Education Management sets talk; Maritime Telecom upsizes, cuts term spreads; Hexion, Quiznos break

By Sara Rosenberg

New York, May 4 - Education Management Corp. came out with price talk on its billion-dollar-plus credit facility on Thursday as general syndication kicked off with the holding of a bank meeting during market hours.

Also in the primary, Maritime Telecommunications Network Inc. tweaked its credit facility, increasing the size of its first-lien term loan B, and decreasing pricing on both the first- and the second-lien term loan tranches.

In trading news, Hexion Specialty Chemicals Inc. hit the secondary, with its term loan seen wrapping around par. And, Quiznos' credit facility freed up as well, with its first-lien term loan trading in the mid-par context and its second-lien term loan trading atop 102.

Education Management released price talk on its credit facility as the deal was presented to investors Thursday with a slightly modified structure that included a larger-than-previously anticipated revolver tranche, according to a market source.

The credit facility was launched as a $1.185 billion term loan B and a $300 million revolver, with both tranches talked at Libor plus 250 basis points, the source said. Prior to the bank meeting, it was anticipated that the revolver would carry a size of $250 million.

Goldman Sachs and Credit Suisse are joint bookrunners on the $1.485 billion (up from $1.435) deal, with Goldman the left lead. In addition to these two lead banks, Merrill Lynch and Bank of America are underwriters on the deal as well.

Proceed from the facility, $760 million of bonds and about $1 billion of sponsor equity will be used to fund the leveraged buyout of Education Management by Providence Equity Partners and Goldman Sachs Capital Partners.

Under the LBO agreement, Providence Equity and Goldman Sachs Capital have agreed to purchase Education Management for $43.00 per share in cash, in a transaction valued at about $3.4 billion.

The transaction is expected to be completed during the summer, subject to the receipt of shareholder approval and regulatory approvals including the U.S. Department of Education, accrediting agencies and state licensing boards, as well as satisfaction of customary closing conditions.

Education Management is a Pittsburgh-based provider of private post-secondary education.

Maritime reworks structure

Maritime Telecommunications Network came out with a round of changes on its in-market credit facility, including upsizing and lowering pricing on the first-lien term loan B and lowering pricing on the second-lien term loan as well, according to a market source.

The six-year first-lien term loan B is now sized at $75 million, up from an original size of $70 million, and pricing was reverse flexed to Libor plus 275 basis points from original talk at launch of Libor plus 300 basis points, the source said.

Meanwhile, the $30 million 61/2-year second-lien term loan (size unchanged) was modified to reduce pricing to Libor plus 625 basis points from original talk at launch of Libor plus 650 basis points, the source continued.

The second-lien term loan contains, and has since launch, soft call protection of 102 in year one and 101 in year two.

Pricing on Maritime Telecommunications' $10 million five-year revolver was left unchanged at Libor plus 300 basis points, with a 50 basis point commitment fee, the source added.

Proceeds from the credit facility will be used to help fund the purchase of Maritime Telecommunications by SeaMobile, with Ignition Partners as the sponsor, from Perseus Capital.

In connection with the first-lien term loan B upsizing, the equity contribution for the acquisition was reduced by $5 million.

With the changes, the company will now be 6x levered.

Credit Suisse is the lead arranger on the $115 million credit facility - up from an original size of $110 million.

Maritime Telecommunications is a Miramar, Fla., provider of broadband solutions for voice, data, internet and compressed video services to cruise ship lines and other offshore industries, and to the U.S. government.

Hexion trades around par

Switching to the secondary, Hexion Specialty Chemicals freed for trading during Thursday's market hours, with its $1.625 billion seven-year term loan quoted at 99 7/8 bid, par 1/8 offered by one trader and a little wider at 99¾ bid, par ¼ offered by a second trader.

The term loan is priced with an interest rate of Libor plus 200 basis points.

Hexion's $1.9 billion senior secured credit facility (B2/B+) also contains a $50 million seven-year synthetic letter-of-credit facility with an interest rate of Libor plus 200 basis points and an amended $225 million five-year revolver with an interest rate of Libor plus 250 basis points.

Credit Suisse Securities LLC and J.P. Morgan Securities Inc. are joint bookrunners and joint lead arrangers on the deal, with J.P. Morgan also acting as administrative agent.

Proceeds from the term loan and synthetic letter-of-credit facility will be used to replace the company's current term loan and synthetic letter-of-credit facility, to redeem all outstanding series A preferred stock, and to repurchase all outstanding 8% senior secured notes, 9½% senior second secured notes and 13½% senior subordinated notes.

Revolver borrowings will be available for working capital and other general corporate purposes, including permitted acquisitions and investments.

Hexion is a Columbus, Ohio, producer of thermosetting resins.

Quiznos frees to trade

Also breaking for trading on Thursday was Quiznos, with its $650 million first-lien term loan B quoted at par 3/8 bid, par 5/8 offered pretty steadily from the break until the close and its $225 million second-lien term loan quoted at 102 bid, 103 offered throughout the session, according to traders.

The first-lien term loan B is priced with an interest rate of Libor plus 225 basis points. During syndication, this tranche was upsized from $600 million and pricing was reverse flexed from original talk at launch of Libor plus 250 basis points.

The second-lien term loan is priced with an interest rate of Libor plus 575 basis points and contains call protection of 102 in year one and 101 in year two. During syndication, this tranche was downsized from $250 million and pricing was reverse flexed from original talk at launch of Libor plus 600 basis points.

Quiznos' $950 million credit facility also contains a $75 million revolver with an interest rate of Libor plus 225 basis points. Pricing on the revolver was reduced during syndication as well, dropping down from original talk at launch of Libor plus 250 basis points.

Deutsche Bank and Goldman Sachs are the lead banks on the deal that will be used to help fund JPMorgan Partners's purchase of a significant ownership in Quiznos.

Quiznos is a Denver-based quick-service restaurant chain.

GM bids soften

General Motors Corp.'s revolver felt a touch weaker on the bid side as activity in the name slowed following a mad run-up and strong volume during the previous session, according to a trader.

The Detroit-based automaker's revolver closed the day quoted at 96½ bid, 97½ offered, down a quarter on the bid from Wednesday's levels of 96¾ bid, 97½ offered, the trader said.

The bank debt had seen a lot of trading activity during Wednesday's session after the company said that it is working on an amendment or refinancing of its existing $5.6 billion line of credit and plans to complete any such transaction by the end of the second quarter or early in the third quarter.

Following that announcement, the revolver traded as high as 98 but then settled down to 96¾ bid, 97½ offered. By comparison, on Tuesday, the bank debt went out at 95 bid, 95¾ offered.

NPC closes

Merrill Lynch Global Private Equity completed its leveraged buyout of NPC International Inc., according to a news release.

To help fund the LBO, NPC got a new $375 million credit facility (B1/B+) consisting of a $300 million term loan B with an interest rate of Libor plus 175 basis points and a $75 million revolver with an interest rate of Libor plus 225 basis points.

During syndication, the term loan B was upsized from $275 million as the company's bond offering was downsized to $175 million from $200 million, and pricing was reverse flexed from Libor plus 225 basis points.

JPMorgan and Merrill Lynch acted as the lead banks on the deal, with JPMorgan the left lead.

NPC is a Lenexa, Kan., franchisee of Pizza Hut restaurants.

Pegasus Solutions closes

Prides Capital Partners LLC completed its leveraged buyout of Pegasus Solutions Inc. in a transaction valued at about $275 million, according to a news release.

To help fund the LBO, Pegasus got a new $120 million credit facility (B1/B) consisting of a $10 million revolver and a $110 million term loan.

JPMorgan acted as the lead bank on the deal.

Pegasus is a Dallas-based provider of technology and services to hotels and travel distributors.

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