McJunkin rises on paydown; American Axle up; Fairway Market tweaks spread; AMN sets talk

By Sara Rosenberg

New York, Dec. 7 - McJunkin Red Man Corp.'s bank debt headed higher during Monday's trading session after the company announced plans to repay the loans, and American Axle & Manufacturing Holdings Inc.'s revolver strengthened on news of an amendment and paydown.

Moving to the primary market, Fairway Market LLC increased pricing on its term loan and zeroed in on the original issue discount, and AMN Healthcare Services Inc. began circulating price talk on its upcoming deal.

Also on the new deal front, Pinnacle Foods Group LLC held the lender call for its incremental term loan C, and commitments were due on Datatel Inc.'s recently revised credit facility.

McJunkin up on repayment

McJunkin Red Man's holdco term loan and opco term loan were better in trading as the company revealed that it will be selling $1 billion of notes and using proceeds to repay its existing credit facility, according to a trader.

The holdco term loan was quoted at 90 bid, 95 offered, up from 82 bid, 86 offered, and the opco term loan was quoted at 97½ bid, 99½ offered, up from 94½ bid, 95½ offered, the trader said.

Also on Monday, Moody's Investors Service downgraded McJunkin's corporate family rating to B2 from B1 and the senior secured asset-based revolver to Ba2 from Ba1 as a result of weaker-than-expected operating performance in the second half of 2009 and Moody's belief that industry conditions will be slow to recover.

Standard & Poor's, on the other hand, affirmed the company's ratings, including the B+ corporate credit rating.

McJunkin is a Houston-based distributor of pipe, valves and fittings and related products and services to the energy industry.

American Axle moves higher

American Axle's revolver gained some ground on Monday after the company said that it amended its credit facility and will repay some borrowings, according to a trader.

The revolver was quoted at 97½ bid, 99½ offered, up from 95¾ bid, 96¾ offered, the trader said. The term loan, meanwhile, was unchanged at 99 bid, par offered.

On Friday, the company completed an amendment to its revolving credit facility that extends the maturity of about $243 million of the commitments to June 2013.

The effectiveness of the amendment is subject to the satisfaction of certain conditions, including the closing of a senior secured notes offering, which will be used to repay all amounts outstanding under an amended and restated credit facility and some revolver borrowings.

In connection with these transactions, the size of the revolver is being reduced.

American Axle is a Detroit-based producer of driveline and drivetrain systems and related components and chassis modules for the automotive industry.

Fairway Market lifts pricing

Switching to new deal happenings, Fairway Market flexed pricing higher on its $100 million five-year term loan and is focusing on the wide end of the original issue discount guidance that was announced at launch, according to a market source.

The term loan is now being talked at Libor plus 950 basis points, up from initial talk of Libor plus 800 bps, the source said, remarking that the 2.5% Libor floor was left intact.

As for the original issue discount, that is now being talked at 97 as opposed to in the 97 to 98 context, the source added.

The changes were announced in the morning and commitments were due later in the day.

In addition to the term loan, Fairway Market is also getting a $15 million 41/2-year revolver.

Credit Suisse and Jefferies are the lead banks on the $115 million deal that will be used to refinance existing debt and for expansion capital, with Credit Suisse the left lead.

Fairway is a supermarket chain with locations in New York and New Jersey.

AMN talk emerges

AMN Healthcare Services revealed price talk on its proposed $185 million credit facility as the company is getting ready to launch the transaction with a bank meeting on Wednesday, according to a market source.

Both the $75 million three-year revolver and the $110 million four-year term loan are being talked at Libor plus 400 bps, the source said.

However, the term loan also has a 2.25% Libor floor and is being offered at an original issue discount of 96, the source remarked.

Bank of America and SunTrust are the lead banks on the deal that will be used to refinance the company's existing credit facility, with Bank of America the left lead.

Commitments are due mid-next week, and closing is expected to occur before the end of the year.

AMN is a San Diego-based health care staffing company.

Pinnacle Foods holds call

Pinnacle Foods held a call on Monday for its $850 million incremental term loan C (B2), according to a market source, who explained that the call was more of an informational call than a launch being that the deal is already fully subscribed.

The term loan C was initially expected to be sized at $875 million, based on the company's commitment letter. It was then revised to $750 million, and it was revised again to $850 million because of the strong demand.

As a result, the company's senior unsecured bond offering, which was first expected to be sized at $275 million, was changed to $400 million when the term loan C was $750 million and, now with the latest term loan size, has been revised to $300 million.

Pinnacle Foods price talk

As was previously reported, Pinnacle Foods' term loan C is being talked at Libor plus 500 bps with a 2.5% Libor floor and an original issue discount of 98.

This talk is different than what the company had outlined in the credit facility commitment letter. In that letter, pricing on the term loan C was described as Libor plus 450 bps with a 2% Libor floor and an original issue discount of 98.

In addition to the term loan C, the company is getting a $20 million incremental revolver (B2), which is not being syndicated and will be used for general corporate purposes and working capital. The revolver add-on will be priced in line with the existing revolver.

Maturity dates on the incremental debt will match those of the company's existing debt.

Barclays, Bank of America and Credit Suisse are the joint lead arrangers and bookrunners on the credit facility, with Barclays the left lead. HSBC and Macquarie Capital are bookrunners as well.

Bank of America, Credit Suisse, HSBC and Macquarie each committed to provide $5 million of the incremental revolver.

Pinnacle Foods buying Birds Eye

Proceeds from the term loan C, the bonds and equity will be used by Pinnacle Foods to fund the acquisition of Birds Eye Foods Inc. from Vestar Capital Partners, Pro-Fac Cooperative and management in a transaction valued at $1.3 billion.

The actual equity contribution will be based on Birds Eye's balance sheet at the closing. Based on Birds Eye's debt balances at Sept. 26, the equity would have been $312 million. Net debt of Birds Eye was $37.6 million lower on Nov. 28 than on Sept. 26, which would have reduced the equity contribution to $274.6 million, had the transaction closed on that date.

Pro forma for the acquisition, including expected synergies of $45 million, the company will have senior secured leverage of 4.4 times, senior leverage of 5.7 times and total leverage of 6.2 times based on pro forma adjusted EBITDA of about $472 million for the 12 months ended Sept. 27.

Closing on the acquisition is expected to occur no later than the first quarter of 2010, subject to customary conditions, including regulatory approvals.

Pinnacle Foods is a Cherry Hill, N.J.-based manufacturer and distributor of branded packaged foods. Birds Eye is a Rochester, N.Y.-based packaged food company with more than $930 million of total sales.

Datatel shuts books

Commitments toward Datatel's recently tweaked credit facility were due from lenders on Monday and the expectation is that allocations will go out sometime this week, according to a market source.

The facility is comprised of a $40 million five year revolver (Ba3) priced at Libor plus 450 bps, a $165 million six-year first-lien term loan (Ba3) priced at Libor plus 450 bps with an original issue discount of 98½ and a $120 million seven-year second-lien term loan (B3) priced at Libor plus 825 bps with an original issue discount of 98.

All tranches have a 2% Libor floor.

At the end of last week, the second-lien term loan was upsized from $100 million while pricing was dropped from Libor plus 850 bps and the original issue discount was lowered from 97. Also, the original issue discount on the first-lien term loan was tightened from 98.

Credit Suisse is the lead bank on the now $325 million deal that will be used to help fund the buyout of the company by Hellman & Friedman LLC from Thoma Bravo.

As a result of the second-lien upsizing, the equity being used for the buyout is being decreased.

Datatel is a Fairfax, Va.-based provider of higher education software, services and insight.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.