Life Time Fitness, Dell, Physiotherapy, Penn Engineering break; J. Crew falls on earnings

By Sara Rosenberg

New York, June 4 – Life Time Fitness Inc. (LTF Merger Sub Inc.) firmed the spread on its term loan B at the low end of revised guidance, and the debt emerged in the secondary market on Thursday above its original issue discount.

In more trading happenings, deals from Dell Inc., Physiotherapy Associates and Penn Engineering & Manufacturing Corp. freed up, and J. Crew Group Inc.’s term loan was softer with the release of disappointing earnings.

Back in the primary market, Capstone Logistics LLC lowered the spread on its incremental first-lien term loan and made the debt fungible with its existing loan, and Aristotle Corp. and Ascend Learning released talk with launch.

Life Time sets spread

Life Time Fitness finalized pricing on its $1.25 billion seven-year covenant-light term loan B at Libor plus 325 basis points, the tight end of the revised Libor plus 325 bps to 350 bps talk and down from initial talk of Libor plus 350 bps to 375 bps, according to a market source.

As before, the term loan B has a 1% Libor floor and an original issue discount of 99.5. The debt also includes 101 soft call protection for six months.

The term loan had been recently upsized from $1.1 billion as a result of the company’s senior notes offering being downsized to $450 million from $600 million.

Along with the term loan B, the $1.5 billion credit facility (B1/BB-) provides for a $250 million revolver.

Deutsche Bank Securities Inc., Goldman Sachs Bank USA, Jefferies Finance LLC, BMO Capital Markets Corp., RBC Capital Markets LLC, Macquarie Capital (USA) Inc., Nomura and Mizuho are leading the deal.

Life Time starts trading

With final terms in place, Life Time Fitness’ credit facility made its way into the secondary market, and the term loan B was seen quoted at 99¾ bid, par offered, a trader remarked.

Proceeds from the credit facility, bonds and a $900 million sale leaseback will be used to help fund the buyout of the company by Leonard Green & Partners and TPG for $72.10 per share in cash. The transaction is valued at more than $4 billion.

Other key investors in the buyout include LNK Partners and Life Time Fitness chairman, president and chief executive officer Bahram Akradi, who will remain in his role and has committed to make a rollover investment of $125 million in common stock.

Closing is expected on Wednesday, subject to customary conditions.

Life Time Fitness is a Chanhassen, Minn.-based operator of sports, professional fitness, family recreation and spa destinations.

Dell tops OID

Dell’s loans broke during the session, with the roughly $4.36 billion term loan B-2 due April 29, 2020 quoted at par bid, par ¼ offered, a trader said.

Pricing on the U.S. term loan B-2, as well as on an €825 million term loan due April 29, 2020, is Libor/Euribor plus 325 bps with a 0.75% floor, and the debt was issued at a discount of 99.75. There is 101 soft call protection for six months.

Recently, the U.S. term loan was upsized from $3 billion, the euro term loan was upsized from €622 million, and pricing was set at the high end of the Libor/Euribor plus 300 bps to 325 bps talk.

Bank of America Merrill Lynch, J.P. Morgan Securities LLC, Citigroup Global Markets Inc., UBS AG and Goldman Sachs Bank USA are leading the deal that will be used to refinance a U.S. term loan B priced at Libor plus 350 bps with a 1% Libor floor, a euro term loan priced at Euribor plus 375 bps with a 1% floor and a term loan C priced at Libor plus 275 bps with a 1% Libor floor.

Dell is a Round Rock, Texas-based provider of technology and business products and services.

Physiotherapy frees up

Physiotherapy Associates’ credit facility began trading too, with the $105 million six-year first-lien term loan quoted at 99½ bid, par offered and the $45 million seven-year second-lien term loan quoted at par bid, 101 offered, according to a trader.

Pricing on the first-lien term loan is Libor plus 475 bps with a 1% Libor floor, and it was sold at an original issue discount of 99.5.

The second-lien term loan is priced at Libor plus 850 bps with a 1% Libor floor and was issued at a discount of 99. There is hard call protection of 102 in year one and 101 in year two.

During syndication, the discount on the first-lien term loan was tightened from 99, and pricing on the second-lien loan was lowered from talk of Libor plus 875 bps to 900 bps, while the issue price was revised from 98.5.

Physiotherapy getting revolver

Along with the first- and second-lien term loans, Physiotherapy Associates’ $175 million credit facility includes a $25 million five-year revolver priced at Libor plus 475 bps with a 1% Libor floor.

GE Capital Markets is leading the deal that will be used to refinance existing debt remaining from a bankruptcy restructuring in 2013.

Physiotherapy Associates is an Exton, Pa.-based provider of outpatient rehabilitation services and orthotics and prosthetics services.

Penn Engineering breaks

Penn Engineering’s repriced loans freed up as well, with the $219 million first-lien covenant-light term loan due August 2021 quoted at par bid, par ½ offered, a trader said.

Pricing on the U.S. term loan, as well as on a €226 million first-lien covenant-light term loan due August 2021, is Libor/Euribor plus 300 bps with a 1% floor, and the debt was issued at par. There is 101 soft call protection for six months.

Credit Suisse Securities (USA) LLC and RBS Citizens are leading the deal.

The repricing is taking pricing on the U.S. and euro term loans down from Libor/Euribor plus 350 bps with a 1% floor.

Penn Engineering is a Danboro, Pa.-based manufacturer of highly engineered specialty fasteners.

J. Crew retreats

Also in trading, J. Crew’s term loan dropped following the release of first-quarter results, with one trader quoting the debt at 87½ bid, 88½ offered, down from 90 bid, 91 offered, and a second trader quoting the loan at 87 bid, 88 offered, down from 89¾ bid, 90¾ offered.

For the first quarter, the company reported a net loss of $462.4 million compared to a net loss of $30.1 million in the first quarter last year, and operating loss of $520.6 million versus operating income of $34 million in the prior year.

Also, revenues for the quarter were $581.8 million, down 2% from $592 million in the 2014 first quarter, and adjusted EBITDA was $44.8 million compared to $64.8 million last year.

Furthermore, the company said in a news release that it experienced a further significant reduction in the profitability of its J. Crew reporting unit, primarily driven by performance of women’s apparel and accessories, which is expected to continue at least through fiscal 2015.

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

Capstone reworks deal

Switching back to the primary market, Capstone Logistics trimmed the spread on its $127.5 million incremental first-lien term loan (B1/B-) due October 2021 to Libor plus 450 bps from Libor plus 475 bps and set the tranche to be fungible with the an existing first-lien term loan that carries the same pricing, according to a market source.

The incremental loan still has a 1% Libor floor and an original issue discount of 99, and all of the first-lien term loan debt will have 101 soft call protection for six months.

Along with the incremental first-lien loan, the company is getting a $37.5 million incremental second-lien term loan (Caa2/CCC).

Goldman Sachs Bank USA and BNP Paribas Securities Corp. are leading the deal that will be used to fund the acquisition of Pinnacle Workforce Logistics.

Capstone Logistics is a Norcross, Ga.-based provider of outsourced supply chain solutions at distribution centers catering to the grocery, foodservice, retail and automotive industries. Pinnacle Workforce is a Chino Hills, Calif.-based workforce logistics provider.

Aristotle discloses talk

Aristotle held a bank meeting on Thursday afternoon, launching a $130 million six-year term loan with talk of Libor plus 475 bps with a 1% Libor floor, an original issue discount of 99.5 and 101 soft call protection for six months, according to a market source.

The company’s $160 million credit facility also includes a $30 million five-year revolver.

Commitments are due in two weeks, the source remarked.

BNP Paribas Securities and GE Capital Markets are leading the deal that will be used to help fund the buyout of the company by Wasserstein & Co.

Aristotle is a Stamford, Conn.-based manufacturer and marketer of educational, health-care, medical technology and agricultural products.

Ascend Learning repricing

Ascend Learning came out with talk of Libor plus 425 bps with a 100 bps step-up if corporate ratings are lower than B3/B-, a 1% Libor floor, a par issue price and 101 soft call protection for six months on the proposed repricing of its $482.5 million first-lien term loan due 2019 that launched with a morning call, a source said.

The repricing will take the term loan down from Libor plus 500 bps with a 1% Libor floor.

Commitments are due at noon ET on June 11, the source added.

Bank of America Merrill Lynch and GE Capital Markets are leading the deal.

Burlington, Mass., and Leawood, Kan.-based Ascend Learning is a provider of technology-based learning services focused on student training and testing results in health-care and other vocational fields.

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