Smurfit-Stone oversubscribed; Bucyrus going well; Vanguard, Big West allocating shortly

By Sara Rosenberg

New York, Jan. 22 - Market chatter is that Smurfit-Stone Container Corp.'s term loan overfilled before the book closed on Friday, and Bucyrus International Inc.'s term loan B is coming along nicely with a lot of orders placed well in advance of the upcoming commitment deadline.

Also, Vanguard Health Systems Inc. and Big West Oil LLC are anticipated to give out allocations and break for trading sometime within the next couple of days.

In other news, Hexion Specialty Chemicals Inc. announced on Friday that its amend and extend proposal was approved by lenders.

Smurfit-Stone nets orders

Smurfit-Stone's $1.2 billion six-year term loan (B2) was oversubscribed ahead of Friday's commitment deadline, according to a market source.

The term loan is talked at Libor plus 500 basis points with a 2% Libor floor and is being offered at an original issue discount of 981/2.

In addition, the term loan includes 101 soft call protection for two years.

There is a $400 million accordion feature under the term loan, subject to, among other things, 25 bps MFN pricing protection.

The facility includes no maintenance covenants. However, there is a debt incurrence test of 2.0 times interest coverage.

JPMorgan, Deutsche Bank and Bank of America are the lead banks on the deal.

Smurfit-Stone also getting revolver

Smurfit-Stone also plans on obtaining a new $650 million four-year asset-based revolver, with proceeds from the entire $1.85 billion credit facility going towards exit financing.

Through the company's plan of reorganization, debt will be reduced by $2.9 billion. Pre-petition secured lenders will be repaid in full and there will be an equity distribution to about $3 billion face value of unsecured obligations.

Smurfit-Stone's pro forma capital structure as of March 31 is expected to include 2.5 times total debt and 2.3 times net debt. By comparison, the company's current structure as of Dec. 31 included 8.0 times total debt and 6.5 times net debt.

The credit facility effective date is expected to be Jan. 29, but the company is expecting to emerge from Chapter 11 and fund the bank deal in April.

Smurfit-Stone is a Chicago-based manufacturer of paperboard and paper-based packaging.

Bucyrus nets interest

The book on Bucyrus' $1.075 billion six-year term loan B is rumored to be "going very well" already even though lenders still have until Jan. 29 to throw in their commitments, according to a market source.

Price talk on the term loan B is Libor plus 325 bps, with a 2% Libor floor and an original issue discount of 99.

Proceeds from the term loan B will be used to fund the acquisition of Terex Corp.'s mining equipment business for $1.3 billion.

Initially, the term loan B was launched with a size of up to $1.2 billion, but it was then revised to $1.075 billion after a definitive agreement was reached to issue roughly 5.8 million shares of equity to Terex in place of $300 million in cash.

However, this change wasn't much of a surprise since, when the acquisition was announced, the company said that it expected the term loan B to be sized at $1.075 billion even though the commitment is for $1.2 billion. Being that the stock agreement had not yet been signed, the loan was launched at its maximum size.

Bucyrus lead banks

JPMorgan, Bank of America and Macquarie are the lead banks on Bucyrus' credit facility (Ba2/BB).

In connection with the acquisition, Bucyrus is also planning to get a $50 million revolver add-on and an amendment and extension of its existing credit facility.

Pro forma leverage would be 2.1 times.

Closing on the acquisition is expected to take place during the first quarter of 2010, subject to regulatory approvals and other customary conditions.

Bucyrus is a Milwaukee, Wis.-based designer and manufacturer of high-productivity mining equipment for surface and underground mining.

Vanguard allocating soon

Vanguard Health Systems is expected to allocate its $1.075 billion credit facility (Ba2/B+) during the week of Jan. 25, with the target being that the event will take place early on in the week, according to a market source.

The facility consists of an $815 million term loan and a $260 million revolver, with both tranches priced at Libor plus 350 bps with a 1½% Libor floor.

The term loan was sold to investors at an original issue discount of 99.

During syndication, the term loan was upsized from $765 million after the company's senior notes offering was downsized to $950 million from $1 billion, and the discount on the term loan firmed at the tight end of initial guidance of 98½ to 99.

Vanguard closing soon

Vanguard anticipates closing and funding the credit facility on Jan. 29, according to a recent company news release.

Proceeds from the credit facility will be used to refinance debt, including repaying and terminating the existing credit facility.

Meanwhile, proceeds from the company's recently priced notes, along with cash on hand, will be used to fund a tender for its 9% senior subordinated notes due 2014 and 11¼% senior discount notes due 2015, and to fund a dividend to existing stockholders.

Bank of America and Barclays are the lead banks on the credit facility.

Vanguard is a Nashville, Tenn.-based owner and operator of acute care hospitals and complementary facilities and services.

Big West readies allocations

Also expected to allocate during the week of Jan. 25 is Big West Oil's $360 million five-year term loan, according to a market source.

The term loan is priced at Libor plus 950 bps with a 2.5% Libor floor, was sold at an original issue discount of 97, and includes 101soft call protection for one year.

During syndication, the Libor floor was reduced from 3%, the discount tightened from initial talk of 96 and the call protection was added.

Proceeds from the term loan, along with a $75 million three-year ABL revolver, will be used for exit financing.

Bank of America is the lead bank on the deal.

Big West Oil, a wholly owned subsidiary of Flying J Inc., is a Salt Lake City-based complex high conversion refinery.

Hexion amendment passes

Hexion got enough signatures from lenders to pass its senior secured credit facility amendment and extension proposal, according to an 8-K filed with the Securities and Exchange Commission.

In addition, the company revealed on Friday that roughly $900 million of its term loan debt was extended to May 5, 2015 in return for higher pricing.

The amendment also permits revolver commitments to be extended to May 5, 2013, and, as of Jan. 12, the company had roughly $200 million in orders towards the extended revolver.

Pricing on the extended revolver is Libor plus 450 bps and committing revolver lenders are being offered a 200 bps upfront fee as well as a 200 bps ticking fee.

The extended revolver will take effect upon the May 31, 2011 expiration of the existing revolver.

Hexion amendment allows for notes

Another part of Hexion's amendment is that it allows for the issuance of $1 billion of 8.875% senior secured notes, which the company recently priced at 99.296.

Proceeds from the notes will be used to repay $800 million of term loans and for general corporate purposes.

The notes were upsized from $700 million and, as result, the term loan paydown increased from $500 million.

The amendment also revises some covenants contained in the credit agreement, resets the accordion feature to $200 million, permits the issuance additional senior notes or loans as long as an agreed amount of proceeds are used to prepay term loans and/or revolver loans at par, and allows the sale of additional debt, including junior or unsecured debt, in an amount not to exceed the accordion feature.

Hexion is a Columbus, Ohio-based thermoset resins company.

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