Lender Processing, Unifrax rework deals, free up; Momentive, Hexion rise with earnings

By Sara Rosenberg

New York, Aug. 12 - Lender Processing Services Inc. made a number of changes to its credit facility, including downsizing its term loan B while increasing the spread and original issue discount and upsizing its term loan A. And with the final structure in place, the deal allocated and broke for trading on Friday.

Also, Unifrax I LLC flexed pricing up on its term loan add-on and widened the original issue discount and then it, too, began trading, with levels quoted above the revised issue price.

In other news, Momentive Performance Materials Holdings LLC and Hexion Specialty Chemicals Inc. saw their bank debt head higher during the trading session as parent company, Momentive Specialty Chemicals Inc., released quarterly results and the overall tone in the market was better.

Lender restructures

Lender Processing revised the structure of its senior secured credit facility (Baa3/BBB), opting for more pro rata borrowings over institutional debt, resulting in the overall deal size dropping to $1.185 billion from $1.3 billion, according to sources.

Under the changes, the seven-year term loan B was reduced to $250 million from $550 million, the five-year term loan A was increased to $535 million from $350 million, and the five-year revolver was left unchanged at $400 million, sources said.

As a result of the tranche size changes, the company is getting $115 million less of term loan debt than originally planned. To make up for this, more borrowings will be made under the revolver, sources explained.

Lender Processing flexes

In addition to the tranching modifications, Lender Processing raised pricing on its downsized term loan B to Libor plus 450 basis points with a 1% Libor floor and an original issue discount of 981/2, sources continued. Initial talk had been Libor plus 325 bps to 350 bps with a 1% floor and a discount of 991/2.

As before, the term loan B has 101 soft call protection for one year.

Pricing on the company's upsized term loan A and revolver firmed in line with initial talk at Libor plus 225 bps, with the revolver having a 50 bps unused fee.

J.P. Morgan Securities LLC, Wells Fargo Securities LLC, U.S. Bank and SunTrust Robinson Humphrey Inc. are the lead banks on the deal.

Lender Processing trades

After the revisions were finalized, Lender Processing's credit facility made its way into the secondary market, with the term loan B quoted at 98½ bid, 99 offered on the open, according to a trader.

Proceeds from the credit facility will be used to refinance existing debt, including an existing senior secured credit facility, and for general corporate purposes. Existing facility pricing is Libor plus 200 bps on the revolver and term loan A and Libor plus 250 bps on the term loan B.

The goal of the refinancing is to enhance liquidity, extend maturities and provide more flexibility under covenants.

Closing is expected in August, subject to market and other customary conditions.

Lender Processing Services is a Jacksonville, Fla.-based provider of integrated technology, services and loan performance data and analytics to the mortgage, consumer lending, capital markets and real estate industries.

Unifrax lifts pricing, breaks

Another deal to firm up pricing on Friday and allocate was Unifrax, as it increased pricing on its $150 million term loan add-on (Ba3) to Libor plus 500 bps from Libor plus 450 bps and revised the original issue discount to 99 from 991/2, while leaving the 1.5% Libor floor intact, according to a market source.

The company's existing term loan is being repriced to match the spread and Libor floor of the add-on, the source said.

With the changes in place and the deal ending up well oversubscribed, the add-on freed up for trading, with levels on it and the existing term loan quoted at 99¼ bid, par offered, a trader remarked.

Wells Fargo Securities LLC is the lead bank on the deal that will be used to fund the acquisition of Super Saffil Ltd. and Saffil America Inc. from Dyson Group plc.

Closing is expected in the third quarter, subject to anti-trust approvals.

Unifrax is a Niagara Falls, N.Y.-based supplier of high-temperature insulation products. Saffil is a Widnes, U.K.-based developer, manufacturer and seller of high-temperature polycrystalline wool materials.

Momentive/Hexion trade up

In other trading happenings, Momentive and Hexion saw their bank debt levels rise as their parent company, Momentive Specialty Chemicals, released second-quarter results that showed a year-over-year improvement in earnings, revenues and segment EBITDA, according to traders.

Also helping levels was the more positive tone in the secondary market in general on Friday, traders remarked.

"We were better. I don't think there was a massive rally. In the morning, buyers outnumbered sellers, which is enough to push levels up. As a whole up a quarter this morning, quieted down in the afternoon. I don't think we'll go out more than up a quarter," one trader added.

Momentive/Hexion levels

Momentive's extended U.S. dollar loan was quoted at 91½ bid, 92½ offered, up from 89½ bid, 91½ offered, and its non-extended U.S. dollar loan was quoted at 92½ bid, 94½ offered versus 91½ bid, 93½ offered, one trader said.

And, Hexion's extended C1, C2 and C4 loans were quoted at 92½ bid, 94½ offered versus 91 bid, 93 offered on Thursday, and its extended C5 and C7 loans were quoted at 91½ bid, 93½ offered, up from 90½ bid, 92½ offered, the trader continued.

A second trader, however, had the extended C1/C2 debt quoted at 91 bid, 92 offered, up from 90½ bid, 91½ offered.

Furthermore, Hexion's non-extended C1/C2 were quoted at 94 bid, 96 offered, up from 92½ bid, 94½ offered, its non-extended C4/5 were quoted at 93 bid, 95 offered, up from 92 bid, 94 offered, and its non-extended C6 was quoted at 92 bid, 94 offered, up from 91 bid, 93 offered, the first trader added.

Momentive earnings results

For the second quarter, Momentive Specialty Chemicals reported net income of $63 million, compared to net income of $52 million in the prior year.

Revenues for the quarter were $1.4 billion, compared to $1.2 billion for the 2010 second quarter.

And, segment EBITDA totaled $189 million in the quarter versus $155 million in the previous year, while pro forma adjusted EBITDA for the last 12 months was $770 million.

Also, at June 30, the company had $3.347 billion of unaffiliated net debt and $569 million of liquidity, including $192 million of unrestricted cash and cash equivalents, $200 million of borrowings available under undrawn revolving credit facilities and $177 million of borrowings available under additional credit facilities.

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

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