Wrigley nets orders; TriZetto tweaks tranching again; Invitrogen floats pro rata talk; Airlines soar

By Sara Rosenberg

New York, July 23 - Wrigley Co.'s credit facility is being met with strong demand by investors, with the term loan B more than half done already when looking at firm orders and oversubscribed when looking at indicated interest.

In other news, TriZetto Group Inc. made some changes to tranche sizes under its credit facility for a second time and price talk on Invitrogen Corp.'s pro rata tranches has started to make its way around the market now that the deal is in the process of its senior managing agents round.

Switching to the secondary market, airline names, such as Northwest Airlines Corp., Delta Air Lines Inc., UAL Corp. and US Airways Group Inc., were noticeably stronger in an overall cash market that had a positive tone as well.

Wrigley's credit facility is going extremely well in terms of syndication as the multi-billion term loan B has received a number of orders even before the deal's official Wednesday bank meeting took place, according to a buyside source.

"It's a blow out. Apparently orders have been coming in very, very early. This deal has been whispered in the market for sometime now," the source said.

"I heard some orders came in for tickets of $100 million pre the bank meeting - some months ago. With shadow orders, deal is oversubscribed. In terms of firm orders, there is really only $1.6 [billion] of the $3.6 billion available," the source continued.

The source went on to explain that shadow orders are people who have indicated their interest in terms of size, but are not confirmed until they complete their credit process.

The $3.6 billion term loan B is talked at Libor plus 375 basis points with a 3% Libor floor and an original issue discount of 97.

Initially, based on filings with the Securities and Exchange Commission, it was thought that the B loan would be sized at $4.45 billion, but it was reduced prior to launch to account for a bond issue being left in place.

And, back in May, when the structure on the deal first emerged, sources heard rumors that the term loan B was expected around the Libor plus 400 bps context, but nothing official had been announced at that time.

Wrigley's $4.85 billion credit facility also includes a $250 million revolver and a $1 billion term loan A, with both of these tranches talked at Libor plus 325 bps.

Goldman Sachs is the lead arranger on the deal, and Barclays, GE Capital, Rabobank and Sumitomo have already signed on as co-arrangers.

Proceeds will be used to help fund the merger of Wm. Wrigley Jr. Co. and Mars Inc., and to provide for ongoing working capital and general corporate purposes.

Mars will pay $80 cash for each share of Wrigley common stock and class B common stock in a transaction valued at about $23 billion.

As part of the merger, Mars received a separate debt commitment from JPMorgan, Bank of America, BNP Paribas, Citigroup, Deutsche Bank, Lloyds TSB Bank and RBS Securities that provides for a $12 billion senior unsecured credit facility.

The Mars facility, which is expected to be investment grade, consists of a $1.5 billion revolver, an $8.5 billion term loan and a $2 billion bridge loan, according to filings with the SEC.

Proceeds from the Mars facility will be used to finance the equity contribution from Mars, the repayment or refinancing of certain Mars debt and for general corporate purposes.

Also, Berkshire Hathaway has agreed to provide $4.4 billion in subordinated debt financing to the surviving corporation in the merger and to invest $2.1 billion in equity securities.

Confections company, Wrigley Co., will be operated as a separate, stand-alone subsidiary of Mars, keeping its headquarters in Chicago. Mars is a McLean Va.-based producer of confectionery, food and petcare products.

TriZetto revises structure

TriZetto came out with a second round of changes to tranche sizes under its credit facility that resulted in the total senior secured deal being increased to $457.5 million from $442.5 million, according to a market source.

Under the latest modifications, the six-year revolver was upsized to $65 million from $50 million, while pricing was left in line with initial talk of Libor plus 400 bps, the source said. This change was made to improve liquidity.

In addition, the six-year term loan A was downsized to $77.5 million from a most recent size of $92.5 million and an original size at launch of $112.5 million, the source continued, adding that pricing on this tranche also remained unchanged at Libor plus 425 bps.

And, lastly, the seven-year term loan B was upsized to $315 million from a most recent size of $300 million and an original size at launch of $280 million, the source remarked. As was the case from the start, pricing on the term loan B is set at Libor plus 450 bps.

Like before, the decision was made to increase the term loan B and decrease the term loan A as a result of the term loan B being significantly oversubscribed.

Both the term loan A and the term loan B still have a 3% Libor floor and are being offered to investors at an original issue discount of 98.

Allocations on the credit facility are expected to go out on Thursday, the source concluded.

Sources previously told Prospect News that some things working in favor of the deal include that TriZetto is a public company that already has a lot of investors in its convertibles and it's a strong credit in the health care sector, which is a favorable industry right now.

RBC Capital Markets is the lead arranger and bookrunner on the deal, with GE Capital the syndication agent.

Proceeds will be used to help fund the acquisition of the company by funds advised by Apax Partners along with BlueCross BlueShield of Tennessee and the Regence Group for $22 per share in cash in a transaction valued at about $1.4 billion.

The financing also includes $187.5 million of private senior unsecured mezzanine notes and equity. The equity contribution was increased by $5 million to $954.5 million to further enhance liquidity and will be cash on hand on the balance sheet at close.

The mezzanine debt has been well received by investors and was already fully circled before the bank deal was even officially launched into syndication.

Total leverage is around 5.5 times.

The deal was privately rated. Corporate ratings are in the high single-B profile. Senior secured ratings have a four-B profile.

The acquisition is subject to customary closing conditions, including shareholder and regulatory approvals.

In April, the Federal Trade Commission granted early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act in connection with the transaction. And, on July 14, TriZetto's stockholders approved the transaction, with 34.2 million shares, or 99.8% of shares voted and 79.2% of shares outstanding, voting for the proposal.

TriZetto is a Newport Beach, Calif., developer, licenser and supporter of proprietary and third-party software products for the health care industry.

Invitrogen pro rata guidance surfaces

Invitrogen's proposed revolver and term loan A tranches have begun seeing the emergence of price talk now that the banks on the deal started meeting with potential senior managing agents last week, according to a market source.

The $250 million revolver and the $1.5 billion term loan A are both being guided around the Libor plus 250 bps area, the source said.

Price talk on the company's $900 million term loan B has not yet come out, the source added.

In addition, details on the tranching of the deal are new as previously all that was known, based on filings with the SEC, was that there would be a $250 million and $2.4 billion in term loans.

The proposed $2.65 billion senior secured credit facility is currently expected to hold a retail bank meeting sometime in September.

Bank of America, UBS and Morgan Stanley are the joint lead arrangers and joint bookrunners on the facility, with Bank of America the left lead and administrative agent, and UBS and Morgan Stanley the co-syndication agents.

Proceeds will be used to help fund the acquisition of Applied Biosystems, help repay all of Invitrogen's debt, other than its convertible notes and certain other exceptions, and provide for ongoing working capital and general corporate purposes of the combined company.

Invitrogen is buying Applied Biosystems from Applera Corp. in a cash and stock transaction valued at $6.7 billion.

Applera-Applied Biosystems shareholders will receive $38.00 for each share of stock they own in the form of Invitrogen common stock and cash. The expected split between cash and stock is 45% and 55%, respectively.

The combined company expects to generate strong operating cash flow and rapidly pay down debt.

Total debt at the combined company will be around $3.5 billion or 3.6 times debt to EBITDA.

The transaction is targeted to close in the fall, subject to approval by Invitrogen and Applera-Applied Biosystems shareholders and the satisfaction of customary closing conditions, completion of the previously filed and announced separation of Applera's Celera group, and regulatory approvals. It is not subject to financing.

At the start of this month, Applera announced that it completed the separation of its Celera business and the remaining Applera business, which is what Invitrogen is purchasing, changed its name to Applied Biosystems.

Following the close of the transaction, the combined company will be named Applied Biosystems and will have its corporate headquarters in Carlsbad, Calif.

Invitrogen is a provider of life science technologies for disease research, drug discovery and commercial bioproduction. Applied Biosystems is a developer and marketer of instrument-based systems, consumables, software and services.

Pittsburgh Casino downsizes deal

Pittsuburgh Casino came out with some new changes to its credit facility, this time reducing tranche sizes and lowering pricing on the last-out tranche, according to a market source.

Under the revisions, the first-out term loan tranche (BB-) is now sized at $305 million, down from $355 million, while pricing was left unchanged at Libor plus 600 bps.

Meanwhile, the 41/2-year last-out term loan tranche (CCC+) is now sized at $130 million, down from $140 million, and pricing was cut to Libor plus 600 bps plus 400 bps PIK from Libor plus 600 bps plus 500 bps PIK.

Both tranches still have a 3.25% Libor floor and are being sold to investors at an original issue discount of 94.

As before, the first-out loan is non-callable for two years, then at 102 in year three, and the last-out loan is non-callable for three years, then at 103 in year four and 102 through maturity.

Credit Suisse is the lead bank on the deal that will be used to help fund the construction of the Pittsburgh casino.

The downsizing of the term loan debt was a result of more equity being used for the transaction. The casino's recently announced new controlling investors, Neil Bluhm and Walton Street Capital LLC, will put up $170 million in equity as opposed to $120 million.

Last week, the credit facility had been revised to the first-out, last-out structure around the time that reports emerged about the new majority owners.

Originally, Don Barden, chairman, president and chief executive officer of Majestic Star Casino LLC, was going to be the majority owner of the casino but he gave up his majority ownership for a minority stake.

The project was heard to have stalled under Barden's ownership as a result of insufficient funds.

The credit facility for this project was first launched in April - when it was still Barden's project - under the borrower name PITG Gaming as a $10 million revolver talked at Libor plus 600 bps, a $370 million first-lien term loan talked at Libor plus 600 bps and a $250 million second-lien term loan talked at Libor plus 1,300 bps, of which 1,000 bps was cash and 300 bps was PIK, and all tranches had the 3.25% Libor floor. The first-lien term loan was being offered in the 96 to 97 area and the second-lien term loan was being offered at 96. Call protection on the first-lien term loan was non-callable for 18 months, then at 102, 101, and call protection on the second-lien term loan was non-callable for two years, then at 106, 104, 102.

Then in early May, the deal was changed with the first-lien term loan upsized to $380 million, the discount widened to 94 and call protection became non-callable for 2½ years, then at 102, 101, the second-lien term loan upsized to $260 million, the discount widened to 92, pricing increased to Libor plus 1,500 bps comprised of Libor plus 1,000 bps cash plus 500 bps PIK, and call protection became non-callable for 2½ years, then at 109, 107, 105.

And, in late May, the deal was revised once again, this time upsizing the first-lien term loan to $480 million and downsizing the second-lien term loan to $150 million.

Following that, news on the deal was scarce until the new ownership was announced.

Airlines fly higher

Over in trading news, Northwest, Delta, UAL and US Airways were all stronger on Wednesday by a point or more, while the cash market in general, although better on the day, was only up about a half a point, according to traders.

"Everyone is looking for dollar discount," one trader said. "People think the market will rally, so you buy the biggest discount you can find."

Eagan, Minn.-based Northwest Airlines saw its term loan quoted at 75 bid, 77 offered, up from 74 bid, 76 offered, traders said.

On Wednesday, Northwest reported second quarter numbers including a net loss of $377 million, or $1.43 per share, versus net income of $2.1 billion last year, which included $1.9 billion related to reorganization items. Excluding non-cash impairment charge, net income for the quarter was $170 million, compared to net income of $205 million last year before the impact of reorganization items.

Operating loss for the quarter was $300 million, compared to operating income last year of $357 million.

"The unprecedented run-up in oil prices continues to pose great challenges for Northwest Airlines and the entire airline industry. In response, we have acted swiftly to reduce capacity, preserve liquidity, aggressively manage our costs and grow revenue through fare actions and additional fees and charges," said Doug Steenland, president and chief executive officer, in a news release.

Excluding taxes and out-of-period mark-to-market adjustments on fuel hedges, the company paid $3.45 per gallon for jet fuel in the second quarter, compared to $2.04 a gallon in the second quarter of 2007, an increase of 69.3%. Total fuel costs, excluding out-of-period hedge gains, increased by $637 million versus the prior year.

Northwest ended the quarter with $3.3 billion in unrestricted cash and $424 million in restricted cash. The restricted cash balance includes a funded tax trust of $255 million that was established in 2002.

In addition, earlier this month, the company closed a financing of unencumbered aircraft and engines that generated about $180 million in additional liquidity. These proceeds will be reflected in the third quarter ending cash balance.

Moving on to Atlanta-based Delta Air Lines, its first-lien term loan was quoted at 81 bid, 83 offered, up from 80 bid, 82 offered, and its second-lien term loan was quoted at 64 bid, 66 offered, up from 63 bid, 65 offered, traders remarked.

In April, Northwest announced an agreement to merge with Delta Air Lines, and since the announcement, integration planning teams comprised of leaders from both companies have been created. Northwest said on Wednesday that these teams are making significant progress in the efforts to integrate the two carriers after the merger closes, which is expected to occur in the fourth quarter.

As for Chicago-based UAL, it saw its term loan quoted at 73 bid, 74 offered, up from 71 bid, 73 offered.

UAL released its second quarter results on Tuesday, including a net loss of $2.73 billion, or $21.47 per diluted share, versus net income of $274 million, or $1.83 per diluted share, in the same period last year. Excluding certain largely non-cash accounting charges, the net loss was $151 million, or $1.19 per diluted share, $425 million worse than in 2007.

Operating loss for the quarter was $2.69 billion, compared to operating income of $537 million last year. Excluding the accounting charges, the company generated an operating loss of $87 million in the quarter.

Lastly, Tempe, Ariz.-based US Airways saw its term loan quoted at 66 bid, 67 offered, up from 63½ bid, 64½ offered, traders added.

US Airways also came out with its second quarter results on Tuesday, reporting a net loss of $567 million, or $6.16 per share, compared to a net profit of $263 million, or $2.77 per diluted share for the same period last year. Excluding net special items of $466 million, the company reported a net loss of $101 million, or $1.11 per share, compared to a net profit excluding special items of $261 million, or $2.74 per diluted share last year.

US Airways' operating loss for the quarter was $536 million, compared to operating income of $289 million last year.

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