Extended Stay, Ameriforge trade up; Peak 10 tightens pricing; big bid remains despite outflow

By Paul A. Harris

Portland, Ore., June 6 – In the bank loan primary market Extended Stay America Inc. priced a $375 million senior secured term loan on Friday and Ameriforge Group Inc. priced $100 million of add-on loans.

Both deals traded higher.

And Peak 10 Inc. tightened down spreads and decreased the discounts on $460 million of term loans.

The bid for bank loans remains intense, a trader commented, despite Thursday’s news that bank loan mutual funds and exchange traded funds sustained $1.1 billion of outflows for the week to Wednesday.

“Away from retail, loans are better bid,” the trader said Friday, and noted that CLOs and separate bank loan accounts continue to see cash come in.

Part of the cash migration reflected in Thursday’s outflow news is likely loan ETF investors moving into stocks, said that trader, conceding that for that class of investor the move might make sense.

“The market is up ¼ point on the week, said the trader, who related information reported Thursday by Lipper AMG.

“Every deal is a blowout. Everything is bid.

“And guys are reaching for yield.”

The LCDX22 index of bank loan credit default swaps rose 1/8 point on Friday, closing at 104¾ bid, 105¼ offered, according to a market source.

Extended Stay prices term loan

Extended Stay priced its $375 million senior secured term loan (B+) with a 425 basis points spread to Libor and a revised 0.75% Libor floor at 99.5, a loan trader said on Friday.

The deal was as much as eight times oversubscribed.

It traded to par ½ bid, 101 ½ offered, the source added.

At pricing, the spread was tightened 50 bps from the initial 475 to 500 bps spread talk. The deal came 50 cents rich to initial OID talk of 99. And the Libor floor was trimmed from 1%.

Goldman Sachs Bank USA, Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and J.P. Morgan Securities LLC are the joint lead arrangers on the deal.

Proceeds will be used to refinance $365 million of mezzanine debt and pay related transaction fees and expenses.

Extended Stay America is a Charlotte, N.C.-based owner and operator of company-branded hotels.

Ameriforge prices, trades up

Ameriforge has priced $100 million of add-on term loans, a market source said on Friday.

A $65 million add-on first-lien covenant-light term loan due Dec. 19, 2019 (B1/B+) priced at par with a Libor spread of 375 basis points and a 1.25% Libor floor. It came on top of talk that had been revised from earlier guidance in the 99.5 area.

A $35 million add-on second-lien covenant-light term loan due Dec. 19, 2020 (Caa1/B-) priced on top of talk at 101, with a Libor plus 750 spread and a 1.25% Libor floor.

The first-lien loan was wrapped around 101 in the secondary market, according to a trader.

The second-lien loan was at 102 bid, 103 offered, the trader added.

Deutsche Bank Securities Inc., Goldman Sachs Bank USA, RBC Capital Markets LLC, UBS AG and BNP Paribas Securities Corp. are the bookrunners on the $100 million deal.

Proceeds will be used to fund the acquisition of VerdErg, a United Kingdom-based supplier of diverless subsea connector systems.

Ameriforge is a Houston-based manufacturer of highly engineered products, subassemblies and integrated systems for the oil and gas, midstream, downstream, power generation, aerospace, transportation and industrial markets.

Henniges ups pricing

Henniges Automotive Holdings Inc. downsized its seven-year term loan B (B) to $265 million from $285 million and hiked price talk, a market source said on Friday.

Revised talk sets out a Libor plus 500 basis points spread when total net leverage is greater than three times. The spread drops to Libor plus 450 bps when net leverage is equal to or less than three times. Previous spread talk was 375 to 400 bps.

The Libor floor is unchanged at 1%, as is OID talk of 99. The 101 soft call protection was increased to 12 months from six months.

The company’s $315 million credit facility, decreased from $335 million, also includes a $50 million five-year ABL revolver.

Barclays, Bank of America Merrill Lynch and UBS AG are the bookrruners on the deal.

Proceeds will be used to refinance existing debt and fund a one-time distribution to equity holders.

Littlejohn & Co. is the sponsor.

Henniges is an Auburn Hills, Mich.-based supplier of highly engineered automotive sealing and anti-vibration systems for automotive applications.

Peak 10 tightens pricing

Peak 10 tightened down spreads and decreased the discounts on $460 million of term loans, according to a market source.

A $330 million seven-year first-lien covenant-light term loan (B2/B) saw spread talk reduced to Libor plus 400 basis points from 450 bps. The proposed OID moved to 99.5 from 99. The loan retains its 1% Libor floor as well as its 101 soft call protection for six months.

A $130 million eight-year second-lien covenant-light term loan (Caa2/CCC+) saw spread talk tighten to Libor plus 725 bps from 750 bps. The 1% Libor floor and 99 OID remained unchanged.

The call structures of both tranches remain unchanged.

Credit Suisse Securities (USA) LLC, RBC Capital Markets and Jefferies Finance LLC are the lead banks on the deal, with Credit Suisse left lead on the first-lien and RBC left lead on the second-lien.

The company’s $525 million credit facility also has a $65 million revolver (B2/B).

Proceeds will be used to help fund the buyout of the company by GI Partners from Welsh, Carson, Anderson & Stowe.

Peak 10 is a Charlotte, N.C.-based IT infrastructure and cloud provider.

Michaels Stores prices

Michaels Stores Inc. priced an $850 million covenant-light term loan B-2 due January 2020 (Ba3/B+) with a 300 basis points spread to Libor, a 1% Libor floor, at 99.5 on Friday, according to a market source.

The price came at the rich end of the 99 to 99.50 price talk. The spread and floor came on top of talk.

Timing was moved ahead from the previously announced June 10 deadline.

The term loan has 101 soft call protection for six months.

Deutsche Bank Securities Inc., J.P. Morgan Securities LLC, Barclays, Bank of America Merrill Lynch, Credit Suisse Securities (USA) LLC, Morgan Stanley Senior Funding Inc., Wells Fargo Securities LLC, Guggenheim and Macquarie Capital (USA) Inc. are the leads on the deal.

Proceeds will be used to refinance the company’s existing senior notes due 2018.

Michaels Stores is an Irving, Texas-based arts and crafts specialty retailer.

Arizona Chemical sets pricing

Arizona Chemical Inc. resized the tranches of its $880 million two-part term loan deal – shifting $55 million to the first-lien tranche from the second-lien tranche – and set final pricing on Friday, according to a market source.

The seven-year covenant-light first-lien term loan (BB-) was upsized from $730 million from $675 million. The Libor spread is 350 basis points, down from the 375 to 400 bps spread talk. The 1% Libor floor and the 99.50 OID were unchanged.

The eight-year covenant-light second-lien term loan (B-) was downsized to $150 million from $205 million. The Libor spread came at 650 bps, 25 bps below the tight end of the 675 to 700 bps spread talk. The discount was also cut, with the price moving to 99.50 from 99. The 1% Libor floor remained unchanged.

The company’s $940 million credit facility also includes a $60 million five-year revolver (BB-).

Goldman Sachs Bank USA, Credit Suisse Securities (USA) LLC, Jefferies Finance LLC and SunTrust Robinson Humphrey Inc. are the lead banks on the deal.

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

Arizona Chemical is a Jacksonville, Fla.-based biorefiner of pine chemicals.

Mauser sets bank meeting

Mauser Group set a Wednesday bank meeting for $870 million and €340 million of term loans, according to a market source.

The deal includes $656 million and €340 million of seven-year first-lien covenant-light term loans and a $405 million eight-year second-lien covenant-light term loan.

Further structural details, pricing and credit ratings remain to be determined.

The pro-rata tranche is a €150 million revolver.

Credit Suisse, Barclays, BNP Paribas, ING Capital LLC, Natixis and Nomura Securities International Inc. are leading the deal.

Proceeds will be used to fund the LBO of the Bruehl, Germany-based industrial packaging company by Clayton, Dubilier & Rice.

Internet Brands’ $680 million

Internet Brands, Inc. set a Wednesday bank meeting for $680 million of term loans, according to a market source.

The first-lien tranches, via left lead Credit Suisse Securities (USA) LLC, include a $435 million seven-year first-lien covenant-light term loan and a $50 million seven-year first-lien covenant-light delayed-draw term loan.

In addition there is a $195 million eight-year second-lien covenant-light term loan via left lead RBC Capital Markets.

The $755 million of credit facilities also includes a $75 million five-year revolver.

Proceeds will be used to fund the LBO of the El Segundo, Calif.-based operator of vertical software solutions and branded web sites by Kohlberg Kravis Roberts.

Rovi Solutions lender meeting

Rovi Solutions Corp. and Rovi Guides Inc. plan a lender presentation for Thursday at which the issuer will launch $1 billion of credit facilities via Morgan Stanley Funding, Inc. and BofA Merrill Lynch, according to a market source.

The facilities include a $200 million senior secured revolver, a $100 million term loan A and a $700 million term loan B.

The borrower is a Santa Clara, Calif.-based technology company.

Progressive call is Monday

Progressive-PMSI set a lender call on Monday for $210 million of term loan add-ons, according a market source.

The deal includes a $130 million incremental first-lien term loan due October 2020, priced at Libor plus 450 basis points with a 1% Libor floor and a reset six month 101 soft call.

In addition there is an $80 million incremental second-lien term loan due October 2021, priced at Libor plus 850 bps with a 1% Libor floor.

Both tranches are expected to be fungible with the existing loans.

Credit Suisse Securities (USA) LLC is the lead.

The Tampa, Fla.-based pharmacy benefit manager plans to use the proceeds to return capital to its equity holders.

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