Covalence, Cooper-Standard free to trade; GM revolver heads lower; Huntsman back up; Gentiva sets talk

By Sara Rosenberg

New York, Feb. 8 - Covalence Specialty Materials allocated its credit facility Wednesday morning, with the first-lien term loan opening up for trading in the upper-101 context and the second-lien term loan opening up for trading wrapped around 103.

Cooper-Standard Automotive Inc.'s term loan also broke for trading during market hours, with levels seen in the low 101-region.

In other secondary news, General Motors Corp.'s tranche A revolver took a tumble as investors continue to be frustrated on the lack of information on the sale of the company's General Motors Acceptance Corp. financial arm, and Huntsman Corp.'s term loan B inched higher still in reaction to the recent decision to terminate potential sale conversations.

In primary happenings, Gentiva Health Services Inc. came out with price talk on its credit facility as the deal was launched into syndication with a bank meeting on Wednesday.

Covalence Specialty Materials' new credit facility freed for trading early in the session on Wednesday, with the $350 million first-lien term loan B (Ba3/B+) quoted at 101½ bid, 101¾ offered throughout the day and the $175 million second-lien term loan (B-) quoted at 102 7/8 bid, 103 1/8 offered throughout the day, according to traders.

The first-lien seven-year term loan B is priced with an interest rate of Libor plus 175 basis points and the second-lien term loan is priced with an interest rate of Libor plus 325 basis points.

During syndication, the term loan B was upsized from $325 million and pricing was reverse flexed from original price talk at launch of Libor plus 225 basis points.

The second-lien term loan was added to the capital structure at the time of the term loan B upsizing last week. Initially, price talk on this tranche was set at Libor plus 350 basis points but it came in by 25 basis points earlier this week on strong demand.

Covalence decided to upsize its term loan B and add the second-lien term loan to compensate for the decision to downsize its bond offering by $230 million to $265 million. The company's originally proposed $200 million tranche of second-lien senior secured floating-rate notes was removed form the bond structure altogether, taking form in the second-lien term loan and the incremental term loan B debt. Furthermore, there was a $30 million working capital adjustment to the financing.

Bank of America, Credit Suisse, Merrill Lynch and Morgan Stanley are the lead banks on the $700 million credit facility, which all in all was increased from an original size of $500 million.

In addition to the term loan B and the second-lien loan, the facility contains a $175 million six-year revolver (Ba3/B+) with a 50 basis point commitment fee.

Proceeds from the credit facility and bonds will be used to help fund Apollo Management LP's purchase of Tyco International Ltd.'s plastics and adhesives business, which is being renamed Covalence Specialty Materials.

Covalence is a producer of trash bags, stretch film and plastic sheeting, as well as a leading global producer of duct tape.

Cooper-Standard breaks

Cooper-Standard allocated its new $215 million term loan D (B2/B+) Wednesday, with levels on the tranche closing the session at 101 bid, 101¼ offered, according to a trader.

The term loan D is priced with an interest rate of Libor plus 250 basis points and contains 101 soft call protection for one year. There is a $25 million euro carve out under the term loan.

During syndication pricing on the term loan was reverse flexed from Libor plus 275 basis points and the euro carve out was added.

Proceeds were used to fund the acquisition of the Fluid Handling Systems business of ITT Industries Inc. in a transaction valued at about $205 million, which was announced as completed on Tuesday.

Deutsche Bank and Lehman Brothers acted as the lead banks on the Novi, Mich., automotive supplier's deal.

GM revolver falls

Another name of focus on Wednesday was General Motors's tranche A revolver, as it dropped by a few points spurred on by concern over the lack of progress and information on the GMAC sale, according to a trader.

The Detroit-based automotive company's revolver A closed the day quoted lower and wide at 79 bid, 83 offered, down from previous levels of 83 bid, 85 offered, the trader said.

On Tuesday, GM outlined a program for cutting additional costs and increasing its competitiveness. The program includes reducing its stock dividend in half to $1 per share per year from $2, lowering the salaries of chairman and chief executive officer G. Richard "Rick" Wagoner and several other top executives, making cuts in the executive pension plan and making changes in the health plan for retired salaried workers.

However, the company had nothing to report on its efforts to sell a 51% stake in GMAC to an investment-grade financial buyer in hopes that such a sale would restore GMAC's credit rating to investment grade and greatly lower its borrowing costs.

While at least two potential buyers have emerged - a buying group consisting of Cerberus Capital Management LLC and Citigroup's buyout unit, and a group consisting of Wachovia Bank and The Blackstone Group - all three rating agencies have indicated that the sale of the GMAC stake to a hybrid private equity group as opposed to an outright bank may not be sufficient to bring ratings back to investment-grade status.

Huntsman trades up

Huntsman Corp.'s term loan B was up a touch in Wednesday's secondary loan market that on an overall basis saw good flow and firm tones, still in reaction to the company's recent announcement that it has terminated discussions regarding its potential sale, according to a trader.

The company's term loan B closed out the day quoted at par ¾ bid, 101¼ offered, up an eighth of appoint on the day, the trader said.

At the end of January, Huntsman's term loan B had started coming in closer to par as news came out that the company received an indication of interest regarding an acquisition of all of its outstanding stock.

However, on Sunday, Huntsman terminated the potential sale plans, claiming that none of the proposals were in the best interests of the shareholders, which resulted in relieving some of the paydown pressure that the term loan B had been feeling.

Huntsman is a Salt Lake City-based manufacturer and marketer of commodity and differentiated chemicals.

Gentiva spread guidance

On the primary front, Gentiva set opening price talk on its proposed $445 million senior credit facility as the deal was officially launched into syndication during the session, according to a market source.

The company's $370 million seven-year term loan was presented to lenders with price talk of Libor plus 225 to 250 basis points, depending on ratings that are expected to emerge shortly, the source said.

Meanwhile, the company's $75 million revolver was launched with opening price talk of Libor plus 225 basis points, the source continued. Revolver upfront fees will be finalized when ratings surface, the source added.

Lehman is the lead bank on the deal.

Proceeds from the term loan, along with about $55 million in common stock and about $58 million in cash on hand, will be used to finance the acquisition of The Healthfield Group Inc. for $454 million, refinance over $183 million in existing Healthfield debt and fund transaction costs.

The transaction, which is subject to Hart-Scott-Rodino review, is expected to close in the first quarter.

Gentiva is a Melville, N.Y.-based provider of comprehensive home health services. Healthfield is an Atlanta-based provider of home health care and hospice.

Energy Transfer closes

Energy Transfer Equity LP completed its initial public offering of 24.15 million common units at a price of $21 per unit, according to a company news release.

In conjunction with the close of the IPO, the company got a new $500 million five-year revolving credit facility with a $100 million accordion feature.

Wachovia Bank is the administrative agent on the deal, Bank of America and Citicorp North America are co-syndication agents, BNP Paribas and The Royal Bank of Scotland are co-documentation agents, Credit Suisse, Deutsche Bank and UBS Loan Finance LLC are senior managing agents, and Fortis Capital Corp., Suntrust Bank, and Well Fargo Bank are managing agents.

Borrowings under the revolver, along with a portion of the proceeds from the common units IPO, were used, among other things, to repay the company's $600 million term loan in full.

Energy Transfer Equity is a Dallas-based company that acts as the general partner of Energy Transfer Partners, a propane company and operator of natural gas pipelines.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.