Dollar General up with numbers; Skilled Healthcare rises as case delayed; Wyle, Visteon break

By Sara Rosenberg

New York, Aug. 31 - Dollar General Corp.'s term loan B-1 inched its way higher on Tuesday after the company came out with quarterly results, and Skilled Healthcare Group Inc.'s term loan was better with news that its court case was postponed.

In addition, Wyle Inc. saw its term loan add-on free up for trading above its original issue discount price, and Visteon Corp.'s term loan hit the secondary market as well.

Over in the primary market, some more information surfaced on the breakdown of Reynolds Group Holdings Ltd.'s debt commitment for its acquisition of Pactiv Corp., with the entire amount coming from bridge loans that are expected to be replaced with notes and - maybe - loans.

Also, HealthSpring Inc. detailed its new term loan plans, and Centerplate Inc.'s credit facility is expected to allocate within the next couple of days, and closing and funding should take place at the end of next week.

Dollar General gains ground

Dollar General's term loan B-1 was a touch stronger in trading following the release of fiscal second-quarter numbers that showed a year-over-year improvement in net income and sales, according to traders.

The term loan B-1 was quoted by one trader at 97¾ bid, 98¼ offered, up from 97½ bid, 98 offered, by a second trader at 97 5/8 bid, 98 1/8 offered, up from 97 3/8 bid, 97 7/8 offered, and by a third trader at 97½ bid, 98 offered, up from 97 3/8 bid, 97 7/8 offered.

Meanwhile, the company's term loan B-2 was quoted by the first trader at 96¾ bid, 97¼ offered, up from 96½ bid, 97 offered and by the second and third traders at 96 5/8 bid, 97 1/8 offered, unchanged on the day.

Dollar General income improves

For the fiscal second quarter, Dollar General reported net income of $141.2 million, or $0.41 per diluted share, compared to net income of $93.6 million, or $0.29 per diluted share, in the second quarter of fiscal 2009.

Sales for the quarter increased 10.8% to $3.21 billion from $2.9 billion in the previous year.

Also, as of July 30, outstanding long-term obligations, including the current portion, were $3.35 billion, a decrease of $785 million, or 19%, from the prior year.

In addition, the company said that it increased its expectation for fiscal 2010 adjusted diluted earnings per share to a range of $1.68 to $1.74 from $1.62 to $1.69 per diluted share.

Furthermore, total sales for the fiscal year are now expected to increase 8.5% to 10.5%, and adjusted operating profit is expected to increase 20% to 23% over full year 2009.

Dollar General is a Goodlettsville, Tenn.-based discount retailer.

Skilled Healthcare heads up

Skilled Healthcare's term loan was higher on Tuesday as the company announced that its court case was postponed to Sept. 2 from Aug. 31 and that settlement discussions in the case are ongoing, according to a trader.

The Foothill Ranch, Calif.-based health care services company's term loan was quoted at 93½ bid, 94½ offered, up from 93 bid, 94 offered, the trader said.

As was previously reported, in 2006, parties alleged that certain of the company's California-based facilities were understaffed and misrepresented the quality of care provided in their facilities.

Then in July, a jury ruled that the company should pay $613 million in statutory damages and $58 million in restitutionary damages to the plaintiffs, and before the punitive damages phase of the trial went on, the parties reached an agreement to enter into mediation to settle the lawsuit.

The company later filed for mistrial or new trial on grounds of juror misconduct, but that motion was denied.

Wyle starts trading

Wyle's $195 million term loan add-on (B1/BB) allocated and freed up for trading, with levels quoted at 99 5/8 bid, par offered on the break and then moving up to 99¾ bid, par 1/8 offered, which is in line with where the existing term loan is being quoted, according to traders.

Pricing on the add-on is Libor plus 575 basis points with a 2% Libor floor, and it was sold at an original issue discount of 981/2.

The spread is based on a grid. If the corporate rating is B2/B, the spread is Libor plus 450 bps when senior leverage is less than 2.85 times and Libor plus 500 bps when senior leverage is more than 2.85 times. And, if the corporate rating is lower than B2/B, pricing is Libor plus 525 bps at less than 2.85 times senior leverage and Libor plus 575 bps at more than 2.85 times senior leverage.

Barclays Capital and JPMorgan are the lead banks on deal, with Barclays the left lead.

Wyle funding acquisition

Proceeds from Wyle's term loan add-on, along with cash on hand and equity from its controlling shareholder, Court Square Capital Partners, will be used to fund the acquisition of CAS Inc. from ITT Corp.

During syndication, pricing on the add-on moved up from Libor plus 500 bps because Moody's Investors Service downgraded the corporate rating to B3 from B2, and the size was reduced from $205 million. Also, the pricing grid was changed from Libor plus 400 to 500 bps at B2/B corporate ratings based on leverage, and Libor plus 475 bps to 575 bps at less than B2/B corporate ratings based on leverage.

The amount of equity being used for the acquisition was increased to $35 million from $25 million as a result of the term loan add-on downsizing.

Following the transaction, pro forma total leverage will be roughly 5.5 times, and the combined entity will have pro forma 2009 revenues of about $1 billion.

Wyle amending loan

In connection with the new deal, Wyle asked lenders to amend its existing credit facility to revise the accordion so as to permit the term loan add-on, increase the revolver size to $35 million from $25 million and reset financial covenants.

This amendment proposal passed with significant support.

Lenders were offered a 50 bps amendment fee.

Wyle is an El Segundo, Calif.-based provider of high-tech systems engineering, testing and information technology services. CAS is a Huntsville, Ala.-based provider of systems engineering and technical assistance for of military applications.

Visteon frees up

Visteon's $500 million seven-year term loan broke for trading, with the deal quoted at par ½ bid, 101 offered, according to a market source.

Pricing on the term loan is Libor plus 625 bps with a 1.75% floor, and it was sold at an original issue discount of 98.

Morgan Stanley is the lead bank on the deal that was pre-marketed.

Proceeds will be used to help fund the Van Buren Township, Mich., automotive supplier's exit from Chapter 11.

Visteon working on revolver

Visteon also plans on getting a $200 million five-year ABL revolving credit facility as part of its exit financing package and is marketing the debt to a club of banks, the source said.

Morgan Stanley is the lead bank on the deal. There was no bank meeting.

The revolver consists of a $155 million tranche 1 priced at Libor plus 300 bps to 325 bps and a $45 million tranche 2 priced at Libor plus 350 bps to 375 bps, based on availability grids, and unused fees range from 50 bps to 75 bps.

Both tranches fund pro-rata while the tranche 2 provides a higher concentration limit on a key customer, the source said.

Furthermore, the revolver will be governed by a $40 million minimum excess availability covenant at all times.

Reynolds commitment details

In other news, Reynolds Group's $5 billion acquisition financing debt commitment is comprised of a $3.5 billion secured bridge loan and a $1.5 billion unsecured bridge loan, according to a PREM14A filed with the Securities and Exchange Commission on Tuesday.

The secured bridge loan may be reduced by the sale of senior secured notes, and the unsecured bridge loan may be reduced by the sale of senior unsecured notes. The company also has the right to pursue alternative financing arrangements, including new bank loans under its existing credit facility.

When the Pactiv acquisition was announced about two weeks ago, company officials said in a conference call that the idea was to sell new term loans and issue senior secured and unsecured notes to raise the necessary funds.

Officials also remarked that the commitment letter was extremely flexible and that the amount of loans and notes that would be obtained was not yet determined.

Reynolds may use accordion

Currently, Reynolds has room for $750 million in incremental term loans under its existing credit facility, which may be utilized in place of some of the bridge loans.

Officials previously stated that the company could try to raise more term loan borrowings than the accordion feature allows, but to do so, an amendment of the existing facility would be needed.

The plans is that the financing package will comply with the company's current credit facility covenant requirements of maximum first-lien leverage of 3.5 times and total leverage of 5.5 times.

Credit Suisse, HSBC and Australia and New Zealand Banking Group are the lead banks on the new debt.

Reynolds getting equity

Other funds for Reynolds' purchase of Pactiv will come from about $2 billion in equity from itself and its parent company, Rank Group Ltd.

Under the terms of the agreement, Pactiv shareholders will receive $33.25 in cash per share, for a total purchase price of $4.6 billion. However, the transaction is valued at $6 billion.

Closing is targeted by the end of this year, subject to Pactiv shareholder approval, regulatory approvals and customary conditions. The acquisition is not conditioned on the receipt of equity or debt financing.

Reynolds is a Chicago-based manufacturer and supplier of consumer food and beverage packaging and storage products. Pactiv is a Lake Forest, Ill.-based consumer and foodservice/food packaging company.

HealthSpring A and B loans

HealthSpring disclosed in an 8-K filed with the SEC on Tuesday that its $400 million in new term loans for its acquisition of Bravo Health Inc. will consist of a $150 million term loan A due Feb. 11, 2015 and a $250 million six-year term loan B.

JPMorgan and Bank of America are the joint lead arrangers and bookrunners on the deal, and Raymond James Bank is a co-arranger.

Financial covenants include a minimum consolidated statutory net worth and a maximum consolidated total leverage ratio of 2.25 times, with step-downs to be determined.

Under the agreement, HealthSpring will acquire Bravo Health, a Baltimore-based operator of Medicare Advantage coordinated care plans, for $545 million.

Funding will come from the new term loan, a $100 million draw under an existing revolver and from unrestricted cash.

HealthSpring amendment

In connection with the acquisition, HealthSpring expects to amend its existing credit facility to allow for the new term loans.

The existing credit facility consists of a $175 million revolver and a $175 million term loan A, with both tranches currently priced at Libor plus 325 bps.

At close, leverage on a pro forma EBITDA basis is anticipated to be 1.6 times, and debt to capital is expected in the mid-to-high 30s.

Closing on the acquisition is expected by year-end, subject to customary conditions, including federal and state regulatory approvals.

HealthSpring is a Nashville, Tenn.-based Medicare Advantage coordinated care plans.

Centerplate allocations

Centerplate's $314 million credit facility (B3/B+) is anticipated to allocate and hit the secondary market either late this week or early next week, and closing is targeted for Sept. 10, according to a market source.

The facility consists of a $70 million revolver, a $50 million term loan A and a $194 million term loan B.

Pricing on the term loan B is Libor plus 850 bps with a 2% Libor floor and an original issue discount of 97. There is call protection of 102 in year one and 101 in year two.

During syndication, the spread on the term loan B was increased from talk of Libor plus 625 bps to 675 bps, the discount widened from 98 and call protection was added.

Centerplate lead banks

Macquarie, UBS and BMO Capital Markets are the lead banks on Centerplate's credit facility, with Macquarie the left lead.

Proceeds from the fully subscribed deal will be used to refinance existing debt and fund a dividend payment.

Centerplate is a Stamford, Conn.-based provider of food and beverage concessions, high-end catering and merchandise services in sports facilities, convention centers and other entertainment facilities.

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