Bentley Systems frees up for trading; Henry bid atop OID; primary ready to heat up in January

By Sara Rosenberg

New York, Dec. 23 - Bentley Systems Inc.'s credit facility broke for trading in an otherwise quiet pre-holiday secondary market on Thursday, with the term loan quoted above par, and levels emerged on Henry Co.'s first-lien term loan.

Over in the primary, things were quiet as people are getting ready for the holiday break, but activity is expected to pick up in January as some large deals - Attachmate Corp., Del Monte Foods Co., J. Crew Group Inc. and Walter Energy Inc. among them - are anticipated to come to market, along with some smaller deals.

Bentley Systems breaks

Bentley Systems' credit facility hit the secondary market on Thursday, with its $210 million term loan quoted at par ¼ bid, 101 offered on the open and then moving to par ½ bid, 101 offered, according to a trader.

Pricing on the term loan is Libor plus 425 basis points with a 1.5% Libor floor, and it was sold at an original issue discount of 99.

During syndication, the spread on the term loan was lowered from Libor plus 450 bps as a result of strong demand.

The $310 million credit facility (Ba3/BB+) also includes a $100 million revolver.

JPMorgan is the lead bank on the deal that will be used to fund a tender offer for shares.

Bentley is an Exton, Pa.-based provider of software to architects, engineers, constructors and owner-operators.

Henry first-lien levels emerge

Henry, an El Segundo, Calif.-based provider of roof coatings, cements, roofing systems, driveway maintenance products and sealants, saw its $135 million six-year first-lien term loan (B2/B+) quoted at 99½ bid on Thursday morning, after allocating on Wednesday, according to a source.

Pricing on the loan, as well as on a $20 million five-year revolver (B2/B+), is Libor plus 550 bps with a 1.75% floor, and the tranches were sold at a discount of 981/2.

Recently, the spread on the first-lien debt was flexed up from talk of Libor plus 500 bps to 525 bps.

The company's $195 million senior secured credit facility also includes a $40 million 61/2-year second-lien term loan (Caa1/CCC+) priced at Libor plus 900 bps with a 1.75% Libor floor that was sold at a discount of 98. There is call protection of 103 in year one, 102 in year two and 101 in year three.

UBS and GE Capital are the lead banks on the deal that is being used to refinance existing debt and to fund a dividend payment.

Attachmate readies launch

Switching to the primary, January is expected to bring with it some sizeable deals, including Attachmate's proposed $1.09 billion senior secured credit facility, according to a market source.

Credit Suisse, RBC, Goldman Sachs and Citadel are the lead banks on the deal, with Credit Suisse the left lead.

The facility consists of a $40 million revolver, an $825 million first-lien term loan and a $225 million second-lien term loan, according to filings with the Securities and Exchange Commission.

Proceeds, along with $425 million of equity, will be used to fund the acquisition of Novell Inc., a Waltham, Mass.-based developer, seller and installer of enterprise software, for $6.10 per share in cash in a transaction valued at $2.2 billion.

Closing on the acquisition is expected to occur in the first quarter of 2011, subject to, among other things, regulatory approvals, Novell stockholders' approval and clearance under the Hart-Scott-Rodino Act.

Attachmate is a Seattle-based provider of access and integration software for legacy systems.

Del Monte expected soon

Del Monte's proposed $3 billion senior secured credit facility is also anticipated to launch sometime in January, although it is thought that the bank meeting may came in the latter half of the month, according to a market source.

JPMorgan, Barclays, Morgan Stanley, Bank of America and KKR Capital Markets are leading the financing.

As outlined in filings with the SEC, the credit facility consists of a $2.5 billion term loan and a $500 million revolver.

The company is also planning $1.6 billion of senior notes, which are backed by a commitment for a $1.6 billion senior unsecured increasing rate bridge loan, and $1.7 billion of equity.

Del Monte being acquired

Proceeds from Del Monte's credit facility, notes and equity will be used to fund its buyout by Kohlberg Kravis Roberts & Co. LP, Vestar Capital Partners and Centerview Partners for $19.00 per share in cash. The transaction is valued at $5.3 billion, including the assumption of $1.3 billion of net debt.

There is a "go-shop" period until Jan. 8.

Completion of the acquisition is expected by the end of March, subject to customary closing conditions, including receipt of shareholder and regulatory approvals.

Del Monte is a San Francisco-based branded pet and consumer products company.

J. Crew funding buyout

Another LBO deal that is heard to possibly be hitting the market in January is J. Crew's $1.25 billion senior secured credit facility, according to a source.

Bank of America and Goldman Sachs are the joint lead arrangers and joint bookrunners on the deal.

The company is being acquired by TPG Capital and Leonard Green & Partners LP for $43.50 per share in cash, or a total of about $3 billion.

Closing on the acquisition is expected in the first half of fiscal 2011, subject to customary approvals and conditions and stockholder approval.

There is a "go-shop" period until Jan. 15.

J. Crew facility details

J. Crew's credit facility is expected to consist of a $250 million asset-based revolver and a $1 billion term loan.

Based on filings with the SEC, the revolver is expected at Libor plus 250 bps and the term loan is expected at Libor plus 450 bps.

The term loan is anticipated to provide for a 1.5% Libor floor.

Other funding for the transaction will come from $600 million of senior unsecured notes and $1.1 billion of equity.

The notes are backed by a commitment for a $600 million senior unsecured bridge loan priced at Libor plus 800 bps with a 1.5% Libor floor. Pricing on this loan would step-up over time to a specified cap.

J. Crew Group is a New York-based retailer of women's, men's and children's apparel, shoes and accessories.

Walter Energy targets January

Walter Energy is another company that is anticipated to bring a large deal in January, according to a source, with its senior secured credit facility sized at $2.725 billion.

The facility consists of a $375 million five-year revolver, a $600 million five-year term loan A and a $1.75 billion seven-year term loan B.

Pricing on the facility is expected at Libor plus 350 basis points if corporate ratings are Ba3/BB- and Libor plus 375 bps if the ratings are lower, filings with the SEC revealed.

The term loan B is expected to have a 1.5% Libor floor and the revolver has a 50 bps unused fee.

Amortization on the term loan A is $30 million in year one, $60 million in year two, $90 million in year three, $120 million in year four and $300 million in year six, while amortization on the term loan B is 1% per year with the balance due at maturity.

Walter Energy lead banks

Morgan Stanley, Credit Agricole and the Bank of Nova Scotia are the lead arrangers on Walter Energy's deal, with Morgan Stanley the administrative agent.

Financial covenants under the credit agreement include a minimum interest coverage ratio and a maximum leverage ratio.

Proceeds will be used to help fund the acquisition of Western Coal Corp. for C$11.50 per share, to refinance existing debt and for working capital.

Walter Energy is a Tampa, Fla.-based producer and exporter of metallurgical coal for the steel industry. Western Coal is a Vancouver, B.C.-based producer of metallurgical coal.

Smaller deals on tap as well

In addition to the billion-plus dollar deals that are expected as January business, there are some other deals slated for the month already, too, such as Houghton International Inc.

Houghton is expected to hold a bank meeting around the mid-January timeframe to launch its proposed $365 million senior secured credit facility (B+) that consists of a $50 million revolver and a $315 million term loan B.

Deutsche Bank, Bank of Ireland and GE Capital are the joint lead arrangers on the deal, with Deutsche the left lead.

On a preliminary basis, some pro rata lenders have already been approached about the transaction. The expectation is that the revolver will fill out fairly easily and that these lenders may take some of the term loan as well, the source added.

Houghton buying Shell unit

Proceeds from Houghton's credit facility will be used to refinance existing senior secured debt and to fund the acquisition of Royal Dutch Shell plc's metalworking and metal rolling oils business, a specialty fluid manufacturer in the metal working and metal rolling fluids marketplace.

The transaction is anticipated to close in early 2011, subject to regulatory approval.

Without synergy adjustments, senior leverage will be around the mid-2 times, and total leverage will be in the high-3 times.

Houghton is a Valley Forge, Pa.-based developer and producer of specialty chemicals, oils and lubricants for the metalworking, automotive, steel and aluminum industries.

Electrical Components launch

Meanwhile, Electrical Components International has scheduled a bank meeting for Jan. 5 to launch a proposed $190 million credit facility that consists of a $30 million revolver and a $160 million term loan, according to a market source.

Credit Suisse is the lead bank on the deal that will be used to refinance existing debt.

Electrical Components is a St. Louis-based provider of wire harnesses, subassemblies and assembly services.

CPI prepares loan

CPI International Inc.'s buyout financing, which is expected to include a $178 million senior secured credit facility, is another transaction that is targeted to launch in January, according to a market source.

The credit facility, led by UBS, consists of a $148 million term loan and a $30 million revolver, filings with the SEC said.

The company is being acquired by Veritas Capital for $19.50 per share in cash in a transaction that is subject to stockholder approval and a number of customary regulatory and other conditions.

Other funds for the roughly $525 million buyout will come from $220 million of equity and $215 million of senior notes that are backed by a commitment for a $215 million senior unsecured bridge loan.

CPI is a Palo Alto, Calif.-based provider of microwave, radio frequency, power and control services for critical defense, communications, medical, scientific and other applications.

Encompass plans term loan

Also on the list for January is Encompass Digital Media Inc.'s proposed senior secured credit facility that will include a $175 million term loan, according to a market source.

Macquarie Capital is the lead bank on the deal that will be used to fund the acquisition of the content distribution business of Ascent Media Corp. for total consideration of about $120 million, including about $113 million in cash and the assumption of certain debt and obligations totaling roughly $7 million.

As part of the transaction, Tennenbaum Capital Partners, a current lender and equity holder in the company, will roll over its debt into a second-lien loan.

In addition, the Los Angeles-based digital media services provider has received a commitment from lenders under its existing secured credit facility for an amendment that would support the consummation of the acquisition.

Closing is expected in February, subject to approval by Ascent shareholders, regulatory clearances and the transfer of certain FCC licenses.

ResCare closes

In other news, Onex Partners completed its acquisition of ResCare Inc., which was funded in part by a new $190 million term loan B, according to a news release.

Pricing on the B loan is Libor plus 550 bps with a 1.75% Libor floor and an original issue discount of 98. There is 101 soft call protection for one year.

At launch, the deal was talked at Libor plus 450 bps to 475 bps with a 1.5% floor and a discount of 981/2. Prior to pricing firming up, there had been chatter that talk had moved into the Libor plus low 500 bps area.

JPMorgan and Bank of America acted as the lead banks on the deal that is also being used to refinance existing debt.

ResCare is a Louisville, Ky.-based provider of home care to the elderly and persons with disabilities.

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