Pinnacle Foods firms pricing, breaks; Toys 'R' Us rises; Medical Card, AMN, Chemtura set talk

By Sara Rosenberg

New York, Aug. 11 - Pinnacle Foods Finance LLC finalized pricing on its term loan D at the low end of talk and then proceeded to free the deal up for trading, with levels quoted above the par price at which it was issued.

In more trading happenings, Toys 'R' Us Inc.'s secured term loan was better after the company announced plans to bring a new term loan and notes to market in order to repay the debt in full.

Moving back to the primary market, Medical Card Systems came out with price talk on its term loan as the deal was presented to lenders during the session, AMN Healthcare Services Inc. revealed talk on its incremental loans and details on its amend and extend, and Chemtura Corp. guidance surfaced with the release of ratings.

In addition, NBTY Inc. kicked off an early round syndication of its proposed credit facility and is looking at next month for the retail round, and Valeant Pharmaceuticals International Inc. and HGI Holdings Inc. also revealed that they are likely September business.

Pinnacle Foods comes at low end

Pinnacle Foods firmed pricing on its $442.3 million senior secured term loan D at Libor plus 425 basis points, the tight end of the initial Libor plus 425 bps to 450 bps guidance, according to a market source.

The loan still has a 1.75% Libor floor and it was sold to investors at par.

Barclays, Bank of America and Credit Suisse are the lead banks on the loan, with Barclays the left lead.

Books on the deal closed at noon ET on Wednesday. The original deadline had been 5 p.m. ET, but it was accelerated due to high demand.

In fact, even before the deal was launched with a conference call on Tuesday, talk was that there was a good early order book.

Pinnacle frees to trade

After pricing was decided, Pinnacle Foods' term loan D hit the secondary market, with levels quoted at par ¼ bid, 101 offered on the break and then tightening up to par ¼ bid, par ¾ offered, according to traders.

Proceeds from the term loan D will be used to refinance the company's existing $850 million term loan C due 2014 that was obtained in connection with the acquisition of Birds Eye Foods Inc. on Dec. 23, 2009.

The term loan C is priced at Libor plus 500 bps with a 2.5% Libor floor and was sold at an original issue discount of 98.

Other funds for the refinancing are coming from $400 million of seven-year senior unsecured notes that priced at par on Tuesday to yield 8¼%.

Pinnacle Foods is a Mountain Lakes, N.J.-based manufacturer and distributor of branded packaged foods.

Toys 'R' Us heads higher

Toys 'R' Us' secured term loan gained some ground in the secondary market after the company revealed plans to get roughly $1 billion from a new secured term loan and senior secured notes to repay the existing $800 million loan in full, according to a trader.

The secured term loan was quoted at 99¾ bid, par offered, up from 98¾ bid, 99¼ offered, the trader said.

Remaining proceeds from the new debt offerings will be used to repay the company's existing $181 million senior unsecured facility.

The new term loan is scheduled to launch to investors with a conference call on Thursday via lead banks Bank of America, Goldman Sachs and JPMorgan.

Toys 'R' Us is a Wayne, N.J.-based toy retailer.

Medical Card talk emerges

Switching back to the primary, Medical Card Systems held a bank meeting on Wednesday to kick off syndication on its proposed $175 million five-year term loan, and in connection with the launch, price talk was announced, according to a market source.

The term loan is being talked at Libor plus 900 bps to 1,000 bps with a 2% Libor floor and an original issue discount of 98, the source said.

By comparison, prior to the launch, talk was being whispered in the Libor plus 950 bps area, with the Libor floor and original issue discount still to be determined.

Also, the term loan has soft call protection of 102 in year one and 101 in year two, a 75% excess cash flow sweep and amortization talk is 5% to 10% per year, the source remarked.

Jefferies and Deutsche Bank are the lead banks on the deal that will be used to refinance existing debt and fund a dividend.

Medical Card Systems, a managed care provider in Puerto Rico, will have senior leverage of 1.6 times.

AMN discloses price talk

Another deal to launch and reveal price talk on Wednesday was AMN Healthcare Services' proposed $118 million of incremental loans, according to a market source.

The $68 million term loan B add-on (Ba2) due June 2015 is being talked at Libor plus 525 bps to 550 bps with a 1.75% Libor floor and an original issue discount of 98.

And, the $50 million second-lien term loan (B1) due June 2016 is being talked in the Libor plus 900 bps area with a 2% Libor floor and an original issue discount of 97 to 98, the source said.

The term loan B add-on has 101 soft call protection for one year and the second-lien loan is non-callable for one year, then at 102 in year two and 101 in year three.

AMN seeks amend and extend

AMN also launched an amendment and extension proposal on during its Wednesday conference call, under which the company wants to extend term loan B and revolver maturities, the source continued.

The extended term loan B would have the same terms as the add-on, so it would mature in June 2015 and is being talked at Libor plus 525 bps to 550 bps with a 1.75% Libor floor and 101 soft call protection for one year.

By comparison, the existing term loan B debt currently expires in December 2013 and is priced at Libor plus 400 bps with a 2.25% Libor floor.

Also, the company is looking to extend its revolver to August 2014 from December 2012, and price talk on the extended debt is Libor plus 525 bps to 550 bps with no Libor floor, the source added.

AMN lead banks

Bank of America, GE Capital and SunTrust are the lead banks on AMN's deal, with Bank of America the left lead.

Lenders are being offered a 25 bps amendment fee and a 75 bps extension fee, and consents and commitments are due on Aug. 19.

Proceeds from the incremental loans will be used to refinance Nursefinders Inc.'s $132 million of bank debt in connection with the acquisition of the company.

The transaction is expected to close in the third quarter, subject to customary conditions, regulatory approvals and receipt of debt financing.

AMN is a San Diego-based health care staffing and workforce services company. Nursefinders is an Arlington, Texas-based provider of clinical workforce managed services programs.

Chemtura sets guidance

Chemtura released price talk on its $300 million six-year term loan B of Libor plus 400 bps with a 1.5% Libor floor and an original issue discount of 98 to 99, according to a market source.

The loan was launched on Tuesday. At that time, however, price talk was left as still to be determined until ratings emerged.

The price talk that came out on Wednesday is based on an expected Ba3 corporate rating and Ba1 facility rating, the source said, which ended up proving accurate as Moody's released the ratings later in the day.

Bank of America, Barclays and Citigroup are the lead banks on the deal, with Bank of America the left lead.

Proceeds will be used for exit financing.

Chemtura revolver, notes

Other funds for Chemtura's emergence from Chapter 11 will come from a $275 million five-year senior secured asset-based revolver and $450 million of notes.

According to court filings, pricing on the revolver is expected to be Libor plus 325 bps if availability is less than $100 million, Libor plus 300 bps if availability is $100 million to $200 million and Libor plus 275 bps if availability is greater than $200 million.

Bank of America is the administrative agent the ABL facility.

Chemtura is a Middlebury, Conn.-based manufacturer and seller of specialty chemicals and polymer products.

NBTY launches early round

NBTY launched its proposed $1.7 billion senior secured credit facility into an early round syndication on Wednesday and is expecting to hold a retail meeting around mid-September, according to a market source.

The facility consists of a $200 million revolver, a $200 million term loan A and a $1.3 billion term loan B, the source said. Previously, it was known from filings with the Securities and Exchange Commission that the deal would include $1.5 billion of term loan debt, but there was no breakdown given between an A and a B loan.

Price talk on the term loan B is Libor plus 450 bps to 475 bps with a 1.75% Libor floor and an original issue discount of 98 to 981/2, the source added.

Barclays, Bank of America and Credit Suisse are the lead banks on the deal and are asking for the early round commitments by Aug. 27.

NBTY being acquired

Proceeds from NBTY's credit facility will be used to help fund the buyout of the company by the Carlyle Group for $55 per share in cash. The transaction is valued at $3.8 billion.

Other funding for the acquisition will come from $900 million of senior unsecured notes, which are backed by a bridge loan commitment, and up to $1.6 billion in equity.

Closing on the transaction is expected to occur before the end of the year, subject to customary conditions, including approval of NBTY stockholders and regulatory approvals. It is not subject to any financing condition.

NBTY is a Ronkonkoma, N.Y.-based manufacturer and marketer of nutritional supplements.

Valeant expected next month

Valeant Pharmaceuticals' proposed $3.022 billion senior secured credit facility is anticipated to launch with a bank meeting sometime early next month, but a firm date is not yet available, according to a market source.

As committed, the deal consists of a $250 million 41/2-year revolver, a $500 million five-year term loan A, an up to $1.972 billion six-year term loan B and a $300 million delayed-draw six-year term loan B.

The delayed-draw term loan B is available until the earlier of Dec. 31 or 60 days after closing.

However, recent filings with the SEC disclosed that, if necessary, the banks can convert the entire term loan A into the term loan B or split the term loans into multiple tranches, including a senior unsecured tranche, a senior second-lien tranche or a tranche of debt securities.

Also, the banks can reduce the tenor of the term loan to 4½ years, the tenor of the term loan B to five years and the tenor of the revolver to four years.

Valeant potential pricing

Regarding pricing, Valeant's commitment letter outlined the spread on the revolver and the term loan A at Libor plus 450 bps, and the spread on the term loan B at Libor plus 475 bps.

The letter also said that if the credit facility is rated at least Ba3/BB-, pricing on the revolver and term loan A is expected at Libor plus 425 bps, and pricing on the term loan B is expected at Libor plus 450 bps. Additionally, if the rating is B2/B, pricing on the revolver and term loan A is expected at Libor plus 525 bps, and pricing on the term loan B is expected at Libor plus 550 bps.

But, the banks were given wiggle room with pricing as well. SEC filings have said that during syndication, the banks can increase the weighted average interest rate by up to 275 bps if the facility closing date occurs prior to Dec. 15 or up to 375 basis points if the closing date occurs on or after Dec. 15.

As committed, the term loan B has a 1.75% Libor floor and a $250 million accordion feature. The banks can add 102, 101 soft call protection to the tranche if necessary.

Also, as committed, the revolver has a 75 bps commitment fee and the delayed-draw term loan B has a 75 bps ticking fee.

Valeant amortization details

Amortization on the term loan A was outlined in the commitment letter as 10% in years one and two and 20% in years three and four, with the remaining balance due at maturity, and amortization on the term loan B was outlined as 1% per annum, with the remaining balance due at maturity.

However, recent SEC filings have revealed that this, too, can change. Banks have the ability to increase the amortization applicable to the term loan B to up to 5% per annum.

Other options available to the banks are to increase the excess cash flow sweep to 75% from 50% and eliminate the accordion feature, the filings said.

Financial covenants include a maximum total leverage ratio, minimum total interest coverage and maximum capital expenditures.

Goldman Sachs, Morgan Stanley and Jefferies are the joint lead arrangers and joint bookrunners on the deal, with Goldman the administrative agent and left lead.

Valeant merging with Biovail

Proceeds from the credit facility will be used to fund a merger with Biovail Corp. and refinance existing debt, including Valeant's 7.625% and 8.375% senior unsecured notes.

Under the terms of the agreement, Valeant stockholders will receive a one-time special cash dividend of $16.77 per share immediately prior to closing of the merger and 1.7809 shares of Biovail common stock upon closing of the merger in exchange for each share of Valeant common stock they own.

Upon the completion of the merger, Biovail stockholders will own 50.5% and Valeant stockholders will own 49.5% of the shares of the combined company on a fully diluted basis.

The transaction is expected to close before year-end, subject to Valeant and Biovail stockholder approval, which will be sought at a special meeting on Sept. 27, and regulatory approvals.

Valeant additional dividend

Also as part of the transaction, Valeant expects to offer all stockholders of the merged company an additional one-time $1 per share special dividend by Dec. 31, which is what the delayed-draw term loan B will fund.

The amount of the initial draw under the term loan B will be reduced dollar for dollar by the net proceeds of any securities issued by the company prior to closing and the aggregate principal amount of the existing notes that remain outstanding after closing.

Aliso Viejo, Calif.-based Valeant and Mississauga, Ont.,-based Biovail are specialty pharmaceutical companies. The combined company will be based in Mississauga and will be named Valeant Pharmaceuticals International Inc.

HGI also anticipated in September

Another deal that is expected to launch with a bank meeting in September is HGI Holdings' proposed credit facility, with timing indicated around a week or two after Labor Day, according to a market source.

Details on the structure of the deal are not yet available.

Goldman Sachs, Jefferies and Morgan Stanley are the lead banks on the facility, with Goldman the left lead.

The company is being acquired by Clayton, Dubilier & Rice LLC and GS Capital Partners from the Jordan Co. and members of the Harrington family, and the transaction is expected to close in the beginning of the fourth quarter.

HGI is a Cleveland-based mail-order, direct-to-home provider of specialty medical products for chronic disease patients.

CIT Group closes

In other news, CIT Group Inc. closed on its $3 billion five-year non-amortizing term loan that is priced at Libor plus 450 bps with a 1.75% Libor floor. It was sold at an original issue discount of 98.

There is call protection of 102 in year one and 101 in year two.

During syndication, pricing on the term loan was reduced from initial talk at launch of Libor plus 475 bps to 500 bps due to strong demand.

Bank of America, Morgan Stanley and Deutsche Bank are the lead banks on the deal that was used, along with $1 billion of cash on hand, to repay the company's existing $4 billion in first-lien term debt.

CIT Group is a New York-based provider of financing to small businesses and middle-market companies.

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