rebounded slightly to 96 bid, 97 offered. On Wednesday, the trader was seeing the loan at 98½ bid, 99 offered.

Meanwhile, a second trader was quoting the B II at 96¼ bid, 97¼ offered, down from 97¾ bid, 98¾ offered.

On Thursday morning, the company held a conference call to kick off syndication on the proposed $250 million add-on that was then upsized to $550 million in the afternoon. The loan is priced at Libor plus 425 bps with a 1.5% Libor floor, which is the same pricing as the existing B II carries.

Level 3 add-on frees up

Late in the day, Level 3's new term loan add-on made its way into the secondary market with levels quoted at 96 bid, 97 offered, a trader remarked.

Like the existing B II, the add-on has 101 soft call protection until October 2012. When the B II was obtained last month, however, it sold at an original issue discount of 99.

Bank of America Merrill Lynch and Citigroup Global Markets Inc. are the joint lead arrangers on the add-on and joint bookrunners. Other bookrunners include Morgan Stanley Senior Funding Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc. and Wells Fargo Securities LLC.

Proceeds from the incremental debt will be used to refinance convertibles and to repay a term loan that is priced at Libor plus 850 bps. The loan refinancing is happening because of the decision to upsize the add-on.

Level 3 is a Broomfield, Colo.-based provider of fiber-based communications services.

Gentiva loan slides

Gentiva's term loan headed lower as the company disclosed that it is facing covenant problems and released disappointing third-quarter numbers, according to a trader.

The term loan was quoted by the trader at 85½ bid versus previous levels of 89 bid, 90½ offered.

In its earnings release, Gentiva said that it anticipates falling out of compliance with the maximum consolidated leverage ratio in its credit facility at Dec. 31 as a result of fourth-quarter charges related to cost savings initiatives that are estimated to be in the range of $20 million to $25 million.

As a result, the company is in talks with lenders about a waiver of its financial covenants for the fourth quarter.

Back in September, the company had disclosed that it might be facing problems with the leverage ratio requirement next year due to the potential 2012 Medicare rate cut, but it hoped to remain in compliance this year. At that time, it was said that a waiver would need 51% approval from lenders.

Gentiva earnings results

For the third quarter, Gentiva reported a net loss of $479.7 million, or $15.68 per diluted share, compared to net income of $8.1 million, or $0.27 per diluted share, in the previous year.

Total net revenues for the quarter were $449.7 million, up 18% from $379.7 million in the 2010 quarter.

And, adjusted EBITDA for the quarter was $41.5 million, down 23% from $53.8 million last year.

Also, at Sept. 30, cash and cash equivalents were $196.1 million and outstanding debt was $1.008 billion. During the quarter, the company paid down $20 million on its term loans, and since closing the acquisition of Odyssey HealthCare Inc. in August 2010, the company has repaid $96.9 million on its revolver and term loans.

The company's leverage ratio at Sept. 30 was 4.4 times, and on a net basis, the leverage ratio was 3.5 times.

Gentiva revises outlook

Additionally, on Thursday, Gentiva changed its full-year outlook to reflect the fourth quarter impact of the final 2012 home health reimbursement rate rules, the full-year impact of asset sales and recent business trends.

Full-year adjusted income from continuing operations attributable to Gentiva shareholders is now anticipated to be in the range of $1.50 to $1.70 on a diluted per-share basis, compared to previous estimates of $2.00 to $2.20 per diluted share.

And, full-year 2011 net revenues are now expected to be in the range of $1.78 billion to $1.82 billion, versus prior guidance of $1.8 billion to $1.85 billion.

Gentiva is an Atlanta-based home health care provider.

HMA narrows down talk

Switching to the primary, Health Management Associates has already refocused guidance on its $1.2 billion seven-year term loan B, as guys are being told that, due to strong demand, talk is really Libor plus 375 bps, not Libor plus 375 bps to 400 bps, a market source told Prospect News.

"Probably oversubscribed. No way this comes at the wide end. Telling people to expect Libor plus 375," the source remarked.

The term loan B was launched to lenders on Wednesday with Libor plus 375 bps to 400 bps talk, a 1.25% Libor floor and an original issue discount of 99. There is 101 soft call protection for one year.

With this transaction, the company is reducing its B loan borrowings by half, resulting in institutional guys scrambling to hold on to their paper.

"Would be great if they shut it down early, but [the] issuer wants a huge book," one buyside source said. Currently, the commitment deadline is set for Nov. 16.

HMA revolver, term A

In addition to the term loan B, Health Management's $2.7 billion credit facility (Ba3/BB-/BB+) includes a $500 million five-year revolver and $1 billion five-year term loan A, both talked at Libor plus 275 bps.

Wells Fargo Securities LLC, Deutsche Bank Securities Inc., Citigroup Global Markets Inc., SunTrust Robinson Humphrey Inc. and Barclays Capital Inc. are the joint lead arrangers on the deal, with Wells Fargo and Deutsche the bookrunners.

Proceeds, along with $1 billion of senior unsecured notes, will be used to help refinance an existing $500 million revolver and roughly $2.4 billion term loan B and for general corporate purposes.

Health Management is a Naples, Fla.-based operator of acute care hospitals.

CBRE ups loan size

Also well met was CBRE Group's senior secured sterling term loan A-1 due May 2016, and as a result, the company opted to lift the size of the loan to roughly $300 million (£187 million) from about $250 million, according to a market source.

Pricing on the A-1 loan, which was marketed to existing lenders, is a range of Libor plus 200 bps to 375 bps based on leverage - in line with the company's existing term loan A pricing.

HSBC Securities (USA) Inc. and J.P. Morgan Securities LLC are the lead banks on the deal that will be used to enhance the company's overall financial flexibility and for general corporate purposes.

CBRE is a Los Angeles-based commercial real estate services firm.

AGCO increases revolver

AGCO was another company to come out with an upsizing, lifting its revolving credit facility to $600 million from $500 million, according to a market source.

Pricing on the revolver, as well as on a $400 million term loan A (size unchanged), is Libor plus 150 bps. The revolver has a 25 bps commitment fee.

Pricing on the deal is based on a leverage grid. This grid was changed to lower the leverage break points, but the actual spreads across the grid were left unchanged, the source added.

Rabobank, J.P. Morgan Securities LLC, SunTrust Robinson Humphrey Inc. and Bank of Tokyo are the lead banks on the $1 billion five-year unsecured credit facility, up from $900 million.

AGCO buying GSI

Proceeds from AGCO's credit facility will be used to help fund the purchase of GSI Holdings Corp. from Centerbridge Partners LP for $940 million and to refinance existing credit lines.

Recommitments towards the revised credit facility were due end of day Thursday.

Closing on the acquisition is expected before the end of the year, subject to regulatory approval.

AGCO is a Duluth, Ga.-based manufacturer and distributor of agricultural equipment. GSI is an Assumption, Ill.-based manufacturer of grain storage and protein production systems.

Diversified Machine sets talk

In more primary happenings, Diversified Machine held a bank meeting in the morning to launch its proposed credit facility, and with the event, price talk on the term loan was announced, according to a market source.

The $175 million term loan is talked at Libor plus 775 bps with a 1.5% Libor floor and an original issue discount that is still to be determined, the source said. Ratings are not out yet.

The company's $235 million credit facility also includes a $60 million asset-based revolver.

BMO Capital Markets Corp. and Mizuho Securities USA Inc. are leading the deal that will be used to help fund the acquisition of the company by Platinum Equity from the Carlyle Group.

Diversified Machine is a Howell, Mich.-based precision machining company specializing in automotive powertrain components.

Unifrax guidance emerges

Also launching on Thursday was Unifrax, with its $490 million seven-year term loan B talked at Libor plus 600 bps with a 1.5% Libor floor and an original issue discount of 97, according to sources. There is 101 soft call protection for one year.

Goldman Sachs & Co., Wells Fargo Securities LLC, GE Capital Markets and KeyBanc Capital Markets LLC are the lead banks on the $540 million credit facility (B+), which also includes a $50 million five-year revolver.

Proceeds will be used to help fund the purchase of the company by American Securities.

Unifrax, a Niagara Falls, N.Y.-based supplier of high-temperature insulation products, will have senior net leverage of around 4.0 times.

National Healing pricing

National Healing held a bank meeting as well, launching its $250 million six-year first-lien term loan (B1) at Libor plus 600 bps with a 1.5% Libor floor, an original issue discount of 97 and 101 soft call protection for one year, according to a market source.

As for the $75 million seven-year second-lien term loan (Caa1), that was launched at Libor plus 950 bps with a 1.5% Libor floor and a discount of 97, and the tranche is non-callable for one year, then at 103 in year two, 102 in year three and 101 in year four, the source said.

The company's $355 million senior secured credit facility also includes a $30 million five-year revolver (B1).

Jefferies & Co., RBC Capital Markets LLC and BMO Capital Markets Corp. are leading the deal and are asking for commitments by Nov. 17.

National Healing merging

Proceeds from National Healing's credit facility will be used to help fund its merger with Diversified Clinical Services (Wound Care Holdings), which is being acquired by its sponsor, Metalmark Capital, from the Jordan Co.

First-lien leverage will be 3.5 times and total leverage will be 4.5 times.

Closing is subject to customary conditions, including regulatory approval.

Boca Raton, Fla.-based National Healing and Jacksonville, Fla.-based Diversified Clinical Services are providers of wound care services to hospitals.

BarrierSafe buyout wraps

In other news, Odyssey Investment Partners LLC completed its acquisition of BarrierSafe Solutions International Inc. from Linden Capital Partners and Edgewater Funds, according to a news release.

Funding for the buyout came in part from a $175 million five-year credit facility, consisting of a $30 million revolver, a $120 million term loan and a $25 million delayed-draw term loan, with all tranches priced at Libor plus 525 bps with a 1.5% Libor floor, and sold at an original issue discount of 99.

During syndication, the delayed-draw loan was added to the capital structure, pricing on the facility was reduced from Libor plus 550 bps and the discount moved from 981/2.

CIT Group and SunTrust Robinson Humphrey Inc. led the deal.

BarrierSafe is a Lake Forest, Ill.-based designer, developer and distributor of disposable gloves and food safety products.

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