National Bedding breaks; HIT pulls bonds, adds second lien; Vanguard downsizes, add second lien

By Sara Rosenberg

New York, Aug. 12 - National Bedding Co. allocated its credit facility Friday, with the both the first- and second-lien term loans freeing up for trading around the mid-101 context.

Meanwhile, in the primary, HIT Entertainment plc decided to add a second-lien term loan to its credit structure in lieu of the bond offering that was previously planned. And, Vanguard Car Rental USA Inc. downsized its overall credit facility size, added a second-lien tranche and increased first-lien price talk.

National Bedding's $360 million six-year first-lien term loan (B1/BB-) opened for trading on Friday with levels of 101 3/8 bid, 101 5/8 offered, according to a buyside source. The paper did see one quick bid at 101½ during the session but quickly moved back down to the opening levels - which is where it also closed out the day, a trader added.

The first-lien term loan is priced with an interest rate of Libor plus 200 basis points with a step down to Libor plus 175 basis points if leverage falls below 41/2x - an event that is not projected to happen for at least two years. Originally, the tranche was talked at Libor plus 225 basis points but was reverse flexed with the addition of the step down this past Thursday. Furthermore, the tranche was upsized from $320 million as the syndicate decided to move some funds out of the second-lien term loan tranche.

Meanwhile, the $160 million seven-year second-lien term loan (B3/B+) opened for trading a little wider with levels of 101¼ bid, 101¾ offered and remained quoted in that context throughout trading hours, the trader said.

The second-lien term loan is priced with an interest rate of Libor plus 500 basis points and contains call protection of 102 in year and 101 in year two. Originally, the tranche was sized at $200 million and talked at Libor plus 600 basis points, but it was downsized and reverse flexed this past Thursday as well.

National Bedding's $570 million credit facility also contains a $50 million five-year revolver (B1/BB-) with an interest rate of Libor plus 200 basis points.

The deal was massively oversubscribed, leading the syndicate to shut down the books this past Thursday - a few days ahead of the original Aug. 16 deadline - and allowing for allocations to go out on Friday.

Allocations on the first-lien term loan were very small, according to the trader, who said that 73 accounts participated in the tranche and some of the paper was held for banks and for sponsors. However, the buyside source said that he received 50% of his original order.

Goldman Sachs is the lead bank on the deal, with Merrill Lynch and GE Capital involved as well.

Proceeds from the credit facility will be used to help fund the leveraged buyout of National Bedding by The Ares Corporate Opportunities Fund LP and Teachers' Private Capital.

National Bedding is a Hoffman Estates, Ill., manufacturer of bedding products and is the maker of Serta mattresses.

HIT adds second-lien

HIT Entertainment has added a $172 million 71/2-year second-lien term loan to its credit facility as the company decided to pull its previously planned $172 million eight-year senior subordinated note offering, according to a market source.

The syndicate will be holding a conference call on Monday for lenders, at which time it is anticipated that price talk on the second-lien term loan will surface, the source added.

HIT's now $625 million credit facility also contains a $77 million six-year revolver (B1/B) talked at Libor plus 225 basis points and a $376 million seven-year term loan B (B1/B) talked at Libor plus 250 basis points.

Merrill Lynch and Deutsche Bank are the lead banks on the deal, with Merrill the left lead on the revolver and term loan B and Deutsche the left lead on the second-lien term loan.

Proceeds from the credit facility will be used to help fund Apax Partners' leveraged buyout of HIT Entertainment.

HIT Entertainment is a London-based producer of children's television programming, including "Barney and Friends" and "Bob the Builder."

Vanguard downsizes, ups spread

Vanguard Car Rental downsized its credit facility by $100 million to $800 million by downsizing the first-lien term loan by $200 million and adding a $100 million second-lien term loan tranche. Furthermore price talk on the first-lien term loan was increased.

The first-lien term loan is now sized at $525 million, compared to an original size at launch of $725 million, and price talk on the tranche was flexed up to the Libor plus 500 basis points area from Libor plus 450 basis points, according to a market source.

Meanwhile, the $100 million second-lien term loan that was added to the credit structure is talked at Libor plus 750 basis points, the source said.

Vanguard Car Rental's credit facility also contains a $175 million revolver.

Lehman, Goldman Sachs and Citigroup are bookrunners on the deal, with Lehman the left lead, and Credit Suisse First Boston and Wachovia are involved as well.

Proceeds from the credit facility will be used to refinance existing debt as well as fund a distribution to shareholders. The downsizing in the credit facility will result in a $100 million reduction in the planned dividend payment.

Vanguard is the Tulsa, Okla., owner and operator of Alamo Rent A Car and National Car Rental.

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