Bank loans catch tailwind from stocks; VeriFone breaks; Lord & Taylor trims discount

By Paul A. Harris

Portland, Ore., Dec. 20 - A tailwind in the Tuesday stock market, which pushed the S&P 500 index up 3%, created a conspicuously positive tone in the bank loan market, a trader from a mutual fund said shortly after the close.

The LCDX 17 bank loan index moved up five-eighths of a point on the day, ending at 92 9/16 bid, 93 offered.

The Arizona Chemical Inc. six-year term loan B traded to par bid. The $550 million deal priced Monday at 981/2.

The Colfax Corp. term loan was trading over par on Tuesday, according to the trader. The $900 million seven-year deal priced at 99 on Nov. 30.

"Everyone is focused on new issue," the trader said.

"There is definitely a follow-up bid for recent deals."

Legacy loans also seemed somewhat stronger the trader added.

The First Data Corp. extended term loan was 84 bid on Tuesday, in the middle of its recent trading range of 82 to 86. The company's non-extended loan was 90 bid, 91 offered.

In the primary market, the VeriFone Systems Inc.'s downsized, restructured deal allocated and broke for trading.

And Lord & Taylor trimmed the discount on its $450 million Libor plus 450 basis points term loan (Ba3/BB) to 99 from 98.

VeriFone restructures

VeriFone Systems priced its downsized $231 million Libor plus 325 basis points seven-year term loan at 99.5.

The restructured deal, which was downsized from $250 million, traded to 99¾ bid, par ½ offered.

Free to trade, it was par bid, par ½ offered.

The discount was trimmed by a half-point, from 99. The Libor spread decreased from previous spread talk of 350 bps to 375 bps, and a 101 one-year soft call was added.

The term loan B features a 1% Libor floor.

A pricing grid, which steps to 300 bps when total net leverage is less than 2.25 times, was added to the term loan.

The restructured credit facility (Ba3/BB-), the overall size of which was decreased to $1.5 billion from $1.6 billion, also features a downsized $918 million five-year term loan A and a $350 million five-year revolver, both with pricing at Libor plus 275 bps.

The $918 million term loan A was downsized from $1 billion.

J.P. Morgan, Bank of America Merrill Lynch, Wells Fargo, Barclays and RBC are the lead banks on the deal.

Proceeds will be used to help fund the purchase of Point Group from Nordic Capital for about €770 million, consisting of cash to shareholders of €600 million and repayment of Point debt of €170 million.

In addition to funding the acquisition, the new credit facility will be used to refinance VeriFone's existing $217 million term loan and $277 million of convertible notes that come due in June 2012.

Leverage will be around 3 times, or slightly more, but the company previously said that deleveraging should happen quickly due to strong cash flow generation.

Total debt costs are expected at $60 million per annum, and free cash flow before interest expense should rise to more than $350 million per year from around $300 million per year.

Following completion of the transaction, liquidity is anticipated to be strong with more than $350 million of remaining cash on the balance sheet and $100 million of availability under the new credit facility.

Closing is targeted by the end of the year, subject to customary conditions.

Endurance atop tightened talk

Endurance International Group priced its $350 million six-year term loan B with a 625 basis points spread to Libor at an original issue discount of 98.

The spread came on top of spread talk that had been tightened from 650 bps. The discount was trimmed from earlier OID talk of 97 1/2.

The $400 million credit facility (B1/B) also features a $50 million five-year revolver.

Both tranches have a 1.5% Libor floor.

There is 101 soft call protection for one year on the term loan B.

Credit Suisse is the lead bank.

Proceeds will be used to help fund the buyout of Endurance by Warburg Pincus and GS Capital Partners from Accel-KKR, which will retain a minority interest in the company.

Secured leverage is 3.5 times.

Endurance is a Burlington, Mass.-based provider of web hosting and online services to small- and medium-sized businesses.

High Liner allocates

High Liner Foods Inc. priced its $250 million Libor plus 550 basis points term loan B (B2/B) at 98.

The deal allocated and broke to 98½ bid.

The loan features a 1.5% Libor floor and has 101 soft call protection for one year.

RBC and BMO are the lead banks on the deal.

Proceeds will be used to help fund the $230.6 million acquisition of Icelandic Group's U.S. subsidiary and Asian procurement operations and to repay an existing roughly $47 million term loan.

As part of the transaction, the company plans on increasing its existing asset-based credit facility to $180 million from $120 million.

Closing is anticipated to occur late this year or during the first quarter of 2012, subject to customary conditions, including regulatory approvals.

Near-term synergies are expected at $12.1 million, and total ongoing annual synergies are expected to be in the range of $16 million to $18 million.

The company previously said that leverage would be reduced to about 3.8 times on a pro forma basis adjusted for the expected near-term synergies and seasonal debt levels.

In addition, the company's annual revenue on a pro forma basis would be about $900 million for the last 12 months ending September 2011 with pro forma-adjusted EBITDA of about $94 million, including near-term synergies.

Lord & Taylor trims discount

Lord & Taylor trimmed the discount on its $450 million Libor plus 450 basis points term loan (Ba3/BB) to 99 from 98.

It is expected to allocate on Wednesday, with closing set for Jan. 6, 2012.

The loan features a 1.25% Libor floor, and has 101 soft call protection for one year.

Credit Suisse is the lead.

Proceeds will be used to help refinance the company's commercial mortgage-backed securities.

Toward the holidays

The remainder of the pre-Christmas week is expected to remain generally quiet, with just a few deals left on the calendar as 2011 business.

Kronos Inc. is mulling price increases and covenant tweaks in its $1.36 billion of bank loan financing deals.

Pricing on the new $370 million incremental first-lien term loan B (B1/B) due December 2018 would increase to Libor plus 500 basis points from 475 bps.

The deal features a 1.25% Libor floor and a 101 soft call. Original issue discount talk is 98.

Meanwhile pricing on the $355 million amended and extended second-lien term loan would increase by 50 bps, to Libor plus 875 bps from 825 bps. The second-lien deal is also expected to come with a 25 bps most favored nation provision. In addition a modification to the restricted payments covenant is under consideration.

Pricing on the $635 million amended and extended first-lien loan would increase by 25 bps to Libor plus 475 bps from 450 bps.

Commitments on the amend-and-extend tranches are due by noon Wednesday.

J.P. Morgan, Credit Suisse, Wells Fargo, Jefferies and Deutsche Bank are the bookrunners.

Proceeds will be used to fund a distribution to shareholders.

Existing lenders are being offered a 50 bps amendment fee.

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