Tenneco, Protection break; AL, Hearthside set talk; New Development, Styron, Spectrum tweak deals

By Sara Rosenberg

New York, June 3 - Tenneco Inc. and Protection One Inc. saw their news deals hit the secondary market on Thursday, with both companies' term loans quoted above their original issue discount prices, and Neiman Marcus Inc.'s term loan was stronger with May revenues results.

Over in the primary market, AL Gulf Coast Terminals LLC and Hearthside Food Solutions came out with price talk on their credit facilities as both deals were presented to lenders during the session.

In addition, New Development Holdings LLC made some changes to its term loan, including increasing pricing and adding soft call protection, Styron reworked tranching and pricing on its credit facility, and Spectrum Brands Inc. revised the size and pricing on its term loan.

Also, Jack in the Box Inc.'s revolver is looking like it will be nicely oversubscribed by the time syndication wraps in the next day, and Jack Henry & Associates Inc.'s credit facility got done at initial terms.

Tenneco frees to trade

Tenneco's $150 million six-year term loan B (Ba2/BB-/BB+) started trading on Thursday, with levels quoted at 99½ bid, par ¼ offered, according to a trader.

Pricing on the term loan is Libor plus 475 basis points with no Libor floor, and it was sold at an original issue discount of 99.

JPMorgan and Bank of America are the lead bank on the deal that will be used to refinance the company's existing $128 million term loan A due in March 2012.

In addition, the company is looking to extend the maturity of all or a significant portion of its $550 million revolver to May 2014 from March 2012, with the extended revolver priced at Libor plus 400 bps to 550 bps with a 50 bps to 75 bps commitment fee, based on consolidated net leverage.

Tenneco is a Lake Forest, Ill.-based designer, manufacturer and marketer of emission control and ride control products and systems for the automotive original equipment market and the aftermarket.

Protection One breaks

Also freeing up for trading was Protection One's credit facility, with the $390 million six-year term loan quoted at 99 bid, 99¾ offered, according to a trader.

Pricing on the term loan is Libor plus 425 bps with a 1.75% Libor floor, and it was sold at an original issue discount of 981/2.

The company's $415 million senior secured credit facility (BB) also includes a $25 million five-year revolver with a 75 bps commitment fee.

Financial covenants under the facility include a maximum total leverage ratio, a minimum interest coverage ratio and a maximum amount of capital expenditures.

JPMorgan and Barclays are the lead banks on the deal.

Protection One being acquired

Proceeds from Protection One's bank debt, $150 million of mezzanine financing and $340 million in equity will be used to fund the buyout of the company by GTCR for $15.50 per share. The total purchase price, including the refinancing of debt, is roughly $828 million.

The mezzanine notes are priced at 12.5% in cash plus 1% PIK, and TCW/Crescent Mezzanine has committed to purchase the debt.

Closing is expected in the second quarter, subject to minimum levels of participation in the tender offer and regulatory approvals.

Protection One is a Lawrence, Kan.-based provider of electronic security services to the residential, commercial and wholesale markets.

Neiman up on numbers

In more secondary happenings, Neiman Marcus' term loan gained some ground in trading after the company released preliminary revenues for May, according to traders.

The term loan was quoted by one trader at 92¼ bid, 93¼ offered, up from 90 7/8 bid, 91 7/8 offered, by a second trader at 91¾ bid, 92¾ offered, up from 91½ bid, 92½ offered, and by a third trader at 91¾ bid, 92½ offered, up from 91¼ bid, 92 offered.

For the month of May, the company reported total revenues of $267 million, up 8.8% from $246 million in the previous year, and comparable revenues were $265 million, up 7.8% from $246 million.

Neiman Marcus is a Dallas-based high-end specialty retailer.

AL Gulf Coast talk emerges

Moving to the primary market, AL Gulf Coast held a bank meeting on Thursday to officially kick off syndication on its proposed $305 million senior secured term loan (Ba2/BBB-), and in connection with the launch, price talk was announced, according to a source.

The holdco term loan is being guided in the Libor plus 375 basis points to 400 bps range with a 1.5% Libor floor and an original issue discount in the 98 to 98½ context, the source said.

Barclays is the lead bank on the deal that will be used to refinance existing holdco debt, fund a debt service reserve account and pay a dividend to the company's sponsor, ArcLight Capital Holdings LLC.

Channelview, Texas-based AL Gulf Coast owns 100% interest in the Houston Fuel Oil Terminal Co. LLC, a provider of crude and residual fuel oil storage in the Gulf of Mexico.

Hearthside Food price talk

Another deal to launch with a bank meeting on Thursday was Hearthside Food Solutions, at which time price talk was revealed that was higher than the guidance that was previously being circulated, according to a market source.

The $35 million five-year revolver and a $245 million six-year term loan were both launched at Libor plus 550 bps with a 1.75% Libor floor, and the term loan is being offered at an original issue discount of 98, the source said.

By comparison, prior to launch, price talk on both tranches was being whispered at Libor plus 500 bps with a 1.75% floor.

Rabobank International and GE Capital are the bookrunners and lead arrangers on the $280 million senior secured deal, with Bank of America also a lead arranger. GE is the syndication agent, and Bank of America and Fifth Third are co-documentation agents.

Hearthside Food funding acquisitions

Proceeds from Hearthside Food's credit facility will be used to help fund the acquisition of Consolidated Biscuit Co., a McComb, Ohio-based producer of cookies, crackers, toaster pastries, fruit and cereal bars, ice cream cones, nuts and candies.

In addition, proceeds will be used to fund the acquisition of the cereal division of Golden Temple of Oregon, a Eugene, Ore.-based manufacturer and marketer of all-natural ready-to-eat cereals, bulk granola and granola snacks.

Commitments are due from lenders on June 18.

Senior secured leverage is 3.2 times and total leverage is 4.2 times.

Hearthside, a Wind Point Partners portfolio company, is a Downers Grove, Ill.-based manufacturer of specialty food products such as granola bars, croutons, cereals, popcorn and snack mixes.

New Development revises loan

New Development Holdings, a subsidiary of Calpine Corp., came out with some investors friendly changes on its $1.3 billion seven-year amortizing term loan and is asking for recommitments by noon on Friday, according to a market source.

Under the modifications, pricing on the term loan was flexed up to Libor plus 550 bps from Libor plus 350 bps, and 101 soft call protection was added for one year, the source said.

At launch, the term loan was being talked at Libor plus 350 bps or Libor plus 375 bps, depending on where ratings fell out, but once the facility ratings of Ba3/BB- emerged, the price talk firmed at Libor plus 350 bps.

The 1.5% Libor floor and original issue discount of 98 on the term loan were both left unchanged, the source added.

New Development lead banks

Credit Suisse, Citigroup and Deutsche Bank are the lead banks on New Development Holdings' credit facility, with Credit Suisse the left lead.

The $1.4 billion deal also includes a $100 million revolver.

Proceeds, along with $535 million of corporate cash, will be used to help fund the purchase of 4,490 MW of power generation assets from Pepco Holdings Inc. for $1.65 billion plus adjustments.

Pro forma net debt to adjusted EBITDA as of Dec. 31 is 4.8 times.

Closing on the acquisition is expected to take place by June 30, subject to customary conditions, approval from the Federal Energy Regulatory Commission and antitrust review under the Hart-Scott-Rodino Act. No shareholder approval is required.

Calpine is a Houston-based power generation company.

Styron changes structure

Styron revised the structure of its $1.04 billion credit facility by eliminating the $125 million second-lien term loan (B-) and upsizing the first-lien term loan (BB-) to $800 million from $675 million, according to a market source.

The deal still includes a $240 million revolver (BB-).

Deutsche Bank, Barclays and HSBC are the lead banks on the deal that will be used to help fund the buyout of the company by Bain Capital from Dow Chemical for $1.63 billion.

Under the agreement, Dow Chemical has an option to receive up to 15% of the equity of Styron as part of the sale consideration.

The transaction is expected to close by August, subject to the completion of customary conditions and regulatory approvals.

Styron pricing revised, too

On top of reworking tranching, Styron revised pricing on its first-lien term loan, sweetening the deal for lenders, the source said.

Price talk on the first-lien term loan is now in the Libor plus 550 bps area, up from Libor plus 475 bps and the original issue discount guidance was moved to 98½ to 99 from just 99. The 1.75% Libor floor was left intact.

Furthermore, 101 soft call protection for one year was added to the tranche.

The second-lien term loan that was cancelled was being talked at Libor plus 775 bps with a 1.75% Libor floor and an original issue discount in the 98 to 99 area. The debt was going to carry call protection of 103 in year one, 102 in year two and 101 in year three.

Commitments towards the diversified chemicals and plastics company's facility are still due from lenders on Monday.

Spectrum Brands reworks deal

Another deal to come out with a round of changes on Thursday was Spectrum Brands, as the six-year term loan (B2/B) was downsized and pricing was modified, according to a market source.

The term loan is now sized at $750 million, down from $1 billion, and, as a result, the company's senior secured notes offering was increased to $750 million from $500 million.

When the deals were first announced, the current term loan and bond sizes were what the company was expecting to obtain. Prior to launch, however, the term loan was upsized by $250 million and the bond offering was reduced by $250 million.

As for pricing on the term loan, it was increased to Libor plus 650 bps from Libor plus 450 bps and the original issue discount was widened to 98 from 99. The 1.5% Libor floor was left unchanged.

Also, the term loan saw the addition of 101 soft call protection for one year, the source added.

Amortization on the term loan is 2.5% in year one followed by 5% per annum in subsequent years.

Spectrum Brands sets recommit deadline

Recommitments towards Spectrum Brands' revised credit facility are due from lenders by 11 a.m. ET on Friday.

The company's now $1.05 billion, down from $1.3 billion, credit facility also includes a $300 million ABL revolver.

Credit Suisse, Bank of America and Deutsche Bank are the lead banks on the deal, with Credit Suisse the left lead.

Proceeds from the credit facility and the bonds will be used to help fund the company's merger with Russell Hobbs Inc. and to refinance Spectrum Brands' existing senior debt and a portion of Russell Hobbs' existing senior debt.

Following the refinancing of Spectrum Brands' term loan debt and ABL facility, the new combined entity is expected to have a leverage ratio of 3.8 times forecasted adjusted EBITDA for fiscal 2010.

Spectrum Brands closing this month

The merger of Spectrum Brands and Russell Hobbs is expected to close in June, subject to approval by holders of a majority of Spectrum Brands' common stock, which will be sought at a special meeting on June 11.

Under the merger agreement, current shareholders of Spectrum Brands will receive one share in the new combined company for each share they hold, and, as part of the transaction, Harbinger has agreed to convert its existing about $158 million of Russell Hobbs' term debt and $207 million of Russell Hobbs' preferred stock into common stock of the new company at a price of $31.50 per share. Following the closing of the transaction, Harbinger is expected to own 63.7% of the combined entity.

The all-stock transaction values Spectrum Brands at an enterprise value of $2.6 billion, or $965 million net of debt, which equates to $31.50 per share net of outstanding debt, and privately held Russell Hobbs at an enterprise value of $675 million, or $661 million net of debt.

Spectrum Brands is an Atlanta-based consumer products company. Russell Hobbs is a Miramar, Fla.-based marketer and distributor of a broad range of branded small household appliances.

Jack in the Box well received

Jack in the Box's $400 million revolving credit facility has seen good demand from investors, creating the expectation that it "should be well oversubscribed" when the syndication process ends, which is likely to occur on Friday, according to a market source.

The facility is priced at Libor plus 250 bps and will be used to refinance an existing revolver.

Wells Fargo is the lead bank on the deal.

Jack in the Box is a San Diego-based restaurant company that operates and franchises Jack in the Box and Qdoba Mexican Grill restaurants.

Jack Henry wraps

Jack Henry & Associates completed syndication of its $300 million credit facility at original terms and is anticipating closing on the deal on Friday, according to a market source.

The deal is comprised of a $150 million revolver and a $150 million term loan A, with both tranches priced at Libor plus 250 bps.

Wells Fargo and Bank of America are the lead banks on the deal, with Wells Fargo the left lead.

Proceeds will be used to help fund the acquisition of iPay Technologies Holding Co. LLC for $300 million.

Jack Henry is a Monett, Mo.-based provider of computer systems and ATM/debit card/ACH transaction processing services primarily for financial services organizations. iPay is an Elizabethtown, Ky.-based provider of online bill payment services.

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