Kronos flexes higher, frees up; Lord & Taylor breaks; Liqui-Box, Deluxe Entertainment revise

By Sara Rosenberg

New York, Dec. 21 - Kronos Inc. made its changes official on Wednesday - some of which were already expected by the market - including an increase to pricing, and then the incremental loan began trading by late day.

Also making its way into the secondary market was Lord & Taylor as its term loan allocated with levels seen above the original issue discount price.

Back to the primary market, Liqui-Box made some issuer-friendly updates to its credit facility, lowering the coupon and tightening the original issue discount on strong demand, and Deluxe Entertainment Services Group Inc. downsized its term loan.

Kronos tops OID

Kronos' $370 million incremental first-lien term loan B (B1/B) due December 2018 broke for trading on Wednesday afternoon after revisions firmed up earlier in the day, and levels on the open were quoted at 98¾ bid, 99¾ offered, according to a trader.

Pricing on the incremental loan is Libor plus 500 basis points, up from Libor plus 475 bps, with a 1.25% Libor floor. The debt was sold at an original issue discount of 98 and includes 101 soft call protection for one year.

Proceeds from the incremental term loan B will be used to fund a distribution to shareholders.

With this new deal, the company sought an amendment to its existing credit facility to allow for the incremental loan and for the use of proceeds.

J.P. Morgan Securities LLC, Credit Suisse Securities (USA) LLC, Wells Fargo Securities LLC, Jefferies & Co. and Deutsche Bank Securities Inc. are the bookrunners on the deal.

Kronos reworks amend/extend

Earlier in the day when Kronos officially announced its pricing change to the incremental first-lien term loan B, the company also went out with changes to its amendment and extension proposal to get lenders on board - a move that ended up working, a market source said.

Under the new structure, the extended revolver, which will be pushed out by three years to June 2016, and the extended existing term loan B, which will be pushed out by three years to June 2017, are priced at Libor plus 475 bps, and 101 soft call protection for one year was added to the extended B loan.

Non-extended revolver pricing is Libor plus 200 bps and non-extended term loan B pricing is Libor plus 225 bps based on pro forma total leverage of 5.6 times.

Rumors of the new pricing level on the incremental loan and the extended debt had been out since earlier in the week.

Kronos second-lien changes

In addition, Kronos officially raised pricing on its extended second-lien term loan to Libor plus 1,000 bps at leverage of greater than 5.0 times and Libor plus 900 bps at leverage of 5.0 times, the source remarked. Prior talk had been Libor plus 825 bps. There is no Libor floor.

Also, the PIK toggle option on the second-lien loan was eliminated, and the hard call protection was bumped up to 103 in year one, 102 in year two and 101 in year three, from just 102 in year one and 101 in year three, the source continued.

The second-lien loan will be extended by three years to June 2018. Non-extended pricing is Libor plus 575 bps.

Furthermore, the excess cash flow sweep under the first- and second-lien debt was revised to 50% with a step-down to 0% at 4½ times leverage, from 50% with a step-down to 25% at 5½ times leverage and to 0% at 4½ times leverage.

The restricted payments provision was changed to restrict the company by a total leverage ratio of less than 4.0 times for the payment of dividends as opposed to having no restrictions.

Kronos, most favored nation

Kronos also added a 25 bps most favored nation provision against future amendments and extensions to the existing first-lien term loan B and a 25 bps most favored nation provision to the incremental term loan B, the source added. Previously, there were no provisions.

And, the company is now required to host quarterly calls.

With the changes to pricing and terms, the company changed the fee that it offered first- and second-lien lenders, with first-lien investors getting 25 bps for amendment consents and 25 bps for extensions and second-lien lenders getting 25 bps for consents and 75 bps for extensions, the source said.

By comparison, the company was initially only offering extending lenders a 50 bps fee on both the first- and the second-lien facilities.

Kronos amendment passes

Consents/commitments towards Kronos' revised transaction were due by noon ET on Wednesday, and by the afternoon, word emerged that required approvals for the amendment had been received by the deadline, as were consents to extend more than 50% of each tranche, the source added.

The breakdown of the company's existing credit facility is a $60 million revolver, a $635 million first-lien term loan B and a $355 million second-lien term loan.

Closing is expected to occur on Dec. 28.

Kronos is a Chelmsford, Mass.-based provider of workforce management software.

Lord & Taylor hits secondary

Another deal to break for trading on Wednesday was Lord & Taylor's $450 million term loan (Ba3/BB), with levels quoted at 99½ bid, par offered, according to a market source.

Pricing on the loan is Libor plus 450 bps with a 1.25% Libor floor, and it was sold at an original issue discount of 99 after tightening earlier this week from 98. There is 101 soft call protection for one year.

Credit Suisse Securities (USA) LLC is the lead bank on the deal that will be used to help refinance the company's commercial mortgage-backed securities.

Closing is expected to occur on Jan. 9.

Lord & Taylor is a New York-based upscale specialty-retail department store chain.

Liqui-Box cuts pricing

In more loan happenings, Liqui-Box announced changes to its credit facility based on strong reception from investors that included a pricing cut and a smaller discount price, according to a market source.

The facility, which consists of a $20 million five-year revolver and an $85 million six-year term loan B, is now priced at Libor plus 525 bps with a 1.5% Libor floor and an original issue discount of 981/2, compared to initial talk of Libor plus 575 bps with a 1.5% floor and a discount of 98, the source said.

BNP Paribas Securities Corp. and BMO Capital Markets Corp. are the lead banks on the $105 million deal that will be used, along with roughly $25 million of mezzanine debt, to fund Sterling Group's buyout of the company from DuPont.

Senior leverage is 3.1 times, and total leverage is 4.1 times.

Liqui-Box, a manufacturer of bag and box flexible packaging for the beverage, dairy and foodservice markets, expects to close on the transaction next week.

Deluxe trims size

Also out with revisions was Deluxe Entertainment, as it reduced its 51/2-year term loan (B1/B+) to $475 million from $500 million, according to a market source.

Pricing is unchanged at Libor plus 650 bps with a 1.5% Libor floor and an original issue discount of 96, and there is still 101 soft call protection for one year.

The company's now $575 million credit facility, down from $600 million, also includes a $100 million five-year ABL revolver.

Credit Suisse Securities (USA) LLC, Bank of America Merrill Lynch, Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and Natixis are leading the deal that will be used to refinance existing debt.

Deluxe is a Los Angeles-based entertainment services provider that processes film, assists in motion picture post-production work and distributes prints to film studios.

LIN Television wraps

LIN Television closed on its $260 million seven-year term loan B (Ba3/BB-) that is priced at Libor plus 375 bps with a 1.25% Libor floor, according to a news release. The debt was sold at an original issue discount of 99 and has 101 soft call protection for one year.

During syndication, pricing on the loan firmed at the low end of the Libor plus 375 bps to 400 bps talk and the discount tightened from 981/2.

J.P. Morgan Securities LLC, Wells Fargo Securities LLC and Deutsche Bank Securities Inc. led the deal that will be used to redeem in January all of the company's outstanding 6½% senior subordinated notes due 2013.

LIN is a Providence, R.I.-based television and digital media company.

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