West, VeriFone revise term spreads; Ply Gem eyes second-lien flex; Kinetek sets talk; Goodyear lower

By Sara Rosenberg

New York, Oct. 16 - West Corp. and VeriFone Holdings Inc. both came out with modifications to pricing on Monday, with West increasing its term loan spread by 25 basis points and VeriFone decreasing its term loan spread by 25 bps.

Also in the primary, Ply Gem Industries Inc. is expected to reverse flex pricing soon on its second-lien term loan by a fairly significant amount due to the strong market reception and Kinetek Inc. released price talk on its credit facility as the deal was launched with a bank meeting.

Meanwhile, in the secondary, The Goodyear Tire & Rubber Co.'s second- and third-lien term loans traded down on the heels of the company's recent draw down announcement.

West announced on Monday that it is flexing pricing higher on its in-market $2.1 billion seven-year term loan, according to a market source.

Under the change, the term loan will now carry a spread of Libor plus 275 bps, compared to original talk at launch of Libor plus 250 bps, the source said.

The company's $2.35 billion credit facility (Ba3/B+) also includes a $250 million revolver with a 50 bps commitment fee.

Lehman, Deutsche and Bank of America are joint bookrunners on the credit facility, and Lehman and Deutsche are joint lead arrangers. Lehman is also acting as administrative agent, and Deutsche and Bank of America are acting as syndication agents. Wachovia is documentation agent.

Proceeds from the credit facility, along with $1.1 billion in high-yield bonds, will be used to help fund the leveraged buyout of West by an investor group led by Thomas H. Lee Partners and Quadrangle Group LLC.

Under the agreement, all stockholders except Gary West, chairman of the board, and Mary West, vice chairman of the board, will receive $48.75 per share in cash. Gary and Mary West will receive $42.83 per share in cash for about 85% of their current ownership and about 15% of their current ownership will convert into shares of the corporation surviving the merger.

The transaction values the company at $4.1 billion, including debt as of the date of the definitive agreement.

West is an Omaha, Neb., provider of outsourced communication services.

VeriFone trims pricing

Continuing with newly announced spread changes, VeriFone reverse flexed pricing on its $500 million seven-year term loan B to Libor plus 175 bps from original talk at launch of Libor plus 200 bps as the tranche was oversubscribed, according to a market source.

Pricing on the company's $40 million six-year revolver was left unchanged at Libor plus 150 bps.

Before the bank meeting for the deal ever took place, VeriFone had disclosed in various filings with the Securities and Exchange Commission that it expected the revolver at Libor plus 150 bps and that it expected the term loan at Libor plus 175 bps. With this term loan flex, the company got its wish.

JPMorgan and Lehman Brothers are the lead banks on the $540 million senior secured credit facility (B1/BB-) that will be used to help fund the acquisition of Lipman Electronic Engineering Ltd., a Rosh Haayin, Israel-based provider of electronic payment systems, and refinance VeriFone's existing bank debt.

Debt to EBITDA will be about 3 times at closing.

Under the purchase agreement, Lipman shareholders will receive for each Lipman share 0.5 shares of VeriFone common stock and $14.304 in cash, adjusted for a special dividend. The amount of the special dividend has not been finally determined but will likely exceed $23 million. Alternatively, Lipman shareholders may elect to receive either $29.07 in cash, or 0.9844 shares of VeriFone stock for each Lipman share, each adjusted for the special dividend. The cash and stock elections are subject to proration such that VeriFone will issue 13.3 million shares of VeriFone stock and pay about $382 million in cash, adjusted for the special dividend.

All in all, the acquisition is valued at $793 million based on VeriFone's share price at the close of trading on April 7.

Closing is expected to take place on Nov. 1 following the expiration of a 30-day waiting period required by Israeli law.

Following the acquisition, San Jose, Calif.-based VeriFone will become the largest global provider of electronic payment services.

Ply Gem anticipating flex

Ply Gem is expected to lower pricing on its in-market $117 million second-lien term loan (B3/B+) to somewhere in the Libor plus mid-to high-500 bps area from original talk at launch of Libor plus 675 bps because of strong oversubscription, according to a market source.

Official word on the flex has not come out yet, but speculation is that the new pricing level will be announced in the next few days, the source said.

It has been rumored that the second-lien term loan would come lower than price talk even before the deal actually launched on Oct. 3 since it had already been subscribed before the bank meeting took place, but the suggestion that it would drop into the Libor plus 500's hasn't started circulating until now.

The company is also marketing a $175 million add-on to its first-lien term loan (Ba3/BB-) that is being talked at Libor plus 300 bps.

UBS, Deutsche Bank and JPMorgan are the lead banks on the $292 million of new term loan debt, with UBS the left lead.

Proceeds will be used to help fund the acquisition of Alcoa Home Exteriors, Inc. from Alcoa Inc. in a cash transaction valued at about $305 million.

Completion of the transaction, which is expected to occur in the fourth quarter, is subject to customary closing conditions.

Ply Gem is a Kearney, Mo., manufacturer and marketer of products for use in the residential new construction, do-it-yourself and professional renovation markets. Alcoa Home Exteriors is a manufacturer of vinyl siding, aluminum siding, injection molded shutters and vinyl, aluminum and injection molded accessories.

Kinetek price talk

Kinetek announced price talk on its first- and second-lien credit facility as syndication on the transaction officially kicked off with the holding of a bank meeting on Monday, according to a market source.

The $50 million six-year revolver (B1/B) and the $215 million seven-year first-lien term loan (B1/B) were both launched with opening talk of Libor plus 275 bps, and the $85 million eight-year second-lien term loan (Caa1/CCC+) was launched with opening talk of Libor plus 650 bps, the source said.

Credit Suisse, Goldman Sachs and Jefferies are joint bookrunners on the deal, with Credit Suisse the lead arranger.

Proceeds will be used to fund The Resolute Fund LP's acquisition of Kinetek from Jordan Industries Inc.

In connection with that sale, the company expects to redeem and pay in full its outstanding notes and bonds.

Kinetek is a Deerfield, Ill., designer and manufacturer of motors, components and control systems.

Goodyear weakens in trading

Switching to the secondary, Goodyear's bank debt headed lower on Monday as investors were a little unnerved by the company's recent announcement of a precautionary loan draw down, according to a trader.

The second-lien term loan closed the day at par ¼ bid, par ¾ offered, down from Friday's levels of par ½ bid, 101 offered, and the third-lien term loan closed the day at 101 bid, 101½ offered, down from Friday's levels of 101 3/8 offered, 101 7/8 offered, the trader said.

On Friday, the Akron, Ohio-based tire company revealed that it drew down about $675 million under its revolving credit facility, in addition to borrowing $300 million under its $1.5 billion U.S. first-lien credit facility on Oct. 5.

Goodyear said that the move was to provide additional cash in the unlikely event of a prolonged United Steelworkers strike in North America.

Dole trades up

Dole Food Co. Inc.'s term loan B was stronger during market hours with no specific news seen sparking the momentum, according to a trader.

The term loan B closed the day quoted at 99 3/8 bid, 99 7/8 offered, up from Friday's levels of 99 bid, 99½ offered, the trader said.

Dole is a Westlake Village, Calif., producer and marketer of fresh fruit, fresh vegetables and fresh-cut flowers.

Extendicare closes

Extendicare Health Services Inc., the wholly owned U.S. subsidiary of Extendicare, Inc., closed on its new $120 million three-year senior secured revolving credit facility, according to a company news release.

Lehman Brothers acted as lead arranger on the deal.

Proceeds from the revolver and from a $500 million mortgage loan financing will be used to repay the company's $150 million 9½% senior notes due 2010, its $125 million 6 7/8% senior subordinated notes due 2014, its existing term loan and line of credit, to pay for transaction costs related to the debt refinancing and planned distribution of Assisted Living Concepts, Inc. and for general working capital purposes.

The mortgage financing is a five-year fixed-rate loan at 6.6525%.

Extendicare is a Markham, Ont., provider of long-term care and related services.

USI Holdings closes

USI Holdings Corp. closed on its $100 million term loan B add-on (B1) that is priced at Libor plus 225 bps.

Of the total amount, $50 million was drawn at closing on Monday and $50 million is delayed draw until Nov. 15, according to an 8-K filed with the Securities and Exchange Commission.

JPMorgan acted as the lead bank on the deal that is was used to pay down revolver borrowings and is available to fund potential future acquisitions.

USI is a Briarcliff Manor, N.Y., distributor of insurance and financial products and services to businesses.

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