Asurion, Fogo de Chao break; Rovi weakens with earnings news; Hologic tweaks term loan B

By Sara Rosenberg

New York, July 18 - Asurion LLC's incremental term loans made their way into the secondary market on Wednesday atop their original issue discounts, and Fogo de Chao Churrascaria (Holdings) LLC began trading as well.

Also in the secondary, Rovi Corp.'s term loan B fell strongly on the back of the company's announcement that full-year revenues and earnings estimates have been trimmed and the release of preliminary quarterly numbers.

Moving to the primary, Hologic Inc. reduced the size of its term loan B as its bond offering was increased by the equivalent amount, and the coupon on the institutional debt was flexed lower.

Furthermore, RedPrairie Corp. announced price talk on its credit facility as the deal was presented to investors in the morning, and WaveDivision Holdings LLC is getting ready to bring a buyout loan to market.

Asurion starts trading

Asurion's new covenant-light first-lien term loan debt freed up for trading on Wednesday, with the $375 million new amortizing five-year first-lien term loan B-1 and the $500 million add-on to the existing first-lien term loan due May 2018 both quoted at 99½ bid, par offered, according to a trader.

The add-on loan will trade with the existing 2018 term loan that was quoted in the secondary on Tuesday at 99½ bid, 99 7/8 offered, the trader said.

Pricing on the term loan B-1, which was recently upsized from $300 million, is Libor plus 350 basis points with a 1.25% Libor floor, and it was sold at an original issue discount of 99. There is 101 soft call protection for one year.

As for the add-on term loan, which was upsized from $400 million, pricing is set at Libor plus 400 bps with a 1.5% Libor floor, in line with existing 2018 term loan pricing. The new debt was sold at a discount of 99 and is prepayable at par.

Asurion lead banks

Bank of America Merrill Lynch, Barclays Capital Inc., Morgan Stanley Senior Funding Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc. and Goldman Sachs & Co. are the lead banks on the $875 million of new term loan borrowings.

Amortization on the term loan B-1, which was expected to appeal to collateralized loan obligations, is 12.5% in year one, 15% in year two, 20% in year three, 22.5% in year four and 25% in year five. The add-on amortizes at a rate of 1% per annum.

Proceeds, including those from the upsizing, will be used to pay down some of the company's second-lien term loan debt that are priced at Libor plus 750 bps with a 1.5% Libor floor.

Asurion is a Nashville-based provider of technology protection services.

Fogo de Chao frees up

Fogo de Chao Churrascaria's credit facility also broke, with the $182.5 million seven-year first-lien term loan (B1/B+) quoted at 97½ bid, 98½ offered on the open and then it moved to 97¾ bid, 98¾ offered, and the $70 million 71/2-year second-lien term loan (Caa1/B-) quoted at 97 bid, 98 offered, according to a trader.

Pricing on the first-lien term loan is Libor plus 625 bps with a 1.25% Libor floor, and it was sold at an original issue discount of 97. There is 101 soft call protection for one year.

And, the second-lien loan is priced at Libor plus 950 bps with a 1.5% Libor floor, and was sold at a discount of 96. There is hard call protection of 103 in year one, 102 in year two and 101 in year three.

The company's $277.5 million credit facility also includes a $25 million five-year revolver (B1/B+).

J.P. Morgan Securities LLC and Jefferies Finance LLC are leading the deal.

Fogo de Chao being acquired

Proceeds from Fogo de Chao's credit facility will help fund its buyout by Thomas H. Lee Partners LP from GP Investments Ltd.

During syndication, the first-lien term loan was upsized from $180 million, pricing was increased from Libor plus 575 bps and the discount widened from 98. And, the second-lien term loan pricing was flexed from Libor plus 900 bps and the discount was increased from 97.

The upsizing to the first-lien term loan was done to cover the increased original issue discount prices.

Closing on the transaction is expected this quarter, subject to regulatory approvals and other customary conditions.

Fogo de Chao is a Dallas-based steakhouse chain in the United States and Brazil.

Rovi drops

In more secondary happenings, Rovi's term loan B took a hit as the company revised its full-year revenue and income expectations lower and came out with preliminary financial results for the second quarter, according to a trader.

The term loan B was quoted at 96 bid, 98 offered, down from opening levels of 98¼ bid, 99¼ offered, and from Tuesday's levels of 99½ bid, par ¼ offered, the trader said.

For the full-year, Rovi is now expecting adjusted pro forma revenues of between $650 million and $680 million, down from between $755 million and $785 million previously, and adjusted pro forma income per common share to be between $1.60 and $1.90, down from earlier expectations of a range between $2.35 and $2.65.

And, for the second quarter, the company is estimating revenues of around $158 million, versus $179 million in the prior year, and loss per common share between $0.15 and $0.18, compared to a loss of $0.06 in the second quarter of 2011.

Rovi blames delays

Rovi said in its news release that the change to its full-year estimates was due to several factors including delays in adding new patent licensees in key growth areas and delays in launches for certain products and services.

"We don't anticipate ultimately losing revenues as a result of these delays, and we continue to anticipate significant growth in our licensing business from 2011 to 2013," Tom Carson, president and chief executive officer, said in the release.

"However, in order to ensure the long-term protection of our key intellectual property, we did not sign certain new patent licensing agreements during the second quarter, as some expected licensees would not agree to acceptable terms.

"In addition, certain other deals with first time licensees are simply taking longer to close than anticipated. We expect to come to acceptable terms with these parties later this year or in 2013, and we expect these deals will include catch-up payments to make Rovi whole for the pre-license period," Carson added.

Rovi is a Santa Clara, Calif.-based provider of digital entertainment services.

BWIC emerges

A $132.9 million Bid-Wanted-in-Competition (BWIC) was announced on Wednesday morning, and market players are being asked to get their bids in by 2 p.m. ET on Thursday, according to a trader.

The portfolio includes about 70 companies.

Some of the larger debt pieces being offered include Charter Communications Operating LLC's extended term loan C, Community Health System's extended term loan, EnergySolutions' term loan, HCA's term loan B-3, IPC Systems Inc.'s non-extended term loan B-1, Petrogeo Services' term loan and West Corp.'s term loan B-4.

Hologic reworks deal

Switching to the primary, Hologic trimmed its seven-year term loan B to $1.5 billion from $1.75 billion as its senior notes offering was lifted to $1 billion from $750 million, sources said, and, this wasn't the first size shift. Earlier the B loan was reduced by $250 million from $2 billion, with those funds going to the originally sized $500 million bond deal.

With the latest structural change, pricing on the term loan B was lowered to Libor plus 350 bps from Libor plus 400 bps, while the 1% Libor floor, original issue discount of 99 and 101 soft call protection for one year were left intact, sources continued.

Recommitments were due at noon ET on Wednesday.

The company's $2.8 billion senior secured deal (Ba2/BBB-) also provides for a $300 million undrawn five-year revolver and a $1 billion five-year term loan A, both priced at Libor plus 300 bps.

Hologic buying Gen-Probe

Proceeds from Hologic's credit facility, notes and $826 million of cash and marketable securities on hand will be used to fund the purchase of Gen-Probe Inc. for $82.75 per share in cash, or a total enterprise value of about $3.7 billion.

Goldman Sachs & Co., J.P. Morgan Securities LLC and Citigroup Global Markets Inc. are the lead banks on the credit facility.

Closing is expected in early August, subject to approval of Gen-Probe's shareholders, which will be sought at a meeting on July 31.

Pro forma net leverage is 5.6 times, and net leverage is 5.1 times.

Hologic is a Bedford, Mass.-based developer, manufacturer and supplier of diagnostics products, medical imaging systems and surgical products for the health care needs of women. Gen-Probe is a San Diego-based developer, manufacturer and marketer of molecular diagnostic products and services.

RedPrairie reveals talk

RedPrairie held a bank meeting on Wednesday morning to kick off syndication on its $380 million credit facility (B2/B+), and with the launch, price talk was disclosed, according to a market source.

Both the $40 million five-year revolver and the $340 million six-year first-lien term loan are being talked at Libor plus 500 bps with a 1.25% Libor floor and an original issue discount of 99, the source said. The term loan has 101 soft call protection for one year.

Lead banks, Credit Suisse Securities (USA) LLC and RBC Capital Markets LLC, are seeking commitments by Aug. 1, the source continued.

Proceeds will be used to refinance existing bank debt and fund a dividend.

As a result of this transaction, RedPrairie, an Alpharetta, Ga.-based provider of supply chain software solutions, will have leverage of 4.2 times.

WaveDivision joins calendar

WaveDivision set a bank meeting for July 26 to launch a $520 million credit facility that consists of a $50 million revolver and a $470 million term loan B, according to a market source.

Wells Fargo Securities LLC, Deutsche Bank Securities Inc. and RBC Capital Markets LLC are leading the deal.

Proceeds will be used to help fund the acquisition of the company by Oak Hill Capital Partners, GI Partners and management from Sandler Capital Management, with the transaction expected to close in the fourth quarter, subject to regulatory approvals and customary conditions.

WaveDivision is a Kirkland, Wash.-based owner and operator of broadband cable systems.

Panda allocates

In other news, Panda Temple Power LLC gave out allocations on its $330 million of six-year construction term loans (B) that consists of a $75 million term loan A and a $255 million term loan B, according to a market source.

Pricing on the A loan is Libor plus 700 bps and pricing on the B loan is Libor plus 1,000 bps, with both tranches having a 1.5% Libor floor and sold at an original issue discount of 98. All of the debt is non-callable for two years, then at 102 in year three and 101 in year four, the source added.

Morgan Stanley Senior Funding Inc. and Ares Capital lead the deal that is being to build a 758 megawatt natural gas-fired power plant in Temple, Texas.

Engility wraps

Engility Corp. completed its spin-off from L-3 Communications Holdings Inc., according to a news release, and with the spin-off, Engility paid a dividend to L-3 that was funded with a $400 million senior secured credit facility (Ba1/BB+) comprised of a $65 million revolver and a $335 million term loan.

Pricing on the revolver and term loan is Libor plus 450 bps. The term loan has a 1.25% Libor floor and was sold at an original issue discount of 99.

During syndication, the spread on the term loan firmed at the tight end of the Libor plus 450 bps to 500 bps talk and it was upsized from $200 million as the company withdrew plans for a $250 million senior notes offering. Also, the revolver was increased from a revised size of $50 million, but ended up down from the original amount of $100 million that was announced at launch.

Bank of America Merrill Lynch and Barclays Capital Inc. led the deal for the Billerica, Mass.-based provider of systems engineering and technical assistance, explosive ordnance disposal/counter-IED technical support, acquisition support and NextGen services.

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