Lightower second-lien term loan oversubscribed; Charter launches $1.5 billion; LCDX unchanged

By Paul A. Harris

Portland, Ore., April 1 - The LCDX 19 index of bank loan credit default swaps finished the Monday session at 102¾ bid, 103¼ offered, unchanged on the session, according to a hedge fund manager.

The market took no time whatsoever to regain its legs following the three-day holiday weekend, and the new issue bourse continued to crank out a heavy news volume.

LTS Buyer LLC (Lightower Fiber Networks) priced $1.3 billion of term loans in two tranches.

The downsized Libor plus 675 bps eight-year second-lien term loan (Caa1/CCC+) priced at 99 and traded to 101½ bid, 102½ offered, according to an investor.

The deal, which had earlier been downsized from $200 million, played to $2 billion of orders, the investor said, adding that such intense demand for high-yielding paper is in no way unusual.

There is a lot of cash finding its way into bank loans right now, the investor said.

A considerable amount is coming out of high-yield bonds, the source said, adding that during the first quarter of 2013, high-yield bond funds saw $846 million of inflows, while loan funds took in a whopping $15 billion.

Meanwhile, Charter Communications Operating, LLC led a parade of new deal announcements, as it launched a $1.5 billion seven-year first-lien term loan on Monday.

Lightower loans higher

The Lightower Fiber Networks deal featured an upsized $1.1 billion Libor plus 350 basis points seven-year first-lien term loan B (B1/B), which priced at 99.5.

The loan was upsized from $1.05 billion. The spread came on top of spread talk, which was revised from earlier talk of 375 bps to 400 bps. The reoffer price came on top of price talk that was revised from earlier talk of 98.5 to 99.

The deal was trading at par 5/8 bid, 101 1/8 offered on Monday afternoon, according to a bank loan investor.

The first-lien loan has a 1% Libor floor.

A pricing grid will be added so pricing steps to Libor plus 325 bps when total net leverage is less than 5.25 times.

J.P. Morgan Securities LLC, Morgan Stanley & Co. and SunTrust Robinson Humphrey were the joint lead arrangers for the first-lien tranche. J.P. Morgan was lead left.

Meanwhile, Lightower downsized its Libor plus 675 bps eight-year second-lien term loan (Caa1/CCC+) to $200 million from $250 million and priced it at 99. The spread was reduced from 750 bps.

The reoffer price came at the rich end of earlier price talk of 98.5 to 99.

The second-lien tranche played to $2 billion of orders, according to the investor who saw it 101½ bid, 102½ offered on Monday afternoon.

The second-lien loan has a 1.25% Libor floor.

Morgan Stanley, J.P. Morgan and SunTrust were the joint lead arrangers and joint bookrunners for the second-lien tranche. Morgan Stanley was lead left.

Deutsche Bank, Jefferies & Co. and UBS were joint lead arrangers for both tranches.

The first-lien loan has 101 soft call protection for six months, and the second-lien loan has hard call protection of 103 in year one, 102 in year two and 101 in year three.

Proceeds will be used to help fund the acquisition of Sidera Networks in a transaction valued at over $2 billion. The transaction is being led by Berkshire Partners.

Current Lightower investors include M/C Partners, Pamlico Capital and Ridgemont Equity Partners. Current Sidera investors include ABRY Partners and Spectrum Equity Investors.

The loans are expected to close on April 11.

Lightower is a Boxborough, Mass.-based metro fiber and bandwidth provider. Sidera is a New York-based provider of tailored, high-capacity communications services.

HUB prices $1.13 billion

HUB International Ltd. priced its $1.125 billion Libor plus 350 basis points term loan B due June 13, 2017 at par.

The deal, which priced on top of spread talk, allocated and traded to 101 bid, 101½ offered, before settling at par 7/8 bid, 101 3/8 offered, according to a loan investor.

There is no Libor floor.

The loan has 101 soft call protection for 6 months

The repricing takes the existing term loan down from Libor plus 450 bps with no Libor floor.

Morgan Stanley Senior Funding Inc., Bank of America Merrill Lynch and RBC Capital Markets were the arrangers.

Hub is a Chicago-based insurance company.

RadNet atop revised talk

RadNet Inc. priced its $389,125,000 Libor plus 325 basis points senior secured term loan due Oct. 10, 2018 (B+) at par.

The deal traded to par ½ bid, 101¼ offered, according to an investor.

RadNet earlier cut pricing on the deal to Libor plus 325 bps from the previous talk of Libor plus 325 bps to 350 bps.

The Libor floor was decreased to 1% from 1.25%.

The debt includes a $40 million incremental term loan, which priced at 99.5, on top of discount talk.

There is 101 soft call protection for one year on the entire term loan.

Covenants include a maximum total leverage ratio and maximum capital expenditures.

Barclays, Deutsche Bank Securities Inc., GE Capital Markets and RBC Capital Markets are the lead banks on the deal.

Proceeds will be used to reprice the existing term loan from Libor plus 425 bps with a 1.25% Libor floor, to repay revolver debt and for general corporate purposes.

Charter's $1.5 billion

Charter Communications Operating launched a $1.5 billion seven-year first-lien term loan on Monday.

The deal is announced with a 250 basis points spread to Libor and a 0.75% Libor floor. A 50-cent original issue discount takes the offering price to 99.5.

There is 101 soft call protection for six months.

Proceeds will be used to help fund the acquisition of Optimum West.

Charter Communications Inc. is a St. Louis-based provider of cable TV, internet and telecommunications services.

Applied Systems final pricing

Applied Systems Inc. set final pricing on its package of first- and second-lien term loans.

The deal includes repricings of its existing first- and second-lien debt, as well as tack-ons to those tranches.

Included are a $369 million repricing of the company's first-lien term loan due December 2016 at Libor plus 325 basis points, with a 1% Libor floor at par, and a $150 million tack-on to the first-lien term loan due December 2016, at Libor plus 325 bps, with a 1% Libor floor at 99.75.

The size of the new term loan was slightly downsized from $371 million.

In addition, there is a $175 million repricing of the second-lien term loan due June 2017 at Libor plus 725 bps with a 1% Libor floor at par, and a $75 million tack-on to the second-lien term loan due June 2017, at Libor plus 725 bps with a 1% Libor floor at 99.75.

The first-lien tack-on was upsized from $75 million. The second-lien tack-on was added to the package with the upsizing.

Credit Suisse Securities (USA) LLC is the lead bank on the deal.

Included in the first-lien debt is 101 call protection for six months. The second-lien term loan has call protection at 101 for one year.

Funds from the add-on loan will be used for acquisition financing. With respect to the upsize amount, $75 million of the first-lien add-on and $75 million of the second-lien add-on will be used to fund a dividend.

The first-lien add-on has a ticking fee of half the spread starting after 30 days and the full spread after 60 days, the source added. The added second-lien add-on has a ticking fee of half the spread from 31 days to 60 days and the full spread thereafter.

Applied Systems is a University Park, Ill.-based software provider for the insurance industry.

Mirion launches $278 million

Mirion Technologies, Inc. launched a $278 million repricing of its first-lien term loan due in March 2018 (B2/B).

The deal, which is offered at par, reduces the Libor spread to 450 basis points from 500 bps. The Libor floor remains unchanged at 1.25%. There is one-year soft call protection at 101.

Credit Suisse Securities (USA) LLC is arranging the transaction.

The original $225 million loan was syndicated in the first quarter of 2012.

An $80 million add-on came in February 2013.

Mirion is a San Ramon, Calif.-based provider of mission-critical products to detect, monitor and identify radiation.

Affinia meeting on Tuesday

A bank meeting is set for 10 a.m. ET on Tuesday to discuss the proposed Affinia Group Inc. $670 million two-part offering of term loans.

The deal is comprised of a $200 million three-year term loan B-1, with pricing at Libor plus 325 basis points and a 0.75% Libor. The B-1 loan is talked at 99.5, and features a six-month soft call.

The long-maturity tranche is a $470 million seven-year term loan B-2, with pricing at Libor plus 400 bps and a 1.25% Libor floor. The B-2 is talked at 99.00, and features a 12-month soft call.

J.P. Morgan Securities LLC is leading the deal.

Credit ratings remain to be determined.

Proceeds will be used to refinance existing debt, redeem preferred shares and fund a dividend to shareholders.

Affinia Group is an Ann Arbor, Mich.-based designer, manufacturer, distributor and marketer of industrial-grade products and services.

Essential Power term

A lender call has been scheduled for 10 a.m. ET on Tuesday to discuss the proposed Essential Power, LLC $550.7 million senior secured term loan due Aug. 8, 2019 (existing ratings Ba2/BB).

Pricing has not yet been announced.

Barclays is the left lead arranger.

As with the company's existing loan, the proposed loan due in 2019 features a maximum leverage ratio covenant and a minimum interest coverage ratio covenant.

The Iselin, N.J.-based wholesale power generation and marketing company plans to use the proceeds to refinance its existing term loan.

Tower for Tuesday

Citigroup Global Markets is a arranging a bank meeting on Tuesday involving potential lenders to Tower International, Inc.

No other details were available.

As previously reported, Tower International is tendering for up to $276 million of its 10 5/8% senior secured notes due 2017.

The early deadline passed last Thursday, and the offer is set to end on April 12.

Following completion of the offer, Tower plans to redeem up to $86 million of the notes at 105 plus accrued interest.

The company also expects to use proceeds from new financing to redeem up to $43 million of the notes, with the remaining balance to be redeemed on Aug. 24.

Tower International, previously known as Tower Automotive, LLC, is a Livonia, Mich.-based supplier of automotive metal structural components and assemblies.

Sprouts covenant-lite deal

A Wednesday morning bank meeting is set for the Sprouts Farmers Markets, LLC $625 million seven-year first-lien covenant-lite term loan (B2/B+).

The spread and reoffer price remain to be determined.

Credit Suisse Securities (USA) LLC is the lead.

The loan comes with 101 repricing protection for one year.

The facility also includes a $50 million five-year revolver (B2/B+).

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

Sprouts is a Phoenix-based grocer that operates in the farmers market specialty segment of the retail food industry. Sunflower Farmers Market is a chain of full-service grocery stores.

Merge launches Wednesday

Merge Healthcare plans to launch $270 million of credit facilities at a bank meeting set for 1:30 p.m. ET on Wednesday.

The deal is comprised of a $20 million five-year revolver and a $250 million six-year term loan.

Jefferies & Co. is leading the transaction.

Moody's Investors Service assigned its B2 corporate credit rating to the company, as well as to the company's existing senior secured notes. Standard & Poor's assigned its B corporate credit rating and rated the secured notes at B+.

The Chicago-based company plans to use the proceeds to refinance $252 million of its 11 ¾% secured notes due 2015.

Merge Healthcare is an enterprise imaging services provider focusing on software for the storage and sharing of medical images.

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