Goodman adds call premium, breaks for trading; LandSource heads up; LCDX inches higher

By Sara Rosenberg

New York, Feb. 12 - Goodman Global Inc. added call protection to its term loan B at the last minute, allocated the deal on Tuesday afternoon and freed it up for trading.

In other news, LandSource Communities Development LLC's first-lien term loan B traded higher after the company's forbearance agreement was extended, although levels had come in by the end of the day to close out the session pretty much unchanged.

Also, LCDX 9 and the cash market in general were stronger as equities were mostly up on news that Warren Buffet has proposed to reinsure $800 billion of municipal bonds, and sentiment was still positive from Monday's successful BWIC sale.

Goodman Global made one last change to its $800 million term loan B (Ba3/BB) right before it gave out allocations, and the tranche then broke for trading above its original issue discount price, according to market sources.

The final modification to the B loan was the addition of 101 hard call protection for one year, sources said.

The term loan B is priced at Libor plus 425 basis points, with an original issue discount of 96 and a 3.25% Libor floor to maturity.

Earlier on in syndication, pricing on the term loan B was flexed up from initial talk at launch of Libor plus 375 bps, the original issue discount widened from original guidance of 98½ and the Libor floor was added.

Following the addition of the call protection, the term loan B hit the secondary market, with levels quoted at 96 1/8 bid on the open and then moving up to 96¼ bid, a fund manager said, adding that he hadn't seen any paper offered.

Goodman's $1.1 billion senior secured credit facility also includes a $300 million ABL revolver priced at Libor plus 200 bps.

No changes were made to the revolver during syndication.

Barclays Capital, GE Capital and Calyon are the lead banks on the deal, with Barclays the left lead on the term loan B and GE the left lead on the revolver.

Proceeds will be used to help fund the buyout of the company by Hellman & Friedman LLC for $25.60 in cash per share. The transaction is valued at $2.65 billion.

Other financing will come from $500 million of senior subordinated financing from vehicles managed by GSO Capital Partners and Farallon Capital Management, LLC, according to filings with the Securities and Exchange Commission.

On a gross basis, senior leverage is 3.4 times and total leverage is 5.2 times.

Goodman Global is a Houston-based manufacturer of residential and light commercial heating, ventilation and air-conditioning equipment.

LandSource trades higher on forbearance news

LandSource Communities Development's first-lien term loan B traded up on news that the company's forbearance agreement was extended into next week, but by late day, levels had settled back in, according to a trader.

The term loan B was said to have traded at 75 on Tuesday, compared with 72 on Monday, the trader said.

Levels, however, went out on Tuesday around 72 bid, 75 offered, compared with 72 bid, 74 offered on Monday, the trader added.

During market hours, LandSource held a private lender call. It was around this time that news emerged that the company's forbearance/amendment agreement has been extended for five days.

The original forbearance agreement was obtained last week and was also in effect for a period of five days.

As part of the original agreement, pricing on the first-lien term loan B was raised to Libor plus 475 bps from Libor plus 275 bps and lenders got a 12.5 bps fee.

The company needs the forbearance agreement because it is facing non-compliance with a borrowing base covenant due to a recent land appraisal that showed deterioration in the underlying value of that land.

In order to come back into compliance with the covenant and to cover a cash-flow shortfall over the next two years, the company needs $800 million.

The sponsors, however, have already told lenders that they are only willing to put in $300 million.

LandSource is a joint venture between Lennar Corp., LNR Property Corp. and MW Housing Partners. Its primary investment is the Newhall Land and Farming Co., which owns 15,000 acres in Santa Clarita Valley, Calif.

LCDX, cash strengthen

LCDX 9 and the overall cash market had a positive feel to it as stocks were mostly better on the day and investors are still feeling good about the $460 million BWIC sale that took place on Monday to one buyer in the low 80s, according to traders.

The index went out around 91.10 bid, 91.35 offered, up from around 90.95 bid, 91.20 offered, traders said. During market hours, the index traded as high as 91.55.

Cash was stronger by about an eighth of a point, traders added.

Stocks also mostly ended the day positive, with the Dow Jones Industrial Average up 133.40 points, or 1.09%, S&P 500 up 9.73 points, or 0.73%, and NYSE up 97.07 points, or 1.10%. Nasdaq, however, closed down 0.02 points.

According to the traders, stocks likely got their push up from news that Buffet's Berkshire Hathaway Inc. has offered to reinsure $800 billion in municipal bonds that are currently guaranteed by Ambac Financial Group, MBIA Inc. and FGIC Corp.

Namic wraps at higher pricing

Moving to the primary market, Namic/Venous Access completed syndication of its credit facility at higher pricing and at a wider original issue discount than what was originally proposed, according to market sources.

The $40 million revolver and the $135 million first-lien term loan both ended up with pricing of Libor plus 425 bps, up from initial talk of Libor plus 375 bps, sources said.

In addition, the original issue discount on the revolver and first-lien term loan firmed at 971/2, compared with the 99 level that was announced at launch, sources continued.

Namic/Venous Access' $252.5 million credit facility also includes a $77.5 million second-lien term loan.

Pricing on the second-lien loan ended up fixed at 12.25%, with an original issue discount of 99, sources added. Initial talk had been Libor plus 750 bps at a discount of 99.

GE Capital acted as the lead bank on the deal, which is being used to help fund Avista Capital Partners' acquisition of Boston Scientific Corp.'s fluid management and venous access businesses for $425 million in cash.

The businesses produce a range of products used to manage fluid and measure pressure during angiography and angioplasty procedures and provide a portfolio of implantable devices designed to provide access to the blood stream for patients requiring intravenous antibiotics, nutrition, chemotherapy and blood sampling.

Based on adjusted EBITDA of $39 million, senior leverage is 3.6 times and total leverage is 5.6 times.

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