Rayovac, Intelsat, Wyle cut term B spreads; Del Labs breaks, Seminis heads to par on buyout news

By Sara Rosenberg

New York, Jan. 24 - Rayovac Corp. - as expected - reverse flexed its institutional tranches on Monday as the deal was multiply oversubscribed. Also, reverse flexing during the session was Intelsat Ltd.'s term loan B, with pricing cut by 50 basis points. Lastly, Wyle Laboratories Inc. shifted some funds from its second-lien term loan to its first-lien term loan and reduced pricing on the first-lien loan.

As for the secondary, Del Laboratories Inc. allocated its credit facility, with the term loan B trading above 101, and Seminis Inc.'s bank debt headed down to around par on acquisition news.

Rayovac reduced the spread on its recently downsized $540 million U.S. term loan B to Libor plus 200 basis points with a step down to Libor plus 175 basis points on ratings of Ba3/BB-, according to a market source. The deal - which is currently rated B1/B+ - was originally launched with opening price talk of Libor plus 225 to 250 basis points.

Furthermore, pricing on the euro term loan B tranche in the equivalent of $140 million was reduced to Libor plus 250 basis points, with no grid, from opening price talk of Libor plus 275 basis points, the source said.

Pricing on the Canadian dollar term loan B tranche in the equivalent of $50 million is to be determined, the source added. The tranche was originally talked at Libor plus 225 to 250 basis points.

Pricing on the $300 million revolver remained at Libor plus 225 basis points.

This is the second round of changes on Rayovac's approximately $1.03 billion credit facility, although the first modifications made to pricing levels. On Friday, the company reduced the size of the U.S. term loan B tranche to $540 million from $740 million after pricing a bond offering that was upsized by $200 million to $700 million at 7 3/8% - the high end of price talk.

Changes to pricing have been anticipated by investors for a few days now being that the term loan B was so overwhelmingly well received by the market that the syndicate had to shut down the books on Jan. 19, a week and a half ahead of the original Jan. 28 commitment deadline.

There were a couple of factors working in favor of this deal, with one of the major positives being that Rayovac and the soon-to-be-acquired company, United Industries Corp., each have existing, relatively large loan lender groups - giving the new deal the potential for a lot of rollover commitments.

Rayovac is acquiring United Industries for a total value of about $1.2 billion, including the assumption of about $880 million of United Industries debt - comprised of senior debt and senior subordinated notes - that will be redeemed or replaced - and a cash tax benefit of $140 million.

In addition to helping fund the acquisition, proceeds from the facility will also be used to refinance Rayovac's existing credit facility.

The $700 million senior subordinated notes will be used to help fund the acquisition as well.

The transaction, which is expected to close in February, is subject to approval under the Hart-Scott-Rodino Anti-trust Improvements Act and other customary closing conditions.

Bank of America, Citigroup and Merrill Lynch are the lead banks on the credit facility, with Bank of America the left lead.

Rayovac is an Atlanta-based consumer products company and one of the largest battery, shaving and grooming, and lighting companies.

United Industries is a St. Louis-based manufacturer and marketer of consumer products for lawn and garden care and household insect control. Currently 83% of United is owned by Thomas H. Lee Equity Fund IV. It is anticipated that following the transaction Thomas H. Lee will hold an ownership position in Rayovac of about 25%.

Intelsat cuts B spread

Intelsat lowered pricing on its $350 million 61/2-year term loan B to Libor plus 175 basis points from Libor plus 225 basis points now that the company's enormous bond offering priced, according to a market source.

Pricing on the $300 million six-year revolver was left unchanged at Libor plus 200 basis points, the source added. The tranche has a commitment fee of 37.5 basis points.

The term loan was offered to investors at par and a revolver commitment of $15 million got 125 basis points upfront.

The deal was expected to be a blow out from day one based on the business itself, the company's free cash flow dynamics, and most importantly, the small amount of senior secured debt in the capital structure.

Following closing of the deal, the capital structure will have about $350 million of funded bank debt for a senior secured debt to EBITDA ratio of approximately 0.5. The reason why there's $2.55 billion in bonds and only a $650 million credit facility (Ba3/BB+/BB) is that the company wanted to leave its existing bonds in place, and those bonds have a carve out as to how much bank debt the company can get.

Pricing of the $2.55 billion bond offering had been pushed off until Monday due to Intelsat's loss of its IS-804 satellite On Jan. 14. The $1 billion seven-year floating-rate notes, which were upsized from $500 million, priced at Libor plus 487.5 basis points, compared to price talk in the Libor plus 500 basis points area, the $875 million eight-year fixed-rate notes, which were downsized from $1.3 billion, priced at 8¼%, in line with talk, and the $675 million 10-year fixed-rate notes, which were downsized from $750 million, priced at 8 5/8%, compared to price talk in the 8½% area.

The satellite failure gave Zeus Holdings Ltd., a company formed by a consortium of funds advised by Apax Partners, Apollo Management, Madison Dearborn Partners and Permira, a second chance to pull out of its acquisition agreement with Intelsat - the reason behind why the bonds and bank debt are being obtained in the first place.

The first time occurred in November when the company had to delay its bank meeting indefinitely due to a failure in the Americas-7 satellite. The bank meeting finally ended up happening in early January.

Deutsche Bank, Credit Suisse First Boston and Lehman Brothers are the lead banks on the credit facility, with Deutsche listed on the left.

Intelsat, a Pembroke, Bermuda-based satellite communications company, is being acquired by Zeus in a transaction valued at about $5 billion, including about $2 billion of existing net debt.

Wyle makes changes

Wyle Laboratories increased the size of its first-lien term loan B by $10 million, decreased the size of its second-lien term loan by the same amount and reduced pricing on the first-lien term loan by 50 basis points, according to a market source.

The six-year term loan B (B+) is now sized at $110 million, up from $100 million, with pricing set at Libor plus 275 basis points, down from Libor plus 325 basis points, the source said.

As for the 61/2-year second-lien term loan (B-), it is now sized at $40 million, down from $50 million, the source added. Pricing, however, remained unchanged at Libor plus 650 basis points.

Wyle opted not to make any changes to its $30 million five-year revolver (B+), which is priced at Libor plus 325 basis points, with a 50 basis point commitment fee.

Proceeds from the $180 million credit facility will be used to help fund the acquisition of the Aeronautics Services business of General Dynamics Advanced Information Systems Inc.

Wachovia and Credit Suisse First Boston are the lead banks on the deal.

Wyle is an El Segundo, Calif., provider of testing, research and engineering services to commercial, industrial and government customers.

Del Labs tops 101

Del Laboratories' $200 million 61/2-year term loan B opened for trading on Monday with levels of 101 1/8 bid, 101 3/8 offered, according to a fund manager, but soon moved up to 101¼ bid, 101½ offered probably on investor "clean-up" as allocations were incredibly small.

"They had like $2 billion in the book. Something like 98 accounts got allocations. That's about $2 million per account on average. Allocations were weak," the fund manager said, explaining that the paper was probably pushed higher as some investors were just trying to sell off their small positions and others were trying to increase their positions by buying up as much paper as they could.

The $200 million term loan B, which was downsized from $210 million last week after the company priced a bond deal that was upsized by $25 million, carries an interest rate of Libor plus 225 basis points with a step down to Libor plus 200 basis points, based on leverage. Originally, the tranche was launched with pricing of Libor plus 275 basis points but was reverse flexed at the same time of the downsizing due to the obvious overwhelming demand.

The term loan was originally sold to investors at par.

Del Laboratories' $250 million senior secured credit facility (B1/B) also contains a $50 million six-year revolver with an initial interest rate of Libor plus 250 basis points. The revolver paid an upfront fee of 75 basis points for $7.5 million commitments.

JPMorgan and Bear Stearns are joint lead arrangers and joint bookrunners on the deal. JPMorgan Chase Bank is administrative agent, Bear Stearns Corporate Lending Inc. is syndication agent and Deutsche Bank is documentation agent.

Proceeds from the term loan and the bonds will be used to help fund the acquisition of Del Laboratories by DLI Holding Corp., a company owned by affiliates of Kelso & Co., in a cash transaction valued at $385 million and a total transaction value of about $465 million, including the assumption of about $80 million of debt.

Proceeds from the revolver will be used to fund continuing operations and other general corporate purposes.

Del Laboratories is a Uniondale, N.Y., manufacturer, marketer and distributor of cosmetics and proprietary over-the-counter pharmaceuticals.

Seminis moves to par

Seminis' bank debt was quoted right around par, with no trades, after it was announced that Monsanto Co. - an investment-grade company - would be acquiring Seminis from Fox Paine & Co. LLC for $1.4 billion in cash, plus a performance-based payment of up to $125 million payable by the end of fiscal year 2007, according to a trader.

Prior to Monday morning's buyout news, Seminis' bank debt was quoted right around 102, the trader added.

The acquisition, which is subject to customary terms and conditions, including regulatory approvals, is expected to be completed during the first half of 2005.

Seminis is an Oxnard, Calif., developer, producer and marketer of vegetable seeds.

Oreck price cut anticipated

Oreck Corp.'s $190 million seven-year term loan B is 2½ times oversubscribed, and with this high amount of interest some are expecting to see pricing flex down to the neighborhood of Libor plus 275 basis points from Libor plus 300 basis points soon, a buyside source told Prospect News on Monday, adding that no official change to pricing has been made as of yet.

The $210 million credit facility (B1/B+) also contains a $20 million six-year revolver talked at Libor plus 300 basis points with a 50 basis point commitment fee.

The term loan is being offered to investors at par and the revolver is being offered with 50 basis points upfront for any size commitment.

Royal Bank of Scotland is the lead bank on the New Orleans vacuum company's deal that will be used to refinance the existing credit facility and pay a dividend to sponsor American Securities Capital Partners.

Pro forma for the refinancing, senior and total leverage will be 3.5x.

Jarden closes

Jarden Corp. completed its acquisition of American Household Inc. for $745.6 million in cash for the equity and the repayment of about $100 million of debt, according to a company news release.

To help fund this acquisition, Jarden got a new $1.05 billion credit facility (B1/B+) consisting of an $850 million seven-year term loan B with an interest rate of Libor plus 200 basis points and a $200 million five-year revolver with an initial interest rate of Libor plus 250 basis points.

Citigroup Global Markets and CIBC World Markets acted as joint lead arrangers and bookrunners, with Citigroup the left lead. Citigroup was syndication agent, CIBC was administrative agent and Bank of America was documentation agent.

Jarden is a Rye, N.Y., provider of niche consumer products.

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