Warner Chilcott tweaks deal; GenTek timing emerges; Lear sets launch; LCDX 13 starts trading

By Sara Rosenberg

New York, Oct. 5 - Warner Chilcott plc came out with a number of changes to its oversubscribed credit facility, including increasing the size, reducing pricing and the Libor floor, and setting the original issue discount.

Also on the new deal front, GenTek Inc. came out with timing on the launch of its proposed credit facility that will be used to help fund its buyout and Lear Corp. set a conference call to launch a refinancing term loan.

Over in the secondary market, the LCDX 13 index began trading on Monday and Solutia Inc.'s term loan was unchanged to lower after the company revealed plans for a paydown.

Warner Chilcott upsizes loan

Warner Chilcott went out to lenders on Monday with modifications to the size and pricing of its senior secured credit facility (Ba3/BB+) as the deal was largely oversubscribed, and the books are now closing at 5 p.m. ET on Tuesday instead of on Oct. 13, according to market sources.

Under the changes, the amount of term loan debt that the company is getting was increased to $2.95 billion from $2.5 billion.

The breakdown of the term loan debt is a $1 billion five-year term loan A, which is in line with the company's original expectations, a $1.6 billion 51/2-year term loan B, up from $1.5 billion, and a $350 million delayed-draw term loan, also in line with expectations.

The delayed-draw term loan was able to come from either the term loan A or the term loan B. It has now been decided that the delayed-draw is made up of term loan B debt, sources remarked.

Warner Chilcott cuts pricing

Also as a result of the strong market demand, Warner Chilcott reduced pricing on its term loans by 25 basis points.

Pricing on the term loan A is now Libor plus 325 bps, down from initial talk of Libor plus 350 bps, and pricing on the term loan B is now Libor plus 350 bps, down from initial talk of Libor plus 375 bps, sources said.

The delayed-draw commitment fee, as before, is half the drawn spread. Since the delayed draw is based off the term loan B, the commitment fee will be 175 bps, sources continued.

The term loans have a Libor floor that has been reduced as well. The floor is now set at 2.25%, down from the original 2.5% level.

Lastly, the original issue discount on the term loan A and the term loan B has been set at 99, the tight end of initial talk of 98 to 99, sources remarked.

All orders from lenders had to be pro rata towards the term loan A and term loan B, inclusive of the delayed-draw term loan.

The company's now $3.2 billion, up from $2.75 billion, credit facility also includes a $250 million five-year revolver that has a 2.25% Libor floor.

Warner Chilcott eliminates notes

With the upsizing of the credit facility, Warner Chilcott is no longer planning on selling senior unsecured notes for its acquisition of Procter & Gamble Co.'s pharmaceuticals business.

The notes offering was initially expected to be sized at $1.4 billion. It was then reduced to $450 million as a result of Warner Chilcott's sale of exclusive product licensing rights in the United States to its topical psoriasis treatments Taclonex, Taclonex Scalp, Dovonex to LEO Pharma for $1 billion.

And now, with the $450 million increase to the amount of term loan debt that the company is obtaining, the notes are being eliminated from the capital structure altogether, sources explained.

The company was able to upsize the term loans since they were so well received. In fact, talk was that there was already $4.5 billion in commitments towards the deal as of last Wednesday afternoon.

"No big surprises here, given the popularity of this deal. Senior unsecured notes going away, and OID coming at tight end [99], both of which were rumored developments. Twenty five basis point spread decrease a bit of surprise, but not a shocker," one source added.

Warner Chilcott lead banks

Bank of America and Credit Suisse are the co-lead arrangers on the Warner Chilcott deal. Bookrunners are Bank of America, Credit Suisse, Barclays, Citigroup, JPMorgan and Morgan Stanley. Credit Suisse is the administrative agent.

Financial covenants under the facility include a maximum leverage ratio opening at 4.25 times and decreasing until it reaches 2.5 times after Sept. 30, 2013, and an interest coverage ratio that opens at 2.0 times and increases until it reaches 3.0 times after Sept. 30, 2013, the commitment letter said.

The acquisition may close by the end of October, subject to regulatory approvals, the receipt of proceeds of the financing, the delivery of audited financial statements for the pharmaceuticals business and other customary conditions.

Warner Chilcott is a Rockaway, N.J.-based specialty pharmaceutical company.

GenTek sets launch

In more primary happenings, GenTek has scheduled a bank meeting for Thursday morning to launch its proposed $330 million senior secured credit facility that will be used to help fund its acquisition by American Securities LLC for $38 per share, according to a market source.

Goldman Sachs is the lead arranger and bookrunner on the deal, KeyBank is the syndication agent, and GE Capital is the administrative agent.

The facility consists of a $300 million five-year term loan B and a $30 million four-year revolver, with both tranches carrying a 2.5% Libor floor, according to a commitment letter filed with the Securities and Exchange Commission.

Pricing on the term loan B is Libor plus 475 bps and pricing on the revolver is Libor plus 450 bps with a 75 bps undrawn fee, the commitment letter said.

Also, in the event that the company's corporate credit ratings on the closing date are lower than B1/B+, the weighted average of the interest rate of the facility will be increased by 100 bps, allocated by the arranger in its discretion.

Financial covenants include a minimum interest coverage and a maximum total leverage ratio.

GenTek is a Parsippany, N.J.-based provider of specialty inorganic chemical products and valve actuation systems and components for automotive and heavy duty/commercial engines.

Lear plans refinancing

Lear is also launching a new deal this week, with the company scheduled to hold a conference call on Wednesday to kickoff syndication on a term loan, according to a market source.

JPMorgan is the lead bank on the deal.

The size of the term loan is still to be determined, the source said.

Proceeds will be used to refinance the company's existing $500 million DIP/exit facility that is priced at Libor plus 1,000 basis points with a 3.5% Libor floor.

Lear is a Southfield, Mich.-based automotive parts supplier.

LCDX 13 trades

Switching to trading news, the LCDX 13 index had its first day of trading on Monday, according to a market source.

The index was quoted at 96.75 bid, 97 offered by late day, up a half a point from where it opened, the source said.

Coupon for the LCDX 13 is 500 bps.

Solutia flat to softer

Solutia's term loan was unchanged to weaker on the day, depending on which trader was asked, after the company announced a paydown.

The term loan was quoted by one trader at 101¼ bid, 102¼ offered, down from 102 bid, 102½ offered on Friday, and by a second trader at 101¼ bid, 102 offered, in line with Friday's levels.

On Monday morning, Solutia announced that it will prepay $200 million of its senior secured term loan debt using proceeds from a $300 million senior notes offering.

Remaining proceeds from the notes will be used for general corporate purposes.

Solutia is a St. Louis-based performance materials and specialty chemicals company.

Nebraska Book closes

Nebraska Book Co. Inc. closed on its new $75 million asset-based revolving credit facility, according to a news release.

Security is substantially all of the tangible and intangible assets of Nebraska Book and the subsidiary guarantors.

In addition, the company completed its $200 million 10% senior secured notes offering that were issued at 991/2.

Proceeds from the notes were used to repay all of the company's term loan borrowings.

Nebraska Book is a Lincoln, Neb., provider of new and used textbooks.

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