Flextronics up with refinancing; Kinetic Concepts, Tensar, Open Text, E.W. Scripps float talk

By Sara Rosenberg

New York, Oct. 5 - Flextronics International Ltd.'s term loans headed higher during Wednesday's trading hours as news that the company is working on a refinancing made its way around the market.

Over in the primary, Kinetic Concepts Inc., Tensar International Corp. Inc. and Open Text Inc. came out with pricing guidance as the transactions were presented to lenders, and E.W. Scripps Co. is already circulating price talk on its upcoming pro rata deal, even with the launch expected to be a few weeks away.

Additionally, Renaissance Learning Inc.'s first- and second-lien term loans have been met with strong demand, resulting in oversubscription of the tranches and the expectation that pricing will firm up in the next few days.

Flextronics loans rise

Flextronics' term loans were stronger in a "materially better" secondary market on Wednesday, helped by chatter that the company is seeking a refinancing deal, according to a trader.

The 2012 term loan was quoted at 99½ bid, par offered, up from 98¾ bid, 99¾ offered, and the 2014 term loan was quoted at 97 bid, 98 offered, up from 96¼ bid, 97¼ offered, the trader said.

For the proposed refinancing, the company is working on syndicating a new $1.5 billion unsecured credit facility, consisting of a $1 billion revolver and a $500 million term loan A, and talked at Libor plus 175 basis points.

Bank of America Merrill Lynch is the lead bank on the deal.

Flextronics is a Singapore-based electronics manufacturing services provider.

Kinetic releases guidance

Switching to the primary, Kinetic Concepts held a bank meeting in New York on Wednesday morning to launch its proposed credit facility, at which time lenders were told that the term loan B would be smaller than previously expected and price talk was announced, according to market sources.

The term loan B was launched at $2.2 billion, compared to the $2.6 billion amount that was committed, and as a result, the company's bond offering is being upsized to $2.55 billion from $2.15 billion, sources said.

Price talk on the term loan B is Libor plus 575 basis points with a 1.25% Libor floor and an original issue discount of 95½ to 96, and the tranche includes soft call protection of 102 in year one and 101 in year two, sources continued.

Under the original plans, the company got a commitment for a $900 million senior unsecured bridge loan and a $1.25 billion senior secured second-lien bridge loan to back its bond offering, with a portion of the second-lien bridge loan possibly available in euros.

Kinetic getting revolver

Kinetic Concepts' $2.4 billion senior secured credit facility (Ba3/BB-), down from $2.8 billion, also provides for a $200 million five-year revolver.

The credit facility, for which a bank meeting was held this past Monday to kick start that syndication process, is also being marketed in Europe.

Commitments are due on Oct. 19 and funding is expected on Nov. 4.

Bank of America Merrill Lynch, Morgan Stanley & Co. Inc., Credit Suisse Securities (USA) LLC and RBC Capital Markets LLC are the lead arrangers and bookrunners on the deal, and UBS Securities LLC is a co-manager.

Kinetic being acquired

Proceeds from Kinetic Concept's credit facility, bonds and about $1.75 billion of equity will be used to fund the purchase of the company by Apax Partners, Canada Pension Plan Investment Board and the Public Sector Pension Investment Board for $68.50 per share in cash in a transaction valued at $6.3 billion, including outstanding debt.

Closing is expected in the second half of this year, subject to certain conditions, including shareholder and regulatory approvals. It is not subject to financing.

A special meeting for shareholders to approve the transaction is set for Oct. 28.

Total leverage is 6.0 times LTM EBITDA and leverage through the first-lien is 2.9 times.

Kinetic Concepts is a San Antonio-based medical technology company.

Tensar pricing

Another company to hold a bank meeting and come out with guidance was Tensar International, as it launched a $325 million credit facility to investors in the morning, according to a market source.

The company's $25 million four-year ABL revolver is being talked with grid-based pricing that can range from Libor plus 250 bps to 300 bps, and includes a 50 bps unused fee, the source said.

The $190 million five-year first-lien term loan B is talked at Libor plus 700 bps with a 1.75% Libor floor and an original issue discount of 97, and has 101 call protection for one year.

And, the $110 million 51/2-year second-lien term C is talked at Libor plus 1,000 bps with a 1.75% floor and a discount of 96, and is non-callable for one year, then at 102 in year two and 101 in year three.

Barclays Capital Inc. is leading the deal that will be used to refinance the company's existing capital structure, and lenders are being asked to get their orders in by Oct. 20.

Tensar is an Atlanta-based provider of specialty products and engineering services used in the development of commercial, residential, industrial and municipal sites and transportation infrastructure.

Open Text launches

Open Text also held a bank meeting during the day, and with the launch, price talk of Libor plus 250 bps was announced on its $700 million senior secured credit facility that consists of a $100 million revolver and a $600 million term loan A, according to a market source.

Pricing on the tranches can step up to Libor plus 275 bps if leverage is 2.25 times or more and step down to Libor plus 225 bps if leverage is less than 1.5 times, the source said, adding that the revolver has a flat unused fee of 30 bps.

Upfront fees on the revolver and A loan, which are being sold as a strip, are 50 bps for orders of $50 million, 30 bps for $35 million or more, and 25 bps for $25 million or more.

Commitments are due on Oct. 21.

Open Text lead banks

Barclays Capital Inc. and RBC Capital Markets LLC are the joint lead arrangers and joint bookrunners on Open Text's credit facility.

Proceeds will be used to add cash to the balance sheet, refinance existing bank debt, including the revolver borrowings that were used to fund the acquisition of Global 360 Holding Corp., and for working capital purposes.

Initially, the company was planning on getting a $100 million revolver, a $200 million delayed-draw term loan A and a $600 million term loan B, but given market conditions, the choice was made to go the all pro rata route.

Open Text is a Waterloo, Ont.-based enterprise software company.

E.W. Scripps talk emerges

Continuing on the topic of pricing, E.W. Scripps is talking its $312 million five-year credit facility at Libor plus 400 bps well ahead of its bank meeting, which is potentially going to take place in November, maybe around the early part of the month, according to a market source.

The facility is comprised of a $100 million revolver and a $212 million term loan, and will be syndicated to banks.

SunTrust Robinson Humphrey Inc. is leading the deal that will be used to fund the $212 million cash purchase of nine McGraw-Hill Broadcasting stations, including four stations affiliated with the ABC television network and five stations affiliated with Azteca America.

Closing on the transaction is expected in the first half of 2012, subject to regulatory approvals and customary conditions.

E.W. Scripps is a Cincinnati-based media company with interests in television stations and newspapers.

Renaissance sees demand

In other news, Renaissance Learning's $175 million first-lien term loan (B1/BB-) and $75 million second-lien term loan were both oversubscribed ahead of Wednesday's commitment deadline, and pricing on the debt is anticipated to finalize shortly, according to a market source.

The first-lien loan is talked at Libor plus 600 bps to 625 bps with a 1.5% Libor floor, a discount of 96 to 97 and 101 soft call protection for one year. Talk on the second-lien loan has not yet been released.

The company's $270 million credit facility also includes a $20 million revolver (B1/BB-).

RBC Capital Markets LLC and BMO Capital Markets Corp. are leading the deal that will be used, along with up to $196.7 million of equity, to fund the buyout of the company by Permira Funds for $14.85 per share in cash, or roughly $440 million.

Closing is expected in the fourth quarter, subject shareholder and regulatory approval.

Renaissance Learning is a Wisconsin Rapids, Wis.-based provider of technology-based school improvement and student assessment programs for K-12 schools.

Diamond Foods allocates

Diamond Foods Inc. allocated its $1.75 billion credit facility, consisting of a $1.25 billion term loan A and a $500 million revolver, both priced at Libor plus 250 bps, according to a market source.

Pricing on the facility can range from Libor plus 200 bps to 275 bps based on leverage, and the revolver has a 35 bps unused fee.

Bank of America Merrill Lynch is leading the deal that will be used to help fund the acquisition of Pringles from Proctor & Gamble for $2.35 billion, repay an existing credit facility at Diamond and for working capital and other general corporate purposes.

Closing is expected by year-end, subject to approval by Diamond shareholders and the satisfaction of customary conditions and regulatory approvals.

Diamond Foods is a San Francisco-based packaged food company. Pringles is a potato crisp brand.

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